By rummaging through the notes to the accounts there is, on a...

By rummaging through the notes to the accounts there is, on a pro-rata basis, about $60m in revenue from FY16 acquisitions which are not in the FY16 results but would flow through in FY17. So $320m sales revenue at 14% EBITDA margin (with no growth in underlying revenue) gets you to $45m pro-forma EBITDA. Income outside of sales revenue ($2m in FY16) would get you to about $47m. Potentially synergies as the acquisitions are bedded in could get EBITDA to $50m+.

Based on this you get to a EV/EBITDA multiple of 10x.

I suspect AMA could 'buy' another $15m in EBITDA (given the industry is growing at only 1% p.a.) from their new debt facilities and $20m cash based on previous acquisitions, with media reports indicating 4x transactions (outside of Gemini) have turned into 3x transactions once synergies have been extracted. If this were to happen again $15m of acquisition EBITDA would become $20m. Based on this $70m pro-forma EBITDA might be possible.

$70m EBITDA and $40m net debt would produce, at an 8x multiple (maximum multiple paid for AMA's purchase of Gemini, the other major industry consolidator in Australia, late last year) an indicative market cap of $520m. With 498m of shares on issue (listed and unlisted) I get an indicative SP of $1.04 (with the 19m of options lapsing with a $1.20 exercise price).

My concern is this analysis assumes:

* AMA can find businesses worth acquiring to get the $20m EBITDA (potentially with Gemini out of the hunt for M&A deals in the industry the transaction multiples might decline to make this easier). To my mind only Capital SMART and Smashcare remain as the larger players in the industry to acquire - further growth might need to come from smaller

* Assumes all mergers produce synergies through integration (management haven't provided like-for-like data in results presentations to objectively show organic EBITDA growth exists in the underlying business through economies of scale and synergies with my requests of management to provide such information in results presentations in 1H16 and FY16, rather than publishing raw financial data which 'hides' underlying business performance due to the impacts of regular acquisitions, falling on deaf ears)

* No deterioration in underlying business performance or industry dynamics

* Based on my analysis the current SP already factors in a lot of potential growth in the next few years for the business.

There might be further growth available (through extracting the benefits of greater economies of scale by acquiring Gemini - which seems to be happening with supplier negotiations at the moment) but to my mind the lower hanging fruit and a large part of future acquisitive growth is already factored into the SP to my mind.