Based on last three year figures, the company's EBITDA margin is...

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jian10au

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22/10/18

23:38

Post #: 36217574
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Originally posted by pCap: ↑

I've been running some numbers on the downgrade. This is clearly extremely disappointing, but with the share price down ~40%, its always good to take a fresh look before hitting the sell button;.

- I've assumed TRS generates about $9m NPAT for the full year 2019, reflecting a modest loss in H2 in line with H2 2018 (I can build a case for a higher or lower number, but this seems reasonable given various initiatives that should impact the H2 result);
- This should mean an EBITDA (before any lease adjustments under the new standard) of ~$33m;
- These numbers should allow a dividend of about 19c for the full year, and free cashflow (after dividends) of about $5M, with a year end cash balance FY 2019 of c$20m;
- At the current share price, this gives a fiscal 2019 EV of $60m, EV/EBITDA of 1.8x, P/E of 8.6x, and a dividend yield of 7% (9% grossed up for franking credits).
- EV/EBITDA of 1.8x is extremely low for a company with net cash, profitable and still generating good free cashflow;
- Accordingly, if this doesn't shake out a private equity bidder, then I don't see what will, as a low EBITDA multiple drives a very attractive private equity IRR;
- This obviously assumes that the business model is still viable, but given the scale and position of TRS and the success of this format in US, UK and Canada, I don't see why it can't thrive with the right strategy.

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Based on last three year figures, the company's EBITDA margin is at 40% to 42%. Curious about how you project a 33m ebitda as in under the base scenario.

Any way, even let's just assume TRS only has an ebitda of 20m, the current market price indicates an EV/EBITDA below 3X, which seems unreasonable low from my perspective (well below 10X median for aussie retailers)

Yes, the company is having 100m per year rental payment out of its cash book but historically, the company always having positive 30-35m CFO after servicing rental payment.

What is the biggest risk the market is perceiving at this moment?

Last edited by jian10au: 22/10/18

TRS Price at posting: $2.59 Sentiment: Hold Disclosure: Not Held
1 Upvote

0 Great analysis

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Based on last three year figures, the company's EBITDA margin is...

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