* Strong asset backed business
* $25-27m EBTIDA
* EV/EBITDA is at a stupidly low 3.9x (FY15)
* Debt is low at ~0.9x EBITDA
* Strong cash-flow, taking out tax, interest and debt repayment (assume 50% non-amort) gives ~$13-$15m cash-flow
* Their dividend was 24c which at $5.3 a fully franked yield of 4.5%
* They should be able to continue that dividend level as that is only $5m of their $13-$15m operating cash
* People are focused on P/E and the NPAT which looks bad but there is huge leverage in the Data Centre (fixed costs already being incurred)
* That empty data centre will fill at some point and will significantly increase EBTIDA and more importantly for those that focus on PE, any new Data Centre sales (excluding power) will drop straight down to NPAT.
* The company has made the big investments which have taken longer to eventuate which has hit the share price. You now get to buy the business at the turning point now with the CAPEX spent, a fantastic facility and a strong sales organisation that you have to assume will fill the DC over time.
Other key points to note
* It's not trading that far off its book value
* Perpetual have been buying like crazy (~13% holder now) these are the same guys who purchased VOC at $1.70 range before the market woke up to VOC
* MAQ must be a serious acquisition target at these levels
* Someone like Vocus, NXT or TPG could buy this and pay a 100% premium to get the brothers out and it would still be accretive even before synergies (which would be huge).
* Vocus has purchased smaller data centres without the brand and scale of MAQ at typically 4-5.5x EV/EBITDA so current levels with the upside of empty facilities is seriously cheap
* They are trading on 3.9x EV/EBITDA against other Telco/DC peers who are 8-10x
I'm going hard into this one, as I can earn a ~4.5% franked yield and have a pretty good chance of getting 50-100% capital gains on a take-over / take-private or just over time as they start to fill the facility and FY15/16 results start to reverse the downward trend.
MAQ Price at posting:
$5.24 Sentiment: Buy Disclosure: Held
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