I have appreciated the share analysis work that others have been prepared to share on Hot Copper, so I thought I would attempt to return the favour.by having a go at extrapolating what this announcement might mean for 2021 and 2022 EPS for SRG.
Assumptions:
I have picked up the EBITDA /Revenue % from the 6mthly figures to 31/12/20 ( roughly 7.5%) and simply extrapolated that for 2021 and 2022 ( allowing for the 15% improvement in the announcement). That would tend to indicate strong growth in revenue, as you would expect with the growth in work on hand.
You can see that I have done much the same with depreciation and amortisation, though I allowed some extra depreciation in 2021 estimates as the plant & equipment net of depreciation in the balance sheet hasn't changed, so there has clearly been some purchases in the six months to 31/12/20.
There wasn't much change in the borrowings at 31/12/20 compared to 6mths before, so I have assumed that they have stayed much the same and that cash has increased arriving at the net cash improvement. Accordingly with cash earning next to nothing, I have left borrowing costs the same for this analysis.
There isn't enough info to work out the tax so I have just allowed 30% for 2021 and 2022.
Shares on issue I have left the same.
If those assumptions are reasonable, they would tend to indicate 2021 EPS will get back to a bit better than 2019 levels and then I estimate 3.8c for 2022 EPS.
That would give an estimated 2022 PE of 14 based on a current share price of 54c. The margin improvement mentioned is clearly evident in the 6month figures to 31/12/20 compared to the last few years.
My thinking is that for this type of business as the revenue mix is steadily changing to a recurring revenue model, that a 2022 PE of 14 is still reasonable value at the current share price.
Obviously these are just my rough numbers, so do your own research, but i would appreciate any thoughts or opinions.
SRG 6mths to 2018A 2019A 2020A 31/12/2020 2021E 2022E Revenue 239220000 486391000 519957000 283299000 626666667 720666667 Other Income 876000 6720000 2414000 558000 240096000 493111000 522371000 283857000 626666667 720666667 Construction cost 92953000 245578000 265297000 146162000 Employee cost 119886000 191388000 207463000 106935000 Other Expenses 19018000 32459000 35347000 10251000 Total Operating Expenses 231857000 469425000 508107000 263348000 0 0 EBITDA 8239000 23686000 14264000 20509000 47000000 54050000 3.43% 4.80% 2.73% 7.23% 7.50% 7.50% Less: Depreciation 6928000 9498000 19119000 11066000 23000000 23000000 Amortisation 92000 6621000 5082000 2007000 4014000 4014000 7020000 16119000 24201000 13073000 27014000 27014000 EBIT before Impairment 1219000 7567000 -9937000 7436000 19986000 27036000 Impairment Expenses 24761000 0 Equity Accounted Investment -1011000 -522000 -2779000 6000 12000 12000 EBIT 2230000 8089000 -31919000 7430000 19974000 27024000 Less Finance Charges 628000 1345000 2962000 1368000 2736000 2736000 Profit before Tax 1602000 6744000 -34881000 6062000 17238000 24288000 0.67% 1.39% -6.71% 2.14% 2.75% 3.37% Tax 409000 -2675000 -5194000 2490000 5171400 7286400 Profit after tax 1193000 9419000 -29687000 3572000 12066600 17001600 Shares on Issue 169023570 402445380 444399625 445798415 445800000 445800000 Earnings per Share 0.0071 0.0234 -0.0668 0.0080 0.0271E 0.0381E
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