Zen, Destra earnings – we all have differing views and methods of calculating PE’s etc. My understanding of 07-08 earnings are as follows; note, that I have included the Magna acquisition based on the offer of 1 destra share per magna share plus 15 cents cash (this will vary depending on the take up of Destra shares by Magna holders).
Destra shares on issue = 188m Magna shares = 108m Joint total number shares = 296m Debit = 108m x .15 cents = $16m Total number of shares = 296 million x .25 cents = market cap of $74million.
Destra earnings for 08’ = (06-07’ earnings = $6m EBITDA - $4.5m EBIT based on proforma which also dose not include synergies that have not yet been taken up between acquisitions made in 06’ so based on this and allowing for some growth I’ll use 25% on 07’ = $7.5m EBITDA - $5.7 EDIT) Magnas earning for 08’ = (06-07’ forecast earning = $5.9m EBITDA - $4.1m EBIT) Operating cost savings (as noted by DES = $2m per annum)
Totals projected earnings for 08’ Destra $7.5m + Magna $5.9m + $2m = $15.4m EBITDA. Destra $5.7m + Magna $4.1m + $2m = $11.8m EBIT. (Less interest on $16m (7%) = $1.1m)
Based on a market cap of $74million (25 cents) and projected earnings of $15.4m = 4.8x EBITDA earnings or 6X-7X on EBIT. Destra IMO and that of Lodge Partners Research should start to attract a PE of 15X. Do your own math’s to see how cheap DESTRA is currently (mind you the Magna deal is not a done deal yet!!!).
On top of these figures Destra also has; Approx $1.5m cash investment in Bluefreeway (sitting on a $.5m profit) Approx $1.2m cash investment in Quickflix (sitting on a $.7m profit) Still has the Destra Business division (communications) which is not part of their future growth – worth IMO approx $5m+ which I would expect them to sell in the near term. We then add in more acquisitions which you can bet on, Destra would not just be sitting on the outcome of the Magna deal. Then to add icing to the cake we should add in the possibility that Destra will be a sort after acquisition by the bigger fish in the years to come as well as the institutions.
Put all this together and IMO this stock should be trading between 50cents and 75 cents in 07-08’ with my own personal target of $1+ over the next couple of years.
Please do your own research & figures. I’m very bullish on Destra and have followed this stock from its original listing in 2000 and over time I’ve slowly built a health holding as Domenic and his team have grown this business.
DES Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
