PBH 0.00% 47.0¢ pointsbet holdings limited

Ann: PointsBet Enters Agreement to Sell US Business, page-153

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    In response to the news, the broker has retained its speculative buy rating with a heavily reduced price target of $2.00. This implies potential upside of 48% for investors over the next 12 months.

    The broker explains that it now values Pointsbet shares with a sum of the parts model. It ascribes a 72 cents per share valuation to the Australian business and a modest 8 cents per share valuation to the Canadian business. The balance reflects the proposed capital return from the US business sale. It explains:

    Following this announcement we move to a sum-of-the-parts valuation and assume the sale of the US business proceeds and $1.085 – the mid point of the range – is returned to shareholders. On top of that we assume a A$220m valuation for the Australian business ($0.72 per share), a token A$25m valuation for the Canadian business (A$0.08 per share) and cash of $35m ($0.11 per share). This equates to a valuation of $2.00 per share which is a 31% decrease on our previous valuation of $2.90. At a $2.00 valuation the expected return is still >30% so we retain our BUY (Spec.) recommendation.
 
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