nice update

Things seem to be going pretty well on today's announcement. The acquisitions are essentially immaterial, but all else looks to be running ahead of schedule.

Firstly, i'd note that all those forecasts given today appear conservative to me. What they've basically done are flatline projections based on how the business went in Nov-Dec '06 (it earned $3.6M EBITDA in those two months). I reckon they've forecasted like this:
- 4 months Jul-Oct '06 made $3.5M EBITDA
- 2 months Nov-Dec '06 made $3.6 EBITDA, which equals $1.8M EBITDA per month.
- Therefore, 6 months Jan-Jun '07 EBITDA forecast is (1.8*6) = $10.8M EBITDA
- Sum of 10.8 + 3.6 + 3.5 = ~$18M FY'07 forecast EBITDA. Presto!

Given that the business seems to have improved further between December '06 and now, i think these forecasts have the potential to be exceeded by 10-20%, meaning i reckon they'll pull in ~$21M EBITDA for FY07.

Also note that the forecast they gave today predicts a very low PBT:EBITDA ratio of 56% (i.e. 10:18). The historical PBT:EBITDA ratio of PCH is much higher at around 75% - all this means i reckon they'll do significantly better than the $10M PBT they forecast today. If they get ~$21M EBITDA and we use a conservative 60% PBT:EBITDA ratio, that gives a PBT of $12.6M. Sounds pretty good all of a sudden!

Also, it's worth noting that this year's EBITDA, i think, is going to go close to the $23M they got in 2006, but they're going to achieve this after a terrible 1st half of the year. Good signs again.

One thing is for sure - the broker forecasts are way short. The mean broker FY07 forecast is 4.2c EPS, but on my numbers, assuming PCH pull around $12M PBT with a 20% tax rate, i reckon PCH will get something between 5.5-6.2c EPS.

So all in all, things are turning good again pretty quickly after an ordinary 9-12 months. Hopefully a few more big contracts are in the pipeline and the FY'07 results can match or exceed my forecasts.