Thanks for your thoughts. I agree with your points. I've been working on my own - see cut/paste below. Would appreciate any thoughts you have on these. Cheers, Simon
Thought/observations from pack
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- Large acquisition - approx 50% revenue. Acquisition could be transformational eg. Similar to AX1 acquiring HYPE, giving them scale, talent and ideas.HLA should avoid the stock overhand that AX1 suffered as deal is mainly cash.
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- Good complementary geographically fit. New clinics providing growth options via adding services to sites.
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- Both Back in Mortion and Healthia experiencing 8-9% organic growth
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- 7.15x EBITDA or 12.1x NPATA are full multiples … but with Clinic Classon better multiples, shareholders actually pay 12.7x NPATA!
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- Acquisition is earnings positive … as HLA is trading on higher multiples (debt multiples actually decrease as part of deal).
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- BIM has considerably higher EBITDA and NPATA margins. … BIM is a more profitably business than HLA. This is only partly due to HLA's public company overheads.
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- Synergies are not discussed in the pack?
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- Capital raising ratio is 1:2.7 … retail holders heaviliy diluted as only offered 1:4.3 (however the sock likely needs insto's to drive interest/demand from a wider range of investors).
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- Strong board participation
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Upside risks
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- FY21 revenue impacted by Vic lockdowns. FY22 will be too, but once acquisition is completed, there should be few (if any) going forward.
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- Provides sites and scale to improve revenue with infill of other offers.
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- New growth opportunities via BIM's pilates, dieterics embrionic offers
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- HLA could learn from BIM on how to becomes more profitable
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Downside risks
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- large acquisition integration issues (franchisee to employee).Likely to have at least a few problem franchisees.
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- More lockdowns (surely not??!!)
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- HLA may not be able to maintain BIM's historically higher profitability.
HLA Price at posting:
$2.20 Sentiment: Hold Disclosure: Held
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