Where to from here, page-59

yep that's a great example.

but it's worth bearing in mind that whilst she downgraded SGH to underperform, she had a 6.56 price target on it! The key feature that you needed to extract from that note was:

"Underlying business – muted organic growth and FCF​

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Our deep dive into the AUS business suggests organic growth has been muted (c2%) in FY12-15E and suggests to us the division has reached a plateau. Results of our FCF analysis are concerning and suggest: (1) despite consistent growth in EPS, FCF per share returns have been volatile; (2) conversion has been weak; and (3) reported FCF seems partially reliant on acquisitions.​

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PSD concerns – fragmented business and execution risk​

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We have completed a forensic analysis into the underlying composition of PSD. Our analysis suggests: (1) the PSD division seems fragmented as it appears Quindell constructed it via 20 different acquisitions over 2011-14; and (2) the SoTP value of PSD is £265m which is significantly lower than SGH’1 £637m acquisition price"​

Now her price target was bunk, but that's not the important part of the note.