H1 FY21 Report - Guidance for Continuing Strong Growth, page-6

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26/05/21

15:01

Post #: 53431020
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Originally posted by madamswer: ↑

At more than 40x FY2021 prospective P/E and almost 30x prospective EV/EBIT, I certainly wouldn't describe that sort of valuation as representing a great opportunity.

By my reckoning, the company's earnings will need to grow by 15%pa for the next 4 years to reach the sorts of multiples which I think are fair and reasonable (viz., 25x P/E and 15x EV/EBIT).

Don't get me wrong: I like the business. A lot.
It's just the valuation I don't like.

Of course, I might be completely wrong in thinking in terms of 15%pa earnings growth over the next 4 years.

With the legacy licencing business now approaching irrelevance, the overall growth rate of the company will be akin to the growth rate of its SaaS offering, namely 15%pa at the Revenue line which, given the operating leverage inherent in the P&L, would translate into closer to 18% to 20%pa at the bottom line.

I think that only in that decidedly bullish case, could 40x P/E and 30x EV/EBIT could be justified as being reasonably attractive.

.

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You are nor wrong.. But unique business (like csl) don't follow normal PR's standard !

TNE Price at posting: $9.00 Sentiment: Hold Disclosure: Held
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H1 FY21 Report - Guidance for Continuing Strong Growth, page-6

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