Valuation, page-5

  1. 3,856 Posts.
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    Auto sector

    There was an interesting deal announced on Friday : the purchase of Redflex.
    The buyer offered a premium of 130 % vs the last traded share price.

    Redflex is "the world largest developer and operator of red light and speed enforcement systems".
    Around half of its business is done in the US.
    It is an interesting company because a large part of their business is recurring and they have a high retention rate. However, the stock has been quite volatile, mainly due to the changes of regulation.
    Among the listed companies in Australia, Sensen Networks is probably the most comparable, even if they also have other businesses (ex. in the gaming sector).

    I am not really surprised that such a deal happens in the auto related sector.
    Overall, a lot of small/micro caps in this sector look cheap, unlike the bigger caps.
    Among them : National Tyre, RPM Auto, ASG.
    Of course, not all of them are the same quality, so it is important to do a detailed work on each of them.

    Full disclosure : among these companies, I only own National Tyre (NTD).

 
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