Ann: Preliminary Final Report (App 4E) year ended 31.3.17, page-5

@blackcap,

The stock is rising because they said that sample flow volumes were rising.

Remember that this is largely a fixed cost business, so changes in volumes (i.e., Revenue) drop almost through to the bottom-line, resulting in large changes in profitability.

For example, on my modelling (and the forecast risks are not low for this business), the company will generate EBITDA, EBIT and NPAT of, respectively, $300m, $240m and $160m to $170m (depending on the tax rate).


Those figures represent growth rates of 17%, 30% and 40%, respectively, on FY2016.

And that's what has got the market excited.

For my part I think the cyclical upwsing has largely been priced in, given the stock is trading on a forward P/E of 20x and EV/EBITDA of 12.8x.