GXL Target Price of $8.03/share

Based on latest results, NVL has underlying EBITDA of $12-$13M with 66 vets with enterprise value of $156M, taking the midpoint means it is trading today at EV/EBITDA of 12.5. Using the same valuation ratio, and considering only the Australian vets business of GXL which has underlying EBITDA of $24.6M, the Aust vet business should attract a valuation of $307.5M.

Today's closing price of $3.97 implies Greencross Enterprise Value of $744M. This means the rest of the retail business in Australia and the vets + retail in NZ is valued at (744-307)/73 = EV/EBITDA ratio of 5.98 (let's call it 6).

In comparison with major retail, e.g. Woolies, EBITDA = $3651M, EV of $39844M, giving a 10.9 EV/EBITDA ratio. Or compare it with JBH, EBITDA = $411.7, EV = $3408M, giving EV/EBITDA ratio of 8.28. If we just use 9 as the average EV/EBITDA ratio for the rest of the business of GXL, that will give us 9 x 73 = $657M. Add that to the Aust Vet Business, GXL should trade at $307+$657 = $964M!

That means that GXL target price should be $8.03, and at today's price, it needs to go up by at least 100% from today! Note that this does not take into account the revenue increase that occurs in FY19, which will only make the price go higher..