I did some calc. and conclude that the dilution are actually not at all bad.
Hear me out
So existing holders now own an equivalent of 17.6% of ANQ. That sounds bad, losing more than 80% of equity. But that's only on the ownership perspective.
Dilution should be viewed from the per share basis.
Market price for past two years average $0.002 ps. Or $5.2M total.
The offer value ANQ at $20.91M, or $0.00138 ps - at post conversion share outstanding of 14.9B shares.
By offering four times market price, the 5.6 or so times dilution ain't too bad.
Work out simply, ANQ was worth $0.002, it is now worth $0.00138, or only 31% less on a per share basis.
That's quite impressive given we'll be debt free, with cash and two major shareholders we can either ride along with or get screwed by.
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10 bagging:
It will be hard and while I'm optimistic we're very likely to win Nowra and Adelaide - expecting it in next 12 months... in terms of timing we can't be too optimistic. BUT...
If base price is $0.002 ps, with 14.93B shares after the dilution. For a ten bagger [i.e. at $0.02 ps], the market need to price ANQ at $298.6M. Not an impossible figure to hit.
Why?
If the market view ANQ as a growth company or not.
Market will put a growth premium on it if it win, say, two projects in quick succession, a couple smaller consulation/modularised job with XEPT's existing plants...
Growth multiple could be 25 times earnings; moderate at 15 P/E, standard would be 10 say.
So for ANQ to hit $298.6M market value [10 bag], if market like its growth story it'll just need to earn $11.9M [3 Shenton Park equivalent?]
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Summary of my thoughts on the deal here at me little blog:
here
