Assuming the company pays out the dividend and capital return as...

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Schmucky

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05/12/23

21:22

Post #: 71289506
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Originally posted by hyperreal: ↑

Sure, as a I noted, on a look-back basis the business looks very cheap. However, you need to put the 0.95 cps EBIT into perspective.

In FY22, HwB did $6.5m in 10 months (to be conservative say, $7.5m for full year). So the business went from $7.5m EBIT to $2.4m EBIT between FY22 and 23.

So, it looks like as the Covid lockdown-induced tailwinds wear off, this business will have its work cut out to arrest the decline in performance and ensure that the 0.95 cps EBIT is sustainable.

I do not know the industry well enough to be willing to make a call as to whether it can do this.

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Assuming the company pays out the dividend and capital return as announced. There is total value to shareholders of 36.6c (inclusive of franking credits). Cash distributions amount to 31c.

Based on entry price of 39.5c, you are ascribing a value of 4.3c per share to the Hampers business (excl cash carried in the business and if you value franking at nil). This means the business is worth ~7.4m. (4.6x multiple of NPAT). Personally it looks cheap if they can maintain and increase NPAT over the coming year. They did purchase the business for 25m only a few years back so thats alot of shareholder $$$ gone. If they get remotely close to returning it to historical levels this would be a steal.

PTL Price at posting: 41.0¢ Sentiment: Hold Disclosure: Held
4 Upvote

1 Great analysis

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