Latest view of Matthew Kidman in today's SMHVision Eye...

Latest view of Matthew Kidman in today's SMH


Vision Eye Institute
I HAVE written about ophthalmology group Vision several times this year in the belief that it looked cheap but needed to raise equity to pay down debt. The company recently announced a placement and a two-for-three non-renounceable rights issue to raise over $27 million. These funds will be used primarily to pay down debt.
The company recently forecast that it would earn EBITDA of $24 million to $25 million in 2013. If the company can hit these numbers it is currently trading on an EBITDA multiple of 5.5 times. This is on the cheap end of the scale for a medical business.
So do we buy the stock now? The heavy rights issue is open until the middle of January. Ideally, the stock would be weak into the end of this period as shareholders sell their existing shares to fund the rights at 34¢ . For the moment the buyers are out in force and the stock is trading at 49¢ a share. If between now and the end of the rights period the stock sinks into the low 40s it would create a perfect entry point. For existing shareholders they should not hesitate to take up the rights issue at 34¢ a share.


Read more: http://www.smh.com.au/business/enrolment-trends-a-good-sign-for-education-group-20121219-2bn7m.html#ixzz2FZeLv6H9