Some very good posts in this thread, took me a while to read through properly but from what i can see the "due diligence" done here is far superior than that of the CEO or BOD of Aurizon.
After some quick calcs in excel, i got the following:
Prior to acquisition
NPAT: 513m
Debt: 3.2bn
Equity/Market Cap: 7bn
Total EV: 10.2bn
EV:NPAT multiple: 20
Price/Earnings multiple: 13.6
Post Acquisition
1.5bn debt added, assume @ 5% interest rate = 75m additional int exp. Total Debt now 4.7bn
Equity/market Cap: 7bn
Total EV: 11.7bn
Assumed post merger NPAT : 513m - (80m ebitda -75m interest exp)*.7 = 516m NPAT
EV:NPAT multiple: 22.7
PE Multiple: 13.55
So this aquisition has geared up the balance sheet, adds negligible npat because it barely covers the interest expense, and is detrimental to the EV/NPAT multiple and PE multiple neutral
Without the ECR sale it would have been decent, because that division generates much more EBITDA and has a much lower EV. But the part they kept is just stupid [not withstanding pie in the sky growth forecasts which will "eventuate" in 2030 probably in 2 - 3 CEO's time and a new BOD]
The question is do you sell your shares now? on a PE multiple it still looks ok so hard to say!
Some very good posts in this thread, took me a while to read...
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