Cash flow positive?, page-37

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Dr.Who

4,679 Posts.

145

05/05/16

17:43

Post #: 17688451
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Originally posted by Dr.Who ↑

I would be happy to offer a conclusion Harm. To service its debt SGH must produce $200m+ FCF up to YR 4 therefore it is logical that would continue.

Yr 4 $200m
Growth 5%
Discount Rate (risk off debt under control) 10%

200*1.05 = 210/.10-.05 = 4200

Present value 4200 = $2868 / 400 SOI (adjust for warrants)

Share value $7.17

The question is when will funds decide to get in and drive it towards that value? I think we have another massive jump in us this year, probably a drift up leading into FY result and then a big jump on FY result to pre-AGM of $2.6o. A 5 bagger from here in four months.

At $2.60, it is only just starting its journey back to something like fair value. Likely consolidate rest of FY17 pending confirmation on track.

The really good thing in all that is the calculation assume only producing enough to service debt and W/C and no more. I actually think we will surprise to the upside when things settle down in a couple of years.

It has to be said nobody can predict the market so it is all guess work but guesswork based on some logical figures.

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To those questioning enterprise value multiple - I say a multiple of approx 6 initially (this year) is very low (EBITDA $300m)

1800/300 = 6

Actual will be better, it will be dynamic constantly moving in the right direction.

SGH Price at posting: 48.0¢ Sentiment: Buy Disclosure: Held
5 Upvote

0 Great analysis

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