Leaving the vagaries in the short position aside for a moment, I’d like to draw attention to the actual announcement that was made yesterday.
Page 2 (see picture below) shows that the pre-tax profit contribution from the first 50% of Wivenhoe is going to be ~93m$, to be split over FY2021 and FY2022; this is in addition to the previously announced 64m$ in gross income recognised during the March quarter.
Moreover, the residual 50% is expected to contribute a further 85m$-220m$ in pre-tax profit, in the event that Seqwater will either settle or lose their appeal.
This is much better than I had previously (conservatively) modelled; accordingly, I am increasing my estimate for the cumulative future FCF associated with the existing case book from 450m$-500m$ (see https://hotcopper.com.au/posts/52305192/single) to 600m$-700m$.
In the context of a ~1bn$ Market Cap, this shows how little terminal value the market is currently ascribing to OBL under a 100% fund management structure (once the existing case book has rolled off), which by my estimate will be able to generate ~300m$ EBIT at 2bn$ of total deployed capital.
Very attractive risk/reward at these levels, IMHO.
