FBR 4.76% 4.0¢ fbr ltd

@BrIcKyBUMDilution is not necessarily bad,Keep your head up,...

  1. 613 Posts.
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    @BrIcKyBUM
    Dilution is not necessarily bad,
    Keep your head up, look at the numbers.

    Assuming that the value of a share after the contract with CRH will be 34C (AUD), and the market value of the company will be $1B (USD).
    Then the company dilutes (without discount) 10% of the company.
    The company received 100 million dollars (USD), which will allow them to establish WAAS branches on their own.
    These 100 m are going to generate an annual net income of 200 million dollars for the company.
    And then if the company trades at an expected multiple of 20, then that would push the company's value to $4B (USD).

    Will the dilution be bad in this case?
    The dilution increases the value of the company by 4 times.
 
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