SFH's results and shareprice continue to highlight the potential...

SFH's results and shareprice continue to highlight the potential value of PGR. Post the recent divestments, SFH have significant similarities with PGR given their retail/wholesale business model and growing online offering (although SFH's online presence is a much lower percentage of total sales). After adjusting for recent divestments, SFH generated $19.9m EBITDA in 2018, and at the current shareprice, is trading at a market cap of $208m. If we deduct their net cash position of $25m (post proceeds of the divestments), they have an EV of $183m. Accordingly, they are trading on a historical EV/EBITDA multiple of 9.2x. PGR's current market cap is $39m. If we used the same multiples as SFH to value PGR, we get the following:

- Reported EBITDA: $11.2m*9.2= $103m or 2.6x current market cap


- Reported EBITDA (11.2m) + one off investment costs of $1.6m = $118m or 3x market cap


- Reported EBITDA ($11.2m) + one off investments ($1.6m) + new contracts ($3m) = $145m or 3.7x current market cap.

Clearly the above value is something that can only be realised by a holder who holds until Colleseum exits, but even if we discount the above by a 30% control premium, it is worth double the current share price. Not that I'm expecting the next low ball offer from Colleseum to be anywhere near that, but it certainly adds to the incentive to sit tight.