Obviously the legal case has had a major impact on the company, but a simple calculation of an indicative value may be to use the EBITDA which could be $5.5m to $6m this FY. DA looks like $1.5-$1.6m, so the EBIT may be around $4m, in round numbers. There will be no tax payed for a long while (previous losses), and essentially no interest after the legal settlement so EPS could be as high as 1c. Using a conservative PE of 10, makes 9.3c fair. But there is a lot more to it than that. After paying out the convertible notes + interest, a net amount maybe of the order of $10m (including awarded legal costs) may be the outcome of the legal case. If you look at the impact on the balance sheet (increase in net assets of approx $20m) the company is in a position to borrow significant funds ($20m+). Given the operational improvements of the company and the infrastructure it has in place it should be about to leverage this effectively into new products and higher earnings. (An example is the Sharpsmart joint venture which fits nicely with the clinical waste collection. Both STP and Daniels need each other in this area and despite what some may think it’s better for STP to have Daniels on their side than as a competitor!). Sustained improvement in performance and the right acquisitions, would suggest significant upward scope for the share price. I could babble on.. but we will see probably sooner rather than later.
STP Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
