Nice upgrade and the price held up today! It looks like...

Nice upgrade and the price held up today! It looks like management were being overly conservative with their earnings forecast which kept a lid on the SP until now. If the FY19 interest/depreciation/amortisation are in the ballpark of the 2018AGM forecast we should see an FY19 underlying NPAT around $23m and EPS of approx. 5.4c, giving us a P/E of around 12 times at today's SP. Not bad for a company growing it's EBITDA at 35%+!

@hfrench, I think you are overly pessimistic in your view that PEA should be valued at low multiples;

PEA took a hit of about $4.8m in acquisition costs and $9.8min impairments in their 'reported' FY18 results, so the likelihood of more oneoff costs related to the Contract Power acquisition, which was completed in 2Q/2018, in FY19 is remote IMO.

The Petra broker report forecast FCF of about $30m p/a for the next 3 years (and that was based on a forecast FY19 EBITDA of $55m and NPAT of $20m), for a FCF yield of 12%, so it should spin off plenty of cash going forward, sufficient to pay off most the existing debt if they choose to.

Not that I consider the current gearing to be excessive,with a forecast FY19 interest cover of 14x and a D/E of 63%, an overall cost of funds of 4.25% and a RoC of 10% I would be happy to see a reasonable level of gearing maintained, say around 50% D/E.

Once the analysists recomp their forecasts based on the increased earnings I think we will see their SP targets move up from the current consensus of 72c to 75c+, and as It looks like we will see a HY dividend I’m looking to an easy 70c after the release of the HY report on Friday 22^nd.