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damo13

54 Posts.

02/04/15

21:07

Post #: 15031047
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Originally posted by CmonCDR ↑

If turnover is $50m and EBITA margin is 28% (per their capital raise prospectus), then EBITA is $14m. Therefore, on a multiple of say 6 (they have acquired on a range from 5 to 6.5) ), the enterprise value is $84m.

If the EBITA margin is per the original prospectus 20%, then EBITA of $10m equates to enterprise value of $60m

There are 219,517,574 shares on issue per December 2014 report.

Therefore my guesstimate of value is around 27 cents to 38 cents.

However, lets assume turnover is more likely $40m (it was mentioned that AVANA and Real had booked $10m each respectively for half year), not sure what the Service Institute would book, but lets assume $2m (I have no idea), then on a margin of say 20%, the EBITA is $8m. On a multiple of 6 we get around $48m. This equates to 21 cents per share. Given they paid $54m for Real only last year, this may be a little light on (especially if it has been performing as forecast).

We know debt is less than $10m and with the sale of the VETsoftware business, it is likely to be lower (plus there is cash on hand) so effectively Nil.

Overall on my wild projections (DYOR), I think that they should be north of $0.20. But hey, Mr Market ultimately determines price, look at MAH, they have net tangible assets of $0.26 per share yet are trading at $0.05. Sure its exposed to the Iron Ore market.

I think there is value in this stock but any reasonable person would be best to wait for them to release their upcoming projections etc.

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Service Institute had 2013 revenue of $7M compared to Avana $10m
Both of these from the accounts pre VET.
Would imagine VET FY15 revenue $50-$60m though profit closer to $6-8m
Total asset sales will be $100m ($75+$15+$10 to come) covers off $85m debt and $15m restructure costs to have $20m cash and a profitable business
SP of 30cents would be fair if no legal action was about

VET Price at posting: 14.5¢ Sentiment: Hold Disclosure: Held
1 Upvote

0 Great analysis

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dwindling back down, page-9

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