Value trap imo. These profit warnings are seldom isolated, and...

First 25 Last

Share
Profile

Follow
Ponzi

346 Posts.

14

27/04/17

12:42

Post #: 24297642
Share

Originally posted by Glenn_Archer ↑

Couple of big substantials on the book @ 15% each - all in, hold about 15m shares. Tiger Equities and MicroEquities. What are there intentions & how much have they sold?

At 26c, this is an out and out asset play.

Market cap $13m less $4m in cash = Enterprise Value of $9m.

If you go to the accounts, they show the assets of the 8 companies acquired & then the 'goodwill'.

All in, there were assets acquired as follows - plant & equipment of $2m, inventories of $3.9m, tax benefit of $0.3m. The liabilities were provisions (presumably employee entitlements) of -$1m. So gross assets of $6m, net of $5m. EV of $9m means you are in effective paying 1.8x net assets, a bit lower for gross assets.

This ignores what they paid for the business franchises themselves, as represented by the goodwill of $23.8m, split as follows:
Roo Systems $4.6m
Barden $9.5m
Alloy $3.8m
JDR Motorsports $1.1m
Dolium $0.6m
Transpec 4x4 $1.4m
Deering $0.8m
Umhauers $2.0m
Off course, the issues is the 'big 3' companies in terms of goodwill are the three that are not performing as well! But say you need to write-off 50% of the goodwill on these three to reflect the poorer trading conditions.

This leaves the following calc:
Goodwill $15m
Net 'Hard' Assets $5m
Total Assets $20m
EV $9m
4wd trading at 0.4x book value assuming you can get $15m for the 8 companies on market!

Seems very cheap given there is not external debt - so you are discounting a conservative view of the assets by 60% to account for the obvious cross against management, the short-term liquidity concerns re the unknown intentions of the substantial share-holders & the as yet unknown impact on short-term working capital for 3 of the 8 businesses!

On the 'watch-list' for me ....

Expand

Value trap imo. These profit warnings are seldom isolated, and the share price rarely recovers back to full health. Good will has been permanently shredded in this instance. Best scenario a slow long grind back.

4WD Price at posting: 26.5¢ Sentiment: None Disclosure: Not Held
2 Upvote

0 Great analysis

Reply

Top Stories

WC8

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

HotCopper Highlights: Your most watched stocks for Week 48, 2024

ADD

Parkes Au-Cu project to 'transform' Adavale Resources with key targets

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

ACW

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

RSG

Resolute shares bounce back as second payment made to Mali government to secure workers' release

MIN

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

Dale Gillham's weekly wrap: Bold moves in NZ, caution in Australia

Ice-cold winner: Cryopreserver Vitrafy escapes November's IPO struggles to end debut week higher

Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump's Bessent tied to Dem donor

There are more pages in this discussion • 10 more messages in this thread...

First 25 Last

Add 4WD (ASX) to my watchlist

Value trap imo. These profit warnings are seldom isolated, and...

Top Stories

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

HotCopper Highlights: Your most watched stocks for Week 48, 2024

Parkes Au-Cu project to 'transform' Adavale Resources with key targets

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

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

Resolute shares bounce back as second payment made to Mali government to secure workers' release

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

Dale Gillham's weekly wrap: Bold moves in NZ, caution in Australia

Ice-cold winner: Cryopreserver Vitrafy escapes November's IPO struggles to end debut week higher

Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump's Bessent tied to Dem donor