Ann: ASGL Trading and Profit Guidance Update, page-25

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27/04/17

12:42

Post #: 24297642
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Originally posted by Glenn_Archer ↑

Couple of big substantials on the book @ 15% each - all in, hold about 15m shares. Tiger Equities and MicroEquities. What are there intentions & how much have they sold?

At 26c, this is an out and out asset play.

Market cap $13m less $4m in cash = Enterprise Value of $9m.

If you go to the accounts, they show the assets of the 8 companies acquired & then the 'goodwill'.

All in, there were assets acquired as follows - plant & equipment of $2m, inventories of $3.9m, tax benefit of $0.3m. The liabilities were provisions (presumably employee entitlements) of -$1m. So gross assets of $6m, net of $5m. EV of $9m means you are in effective paying 1.8x net assets, a bit lower for gross assets.

This ignores what they paid for the business franchises themselves, as represented by the goodwill of $23.8m, split as follows:
Roo Systems $4.6m
Barden $9.5m
Alloy $3.8m
JDR Motorsports $1.1m
Dolium $0.6m
Transpec 4x4 $1.4m
Deering $0.8m
Umhauers $2.0m
Off course, the issues is the 'big 3' companies in terms of goodwill are the three that are not performing as well! But say you need to write-off 50% of the goodwill on these three to reflect the poorer trading conditions.

This leaves the following calc:
Goodwill $15m
Net 'Hard' Assets $5m
Total Assets $20m
EV $9m
4wd trading at 0.4x book value assuming you can get $15m for the 8 companies on market!

Seems very cheap given there is not external debt - so you are discounting a conservative view of the assets by 60% to account for the obvious cross against management, the short-term liquidity concerns re the unknown intentions of the substantial share-holders & the as yet unknown impact on short-term working capital for 3 of the 8 businesses!

On the 'watch-list' for me ....

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Value trap imo. These profit warnings are seldom isolated, and the share price rarely recovers back to full health. Good will has been permanently shredded in this instance. Best scenario a slow long grind back.

4WD Price at posting: 26.5¢ Sentiment: None Disclosure: Not Held
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Ann: ASGL Trading and Profit Guidance Update, page-25

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