Timboo, you are being conservative. If the remainder of the debt facility, ~$80m, is successfully deployed at an EBIT acquisition multiple of 5x, implies additional EBIT of $18.5m to AFJ. Add that to AFJ's proforma FY15F EBIT of $28.5m = post debt funded acquisition EBIT of $47m.
AFJ is currently trading at FY15F proforma EBIT multiple of 7.6x. GEM is trading at FY16F (note 2 years out, not the inflated next year multiple) EBIT multiple of +10x.
At 7.5x EBIT, AFJ valued at $350m or $2.10/share.
If we use GEM like metrics, AFJ valued at $470m or $2.80/share.
I think $2.50/share by June 2015 should be your target Timboo!! Obviously there are risks surrounding execution, integration and overpaying ... but plenty of that already discounted in the current share price.
AFJ Price at posting:
$1.30 Sentiment: Buy Disclosure: Held