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$1.22 specialty fashion group limited

Franking Credits 23c per share, page-6

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natnicnak

2,061 Posts.

133

08/02/17

17:35

Post #: 22464203
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Originally posted by madamswer ↑

By my modelling - which, given the nature of things, is a bit rubbery - an acquisition consideration of 70cps equates to a FY2018 EV/EBITDA multiple of 5.5x.

So, not exactly paying over the odds here.

And I guess they are buying in immediately prior to some of the benefits of chopping off the tail of loss-making stores manifest themselves in improving profits and cash flows. So, their timing looks impeccable.

But given the open register, as well as the fact that the SFH board are in active engagement with the would-be acquirer, this looks like a done deal. (I'm a bit surprise the stock isn't trading at 68c or 69c)

I guess that the offshore entitiy(ies) involved in this bid will have no need for franking credits, meaning that the acquisition consideration could - if it included a large special dividend component - be quite tax effective for Australian-domiciled shareholders.

But the problem is that the company has no retained profits out of which to pay any special dividend, so I'm not sure those franking credits are able to be used as a sweetener in any deal that gets done.

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As mentioned, need 2017 half year results released to be able to gauge effective 2017 ebitda multiple being paid otherwise lack of information to make an informed decision.

SFH Price at posting: 65.5¢ Sentiment: Buy Disclosure: Held
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Franking Credits 23c per share, page-6

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