The purchase of WA based construction and property management business Rapley Wilkinson at $40 million, (by way of $14 million in script and $26 million in cash), is funded by a $2.35 per share institutional placement.
Euroz expects the acquisition to be EPS accretive in 2009, and will add around $100m in revenues and $7 million to $8 million to NPAT.
In our view NOD has continued to experience growing pains in pockets and, while still growing strongly, this may result in a meet, rather than beat, of full year guidance. That said, the acquisition of Rapley Wilkinson looks a well conceived addition to the NOD portfolio, increasing product diversity, further modular building capacity and potentially a platform from which to add a "Build Own Operate" business, a model the investment market appears to place in high regard (refer Mac Services Trading metrics of circa 17 x consensus 2009 EPS).
Euroz say that the order book for 2009 in Rapley is 75% locked away.
Euroz analysis has NOD trading very cheaply at 9.9 x the indicative 2009 forecast EPS of 24.3c (normalised 2009 NPAT of $33.5m) which provides a good buffer for integration risk. Euroz also see a very strong growth profile for NOD and note NOD's moderately geared balance sheet at 28% net debt to equity.
NOD Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
