Given the dividend is now locked in, if we assume a dividend...

Given the dividend is now locked in, if we assume a dividend payout range of between 70% and 75%, EBITDA should be in the $8.8-9.4m range, net profit after tax of $5.2m-$5.6m, and the cash balance should be $7m-$8.5m. This means a P/E of 8-9x, EV-to-EBITDA of 4-4.5x, and a grossed up dividend yield of ~11%. Accordingly, ASH is still cheap at 32.5c.

If the cash balance is >$7m, ASH could do a 10% buyback (which would cost about $5m at an average price of 35c per share). I also saw that competitor Rubicor has gone into administration, so there may be parts of that business that could be picked up on the cheap. ASH has shown itself to be very disciplined with M&A, so hopefully they would only consider buying something that was a low risk bargain and a good strategic fit.

In addition, the tailwinds for the training business are getting stronger with the govt pushing hard to accelerate VET growth, and the infrastructure boom should continue to support the CE labour hire business. I am also not convinced that a tougher economic environment automatically means a weaker labour hire result. In the early stages of a downturn, labour hire demand could actually increase as employers reduce full time employees but need LH to meet demand.

Overall, despite the 20%+ gains yesterday, I will be sitting tight as this still has plenty of upside in my view. As Peter Lynch says, 'don't cut the flowers and water the weeds'. ASH looks like a well run flower to me.