ORL 0.00% 43.5¢ orotongroup limited

Have you checked out the Aussie offering for Brookes Brothers?...

  1. 3,808 Posts.
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    Have you checked out the Aussie offering for Brookes Brothers?
    Chemist warehouse has a classier looking offering, once GAP is out of the way as well I would be very surprised if there wasn't going to be some serious stakes built in ORL by Premier/David Jones/Myer or maybe someone other multinational looking for an Aussie target.
    This will need some real patience, may languish this low for a while (years) although we should be able to get some half decent divis over the next few years without the nooses around our necks, I can afford to be patient as I'm not leveraged and have plenty of time on my side.
    I certainly don't see much possible downside from here but plenty of upside over the longterm if you have lots of patience.
    Should be able to generate comfortably above $10m per year in profit without GAP and Brookes Brothers, I would call that VERY conservative( I think $12m is reasonable) and we should be debt free and hopefully carry a decent cash buffer if an exit from GAP is negotiated at a half reasonable price, realistically it will be a large loss but the balance sheet can handle it IMO and would make ORL a decent cash cow.
    In the end it looks like ORL will have sunk around $10m into Brookes Brothers in total and will end up sinking at least that into GAP, in the last half year they carried $5.6m in debt and that would now be around $13m and we still have commitments to three more GAP stores being opened in H1 2016.
    If they keep paying divis at around 4cps per half I'd expect debt to peak at under $20m (hopefully less than $15m), should be very easy to be debt free by the end of FY2016 and have a profit in the region of $12-15m in FY2017.
    All IMO, DYOR and goodluck
 
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