For these comments I have not used Commsec data but I have used A2M "2024 Annual Report" data so you can verify the figures. Page 91 of the report shows at "Net Assets" $1,256,773,000. I.e If A2M sold all assets and paid out all liabilities it would have $1,256,773,000 cash in the bank. Page 143 shows 722,934,808 shares were on issue. Net Asset backing for each share is therefore $1,256,773,000 divided by 722,934,808 = $1.74 per share.
If you and I formed a partnership to buy A2M we would be happy to pay $1.74 per share. But A2m would want a premium to net asset value usually referred to as Goodwill. Often this is 1 or 2 years trading profit. Given forecast profit for 6/25 is .26 and for 6/26 is .30 EPS we would probably pay $1.74 + .26 + .30 = $2.30. I.e we are basically losing 2 years profit for the opportunity to takeover the company.
I don't think we would pay much more than that.
The big question is how many years of profit are we happy to lose to take over the company.
Hope this clarifies. For the record I have a significant holding in A2 and I am in the red. Not happy but hope for improved EPS reporting next week.
A2M Price at posting:
$5.88 Sentiment: Hold Disclosure: Held
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