"So if margins remain the same then NPAT will be on the low-side about 16.8million.With 217 million shares on issue that is EPS of 7.7 cents.At current price PE is about 15."@master of sin,
Be careful of the financial maths here, because the way they have presented this update is a bit naughty and can be very misleading: they have provided a 9-month, financial YTD update, saying that EBITDA is down 11.6%.
And while that figure looks bad enough, when one considers that DH18 EBITDA was actually
4.4% higher than pcp, it means that EBITDA in the March quarter of 2019 had fallen into a very large hole (
down by more than 30%(!) on pcp, by my reckoning).
It is therefore dangerous to extrapolate the 9-month YTD figures to arrive at annualised numbers on which to base valuations (despite June halves being seasonally weaker than December halves for BLX).
For that reason, the projected FY2020 earnings numbers are the more relevant ones and, for mine, using the current half as the base for earnings (i.e., ignoring DH2018 which was still cyclically high given it caught the tail end of the housing construction boom). I think NPAT in FY2020 will struggle to be much higher than $15m (7cps).
On that basis, after today's share price moved, the stock is valued at around 15x P/E and ~9x EV/EBITDA (the EV is somewhat elevated after the ~12m purchase of the Brisbane DC last year, settlement of the transaction which has occurred in the current half), Net Debt-to-EBITDA will currently be around 1.0x to 1.2x, compared to 0.3x @ 30 December 2018).
Which makes the stock seem to me to be, at best, reasonably valued.
And I strongly suspect it will remain that way for the next 12-18 months.
I'm no good at timing these things with 100% accuracy, but I suspect a better buying opportunity might arise at the time of the release of the full-year result, when the evidence of the current difficult trading conditions becomes evident.
And when there is the sticker shock of the inevitable cut to the dividend, which is likely to be meaningful. For a small cap company, BLX has a rather high number of small retail shareholders, who are unlikely to be happy when they see their dividend being cut and with BLX being such an illiquid stock, it won't take much selling activity to impact the share price.
I expect I'll be a buyer of BLX in that situation (assuming, of course, that my assessment proves to be accurate).
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