I've increased my holding by 50% for an average of about 27 cents now. While I'm not too happy with the current share price, and the miserable performance in assimilating the various businesses in the last few years, I think the confirmed 38m "underlying" EBITDA puts them well into the "buy" basket. I'm very much expecting a chunk of this to be eaten up by the "one off" wrote off's or expenses that somehow manage to happen each year, but am still positive about the underlying result.
They have some good economies of scale now compared to even 12 months ago and are in a recession proof industry with demographic driven growth built in. To be honest, their past ability to drive EPS growth from acquisitions has been atrocious, but it looks like things are settling, and $38 mil EBITDA puts them on an EBITDA to market cap ratio of less than 4 which is crazy in a growth company. Their dividend will probably be around 6% yield so I'm quite happy to have a fair bit of capital parked here. With ongoing integration benefits and modest organic growth, I think 40 cents isn't inconceivable in the next 12-24 months, and for a company with that sort of potential I think it's pretty safe with debt being paid down quite quickly, low debt to EBITDA ratio and plenty of cash in bank.
PGC Price at posting:
22.0¢ Sentiment: Buy Disclosure: Held
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