Ann: Acquisition of St Andrew's Insurance and Trading Update, page-25

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whartanto

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07/05/18

08:58

Post #: 32920603
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Originally posted by tessastanle ↑

Looking at the announcement that BOQ put out yesterday and also the FIG announcement more closely I'd add a couple more points:

8. St Andrews contributed about $8m after tax profits last year, and not knowing any depreciation/amortisation but with 30% tax rate this is around $11.5m pre tax. Adding this to FIG's $16m forecast in FY18 and assuming flat growth going into FY19 EBITDA would be at least $27.5m. Given that this is funded by cash + debt and so no CR dilution, we're now down to ~4x P/E. Surely the likes of SDF and CVW would be taking notice when their P/E are around 18x, if they weren't previously.

9. Much has been discussed on this forum that FIG is very little moat given the general perception of it being predominantly a call centre based salesforce for direct insurance. One would argue that the moat is starting to form in terms of the diversification of the distribution channel (corporate partners, call centres, mortgage brokers, wealth advisers) and through customer relationships. Increased market share generally transpire to greater pricing power.

BTW I think from watching recent trade movements, the accumulator could still be working hard to cap the gains to 10% from yesterday to buy more time and stock up. Let's see if there are any substantials coming out in the near future.

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EBITDA last year was 21m, profit was 14m.
EBITDA this year (2018) will be 16m, profit assuming same ITDA will be 8m

The acquisition is an expensive way to stay in place, given the $15.9m of goodwill and $20m of debt that they must take.

It is not a bad acquisition, cheap even at 6x earning, but the deterioration of the underlying FIG business compared to last year is worrying.

FIG Price at posting: 46.5¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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Ann: Acquisition of St Andrew's Insurance and Trading Update, page-25

Top Stories

Pan Asia rebranding to 'clear confusion' after bagging $35M for Chile projects

Aussie Broadband set to kick off share buyback starting Q1 CY2025

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

MinRes's Ellison knows he screwed up – for that reason, hunt for new Chair to be sped up

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game