SGF Strategic Valuation

No valuation threads on SGF so might as well start one.

SGF looks value at $1.80 odd, but someone wants out as seen by the persistent selling over the last few months.

Structurally, the market is also probably nervous of the significantly increased debt SGF has taken on as part of its Aquisition of LeasePlan. Loading up on debt and coming into a future macro environment of supply chain uncertainty, rising interest rates, etc might not have been the wisest strategy with the benefit of harry hindsight.

We also don't know the earnings sensitivity of this business to a rapidly rising interest rate environment, given that significantly rising interest rates has not been a part of our environment for the last 15 years!!!

So with all of the above:
*SGF has traditionally traded in a PE bandwidth of 12-16 times earnings.
*Current PE is around 9 times on underlying.
*Consensus is still for earnings to increase (but given this is a small cap with no much following how much can we trust those consensus earnings??)



As mentioned given its small cap nature I don't have access to a broad array of alternative research articles to test the above forecast earnings.

But if forecast earnings come to fruition, and given the current low PE SGF appears to have value at current share prices of $1.80 odd.

The AGM whilst not giving specific guidance, did not drop any bombshells, except for emphasizing that current market conditions (with its challenges, should persist for another 12 months).

Given all this I took a 1st position at $1.84 (with low liquidity, hard to get a reasonable 1st position except for offering a couple of cents above bid price).

Interested in others views.