I should also add that with the additional 2m from refinancing the cash flow yield is close to 10%. Once companies are at this kind of FCF yield and if it is sustainable they should do very nicely over the long term. I also expect that as gearing is reduced that yield will increase due to lower interest payments.
The only fly in the ointment is Star Vegas once the 60m agreed upon EBITDA expires. Hopefully the Star is not being squeezed to produce this value.
It should be noted that this is way below what was forecasted last year by analysts (I am looking at the Bell Potter report). To be honest in hindsight many of their assumptions were massively optimistic.
Hopefully DNA should tick along nicely now and gradually improve that FCF. I am still happy with the valuation of 60 - 80 odd cents I said before. I feel on current performance this is not a $1 stock, but at the current price I still think it looks cheap - that is plenty of FCF for the price!
Andrew
DNA Price at posting:
43.0¢ Sentiment: None Disclosure: Held
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