I have a very basic model for this company. SCL roughly has 4 divisions.
- proteins where most of the money comes from ~$60m EBITDA
- hort which used to make a regular $40m EBITDA in 2020 and 2021 but has been crushed by the cyclone to zeroish.
- logistics just ticks in at $4m or so outside of COVID
- corp which is about a $6m cost.
So modelling this out for 2024.
- If EBITDA for their proteins div stays at the elevated $60m, hopefully this is the case and wasnt a one off COVID bump. I simply dont have anything to go on here other than prev years. H1 results was $30m so looking good.
- hort bounces back in 24 and gets a somewhat normal year in (less the damaged crops) so $30-$35m EBITDA. From company announcements I dont see why this would be worse. This is the key bit. Is the hort division f#cked or not. The recent announcement https://scalescorporation.co.nz/wp-c...esentation.pdf
says damage pretty minor, and they can push through.
- logistics has a small profit $4m. H1 was $2.7 so looking good.
- corp costs up $1m to $7m cos inflation. H1 was $2.7m so looking good.
Company has $90m EBITDA, less $20m depreciation and amort = $70m EBIT
$8m interest bill (on $67m debt)
= $62m EBT
$20m tax in round numbers
$40m NPAT on a $437m company. So a PE of 11, and they are talking about growth in the proteins division taking off and investing more. Borrowings of $70m, so not huge. Balance sheet is fine. Management are super steady and good operators.
Whats not to like here people? I reckon its worth $4.50ish (which is the lower end of the pre-cyclone value), so 50% upside. Should see a rerate in the next 8 months once they signal all clear in the hort division in June 24. Not impacted by any NZ recession either as most of the fruit heads offshore.