To be honest, i don't consider FY17's results to be particularly important as they don't properly reflect what's going on in the business - the FY17 results will show the full cost impact of the significant expansion undertaken since FY15 (i.e. the overhead/admin costs of the business have increased significantly will be fully reflected in this year's P&L), but the revenue side of the equation associated with the business expansion won't start coming through until FY18 given there's an average of 2+ years from case selection to settlement.
That said, one could guess FY17's profit reasonably easily under the following parameters:
- 11 cases were completed in FY17; 6 of those in 1H, and 5 in 2H. The 6 cases completed in 1H generated gross profit of $36.5m.
- The 5 cases in 2HFY17 appear to be: 13 Feb ($3.9m gross profit), 24 Feb ($1.5m GP), 31 March ($2.1m GP), 29 May ($1.4m), and today ($22.5m).
- FY17 gross profit should, therefore, be in the order of 36.5 + 3.9 + 1.5 + 2.1 + 1.4 + 22.5 = $68m.
- Less estimated $35m FY17 operating expenses (i estimate 2H will be ~$20m given end of year bonuses and additional overhead relative to 1HFY17)
- Gives estimated FY17 EBIT of $33m.
That estimated ~$33m FY17 EBIT compares to today's pro forma 31 March EV of:
- $330m market cap
- Pro forma 31 March cash of $124m + $41m raised from debt - $44m estimated 4Q outflow + $32m HK settlement = $153m
- Pro forma debt of $80m at 31 Dec + $41m additional debt = $121m
- Equals estimated current net cash position of $32m
- Gives estimated EV of ~$300m
So, a finger-in-the-air estimate is that this business is presently trading on an FY17 EV/EBIT of (300/33) = 9.1x. That is probably slightly expensive for a business of this nature (i'd say 7-8x EBIT is 'about' right).
But, as mentioned, the FY17 profit doesn't really say much of importance. What matters is what's coming down the pike in FY18-19, all going well.
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