Dhukka, some really good points about margin expansion and...

Dhukka, some really good points about margin expansion and earnings potential. Using a WANOS of approximately 87,650,000 for 09/10, on my figures EPS should come in at around 1.5 to 1.6cps. With the margin expansion and a 30% growth from existing numbers (i.e. existing EBITDA of over 300,000 EBITDA per month) I think its reasonable to expect EPS of between 2.2 and 2.5 cps for 2010/2010. 30% growth assumptions seem reasonable given recent performance, and also the possibility of BGL cementing further relationships with solid channel partners, and also given the capacity available given the ongoing strong CAPEX spend to increase capacity.

Aside from organic growth there is still the prospect of adding additional EBITDA through acquistion of the smaller players (i.e. Wizz mark II etc) and potentialy substantial EBITDA contribution if a CVA - BGL tie up is ever consumated (on this point check out the recent notice of EOGM for CVA - a corporate soap opera playing out right before our eyes). On the point of growth by acquisition, BGL has absolutely NO debt. So I think it would be sensible to add in a moderate level of debt to fund any new acquisitions, to allow the acquisitions to really ratchet up earnings. Banks would happily offer debt given the free cash flow of BGL. Even if debt of only 2,000,000 was taken on board, given growth rates that could probably be paid off in full from cash reserves in 2 to 3 years. So bascially there is a really good scope for growth in the next 12 to 24 months.

Another interesting observation - check out Amcom (ASX ticker: AMM). Its a telecoms network owner, although I think most of the network is fixed wire etc. Anyway the earnings profile of AMM is very similar to BGL, but just 12 months in advance. AMM had EPS of .017 for 08/09. Analysts are forecasting EPS of .025 for 09/10. AMM share price is currently 30cents+. Actually it hit 30cents per share on about January of this year. So on that basis it would be reasonable to assume that the market would take the BGL share price to around 30 cents per share by January 2011 on the expectatino of earnings for 10/11 of between .022 and .025. Of course thats on the basis that markets dont collapse in the second half of the year on increasing jitters about soveriegn debt, overheating china, Rudd making a right mess of the OZ mining industry etc....