The AASB16 impact you and madamswer have mentioned are particularly relevant for valuing edv. The EV/EBIT and EV/EBITDA multiples I still in my head have anchored to the old multiples that were used pre AASB 16. Unless we adjust for it (AASB 16 impact), I think we have to move to a P/E multiple to value this one, as has been mentioned the "D" and "I" from leases are disproportionately large for edv compared to most other businesses so the relevant multiples for EV won't be comparable unless we adjust them (unfortunately then we need to adjust other businesses as well to compare if we are trying to work out relative value). I still think of the operating lease payments as operational expenses fwiw and for valuation purposes I think we have to think this way, otherwise we are valuing different companies differently (i.e. we need to adjust for aasb16 impact). My shortcut method is for companies that have very little leases can use the most relevant of ev/ebit or p/e, companies with significant leases use p/e unless I have the energy to calculate adjusted ebit/ebitda.
I digress, regarding spin offs, there is a book which I found very useful on the topic by Joel Greenblatt (it had a bit of a tacky title which I can't quite remember but I thought it was quite a good book). It is set in the US stockmarket but the data showed buying the demerged company had very strong returns compared to average market returns. From memory around a year post demerger was on average around the best time to purchase although this obviously will not always be true.
I think edv is a strong business but it's not cheap enough at the moment, however I'll be watching over the next 12 months to see if the stats come good on this one for a purchase.
EDV Price at posting:
$6.44 Sentiment: None Disclosure: Not Held
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