Thought the investor presentation was interesting :Homeground:...

Thought the investor presentation was interesting :

Homeground: Given that the asset has been for sale for a long time and they couldn't find a buyer I would assume that the AUD 57 MM mark is too optimistic. If you assume they can get half that amount, they would have to leave the proceeds largely in the business for working capital requirements. So for a sum of the parts Homeground one should probably assume assume zero to negligible value

Court cases: Wasn't there also a positive expected value for the Balla Balla dispute? Looks like that positive value seems to have not materialized. Also note that the RDP case initially had a maximum upside of AUD 60 MM which has now come down to 30. The wording of Sunraysia expected outcome guidance is very strange not quite sure what they are trying to say. If you took the midpoint of the range you end up with AUD 30 MM gain. Given how this has come down over time and managements history of being quite optimistic, taking the midpoint feels pretty generous. Also find the discussion incredibly fuzzy, which does not inspire confidence. One would expect more detail on possible worst case, how much these parties have collected so far and what incremental P&L and cash flow impacts would be under different scenarios.

Guidance: If you assume the low ends of guidance (rev 500 MM, 8% gross margin), you end up with AUD 40 MM gross profit in 2022. Overheads at AUD 28 MM (which btw have come down substantially only relative to the hopefully exceptional 2020; find that a bit disingenuous). You end up with AUD 12 MM EBITDA. Assuming about AUD 5 MM D&A and something, say AUD 4 MM, for interest and surety providers leaves you with AUD 3 MM profit before tax which should be same as after tax given the tax loss carry forwards. Given the volatile history, very thin profit margins and generally low valuations in the space hart to see how you would value this above 10x or AUD 30 MM. True maybe there is some upside to the guidance but historically the surprises were largely to the downside. But let's say optimistically they get to AUD 10 MM post tax. At that point you could argue for maybe AUD 100 MM for the business and something for the court cases, say AUD 120-130 MM all together. That is a double from here but feels like a quite a bit of execution risk to get there.Balance sheet: there is actually not a lot of buffer against a negative event. If they ever had to another AUD 20 MM loss or so they would probably need to raise capital again which would probably be tricky.

Seems like the current share price is at the upper end of what one could argue is fair value. I acknowledge that there a few points on which there could be a possible positive surprise, but based on the current numbers it is hard to get excited.