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madamswer

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11/02/19

16:13

Post #: 37400639
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Originally posted by Transversal ↑

Originally posted by thunderhead1
@Transversal - I realise now that you have atleast partially answered my questions in the post above. I only caught up with all the posts since I last visited this forum, so my apologies.

Thank you @madamswer for your detailed view on the company, and welcome back to the register!
No worries.

This is a medium-term deleveraging play for me, i.e. a challenged but still FCF-generative enterprise that can materially enhance the value of its equity by paying down its debt. I started buying in October, not far from today’s price, therefore my investment rationale is probably different from the one of an existing long-term holder.

If the Company’s turnaround is successful, evidence of deleveraging should transpire by the end of FY20 (i.e. approx. 18 months from today); that is my investment horizon, unless the price/value gap closes earlier or the turnaround fails.

In terms of exit price target, if you assume a reduction in Net Debt down to ~30.0m$ (which looks conservative to me) and a stable EBITDA of ~22.5m$, then a 7.0x EV/EBITDA multiple would value the equity at 7.0*22.5m$ - 30.0m$ = 127.5m$, or 63.5c/share.

Any improvement in copyright costs, further cost savings, growth in Asia, etc. could possibly make me want to hold for longer.

Hope this helps.

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That's exactly the way I view this investment opportunity.

Not a thing of any particular beauty but so cheap that nothing needs to go all that right for the Enterprise Value to be rapidly re-equitised.

ISD Price at posting: 30.5¢ Sentiment: Buy Disclosure: Held
6 Upvote

0 Great analysis

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