Ann: Record quarterly performance and poised for strong growth, page-9

That correct.

The irony is RPM's trading multiple prior to this announcement was LOWER than what they've been buying businesses for! Traralgon was done on a 3.8x multiple.

In their last investor presentation they said their target multiple for future acquisitions was 3x to 5x. That provides a rough lower bound multiple of what the GROUP should be valued at.

Clearly you'd want a higher trading multiple than a purchase multiple or you're destroying shareholder value. For this size business, you're probably looking a multiple of 6x to 8x EV/EBITDA which is still scary low. That's probably justified for now given the size and lack of track record but I'll show you why there's still a large opportunity here.

Given we know they're acquisitive, I can apply the cash holdings to a theoretical acquisition. If I use say $5m of my cash balance leaving a ~$2m buffer for working capital, I can buy $1.25m in EBITDA at a 4x multiple. This only assumes I use cash. If I use debt, I can buy more profit but let's keep this simple.

I also believe the company is low balling their forecast so they can show a 'beat' at the end of the year. I'm ok with that but I think they will comfortably do $5m to $5.5m in EBITDA for the year.

So if I use $5m EBITDA and I buy another $1.25m in EBITDA with my cash, my run rate EBITDA is $6.25m.

Using the mid point of my 6x to 8x multiple on what I think the Group should be valued at gives me an EV of $43.8m (i.e. 6.25 * 7). If I add back cash of say $2m then my market cap is $45.8m, which translates to a share price of ~40c using 115.2m shares on issue. This excludes any growth or synergies!

With the very tight share register it's not hard seeing that this can bag from here. GLTAH