I'm not sure I follow the comment about putting money at risk. ASH were the defendant in a class action that has now been settled out of court. The case was based on accusations that they had omitted important information from the IPO prospectus (and subsequently).
That said, with this matter now resolved, the balance sheet is freed up for some form of capital management. In my view, if we assume that the price paid by PPE for their recent acquisition is representative of current LH acquisition multiples (which was about EV/EBITDA of 5.6x - including the earnout), ASH is better placed using its excess capital to buy back its own shares. Based on my 2019 forecasts (EBITDA of $9.3m), ASH is currently trading on an EBITDA multiple of about 3.5x, so it is cheaper to buy itself than other businesses and it is much lower risk. I also think they have good organic growth potential, particularly in the training business given the growing government and industry focus on ramping up vocational training.
ASH Price at posting:
27.5¢ Sentiment: Buy Disclosure: Held
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