Hello Pioupiou thank you again ...
I have a (psychic?) suspicion $3.74 is the exact number target sought by James Gerrish, of Livewire and the Platinum Fund.
And your presentation and translation of processes used by James, and Robert Frost of OC, and all the others doesn’t only invite discussion from others who can converse in this language (like
@KKLL and
@SimonGr and
@Danzar and important others)
.... it educates and reassures me and the rest of the less-savvy ones I persist in believing are out there.
Regarding other perspectives on the numbers, FN arena said; (
https://www.fnarena.com/index.php/2019/12/03/nrw-holdings-diversifies-growth-options/)
“
Based on consensus estimates the acquisition implies pro forma FY20 accretion to earnings per share of 14% pre synergies and 27% post synergies.”
On this point NRW said ; “
Highly EPS accretive: >14% pre synergies and >25% post-synergies1” (BGC Acquisition Presentation)
... so the broker consensus on post synergies was higher than what NRW was prepared to enumerate.
Regards the individual brokers who were quoted it said
“
Citi forecasts BGC Contracting to deliver $56m in earnings (EBIT) in FY21, including $15m in synergies.”...
.. “The broker increases FY20 estimates for operating earnings (EBITDA) to $228.8m to reflect around seven months contribution from the BGC Contracting acquisition.”
NRW said :
Targeting pre-tax synergies of $15M pa.....
..Good visibility on FY20F earnings, expected to generate revenue of ~$850M, EBITDA of ~$100M.
View attachment 1876300
NRW also said it expected combined earnings to be between $2280M to $2520M
...Which means Citi agreed with the $15M in synergies, took NRW’s lower EBITDA estimate and expects depreciation and amortization to account for ~$44M?
FN Arena did not give a target price from Citi but said;
- Moelis rated NRW as a BUY - Current target $3.40 (with upside depending on contracts)
- UBS - BUY - Current target $3.85 (upside depending on synergies and contracts)
But UBS wanted more information about BGC’s aggressive depreciation schedule compared to NRW’ “
as well the divisional margins, in order to assess relative operating performance.”
This is broken down enough for me to try to ‘crunch’.
- If there is a comparatively aggressive depreciation schedule at BGC, might this likely has something to do with the possible pending sale of equipment to the mystery client?
NRW said : (BGC) “
Value underpinned by a fleet of over 200 items of high-quality mobile mining equipment with a book value in excess of $200M.
It also said ;
View attachment 1876312
....which includes the point that if the client* buys the machinery the net earnings would reduce by around $3Mpa and the finance costs (of $190M) would be reduced by around $154M leaving the remaining fleet etc with attached finance costs of ~$36M?
And the current depreciation schedule of Citi’s ~$44m per year becomes massively reduced ?
Is there a bad side to this ?
Does it mean NRW’s taxes would go up?
-NRW says loss of earnings is comparatively negligible but, besides potential tax issues, are there other consequences?
Eg if the client buys the equipment, NRW would lose most of that “value underpinned by “fleet of over 200 items of high-quality mobile mining equipment with a book value in excess of $200M.”?
Or does this not matter ?
Cheers
*possibly Boggabri ;
41710717
80% Idemitsu
https://www.idemitsu.com.au/mining/operations/boggabri-coal/
(20min delay)