The “dream deal” of a huge takeover premium may have gone, in the short term, but this is a tremendous deal for SFH when you consider the cold, hard numbers. $31m cash for $6.2m of EBITDA losses, plus selling at the optimal point of the working capital cycle.
City Chic must be some business to have grown strongly through the retail downturn, especially with a cash strapped parent. Pro forma EBITDA to June 2018 of $20m.
Even if you 0nly put it on a multiple of just 5x EBITDA you get a share price of 55c.
SFH Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
