I attended the AGM yesterday. The raising will not be anything...

I attended the AGM yesterday. The raising will not be anything like $100m of new equity. They are only seeking to eliminate the ‘additional’ borrowings taken on to acquire Express Data, about $50m. The first (at least) $20m will be achieved by capital issued through the DRP over the course of financial 2015. The remaining approximately $30m will be raised after the full year results are issued.
If you read the recent Q1 update, they are giving you the best possible indication as to what the new business is capable of. In the weakest quarter (Q1), they have generated $263m of revenue. They gave a guidance of $20m NPAT back in July, and have said they are tracking 6% ahead of that at the end of Q1 (i.e. at least $21.2m NPAT after bearing $3.2m in FY15 integration costs). Bearing in mind the final $3.2m of integration costs will be borne in the first half. The second half will be clean of acquisition costs and it is only then that ignorant market participants will begin to understand what Dicker have done in acquiring ED – that rarest of things, a screamingly successful acquisition!
They were very guarded about the numbers at the AGM (for fear of saying something not formally announced to market), but it is very clear the acquisition has gone much better than they had expected. Don’t be surprised if by the end of FY15, the revenue is approaching $1.2b rather than the $1b they have guided.
It is always dangerous to make forecasts, but the NPAT run-rate when removing the $3.2m of acquisition costs will be closer to $30m per annum than $20m (in my view). Off the current share base, that indicates something around 8x FY16 earnings. They have a quite high debt-load for a small firm, but I would be quite surprised if the market capitalisation by the time the full year’s figures are released doesn’t represent at least a low double figure earnings multiple.
I am going to timestamp a call and say they will raise equity in September next year at prices exceeding their $2 per share target, but consider the fact you’ll have received around 15c per share in dividends (that would make 21.43c grossed up), it appears that in a fairly short time-frame, there looks to be a very good upside to the buyer at today’s prices - Eternalgrowth