Davidgeorgedestra forward earnings - i did a post after the...

Davidgeorge
destra forward earnings - i did a post after the Magna deal was announced on 9th april post No 1687925 see copy below; but since then the following changes need to be noted;
1) invetsment in bluefreeway is now worth $2.4M - $2.40 SP ($1.4M profit)
2) investment in Quickflix worth $2.6M - .23 SP ($838,000 profit)
3) Sold comms division for $6.25M - I had it down for $5M - increase of $1.25M

Prime have put money into Destra - hence more shares on issue - but more money in the back!
Murdock takes steak also.

So untill the Magna deal is complete we are unable to know the number of shares on issue, plus it would not surprise me if we see another acqusistion shortly following the EGM next week.
Take over = this stock will not be taken over untill Doms hard work puts the SP in the $1+ (IMO only!)

Destra earnings – we all have differing views and methods of calculating PE’s etc.
My understanding of 07-08 earnings are as follows; note, that I have included the Magna acquisition based on the offer of 1 destra share per magna share plus 15 cents cash (this will vary depending on the take up of Destra shares by Magna holders).

Destra shares on issue = 188m
Magna shares = 108m
Joint total number shares = 296m
Debit = 108m x .15 cents = $16m
Total number of shares = 296 million x .25 cents = market cap of $74million.

Destra earnings for 08’ =
(06-07’ earnings = $6m EBITDA - $4.5m EBIT based on proforma which also dose not include synergies that have not yet been taken up between acquisitions made in 06’ so based on this and allowing for some growth I’ll use 25% on 07’ = $7.5m EBITDA - $5.7 EDIT)
Magnas earning for 08’ =
(06-07’ forecast earning = $5.9m EBITDA - $4.1m EBIT)
Operating cost savings (as noted by DES = $2m per annum)

Totals projected earnings for 08’
Destra $7.5m + Magna $5.9m + $2m = $15.4m EBITDA.
Destra $5.7m + Magna $4.1m + $2m = $11.8m EBIT.
(Less interest on $16m (7%) = $1.1m)

Based on a market cap of $74million (25 cents) and projected earnings of $15.4m
= 4.8x EBITDA earnings or 6X-7X on EBIT.
Destra IMO and that of Lodge Partners Research should start to attract a PE of 15X.
Do your own math’s to see how cheap DESTRA is currently (mind you the Magna deal is not a done deal yet!!!).

On top of these figures Destra also has;
Approx $1.5m cash investment in Bluefreeway (sitting on a $.5m profit)
Approx $1.2m cash investment in Quickflix (sitting on a $.7m profit)
Still has the Destra Business division (communications) which is not part of their future growth – worth IMO approx $5m+ which I would expect them to sell in the near term.
We then add in more acquisitions which you can bet on, Destra would not just be sitting on the outcome of the Magna deal.
Then to add icing to the cake we should add in the possibility that Destra will be a sort after acquisition by the bigger fish in the years to come as well as the institutions.

Put all this together and IMO this stock should be trading between 50cents and 75 cents in 07-08’ with my own personal target of $1+ over the next couple of years.

Please do your own research & figures.
I’m very bullish on Destra and have followed this stock from its original listing in 2000 and over time I’ve slowly built a health holding as Domenic and his team have grown this business.