FY2014 'Australasia Only' per share value case revisited
Quote:
Originally Posted by
Snoopy
I can take it one step further than that.
$18.7m is the EBITDA earnings from Australia before licence fees and less investment in new market development of $7.5m and the undeclared 'corporate costs' which reduce EBITDA to $3.6m. So licence fees and corporate costs must be:
$18.7m - ($7.5m + $3.6m) = $7.6m
If we assume that 1/4 of corporate costs relate to Australia, while the other 3/4 go to developing China, UK and USA, then underlying EBITDA for Australia is:
$18.7m - ($7.5m + 0.25($7.6m))= $9.3m
Since Australia is the only developed market we can assume that all the Depreciation and Amortization relates to that market.
So NPBT = $9.3m - $1.9m = $7.4m
Tax that result at 30% and you get NPAT of $5.18m. There are 660m shares on issue. So this gives earnings per share of:
$5.18m / 660m = 0.00785cps
A reasonable growth multiple might be 20 if ATM finds itself an Australian only brand in the future.
So fair value for ATM Australia is.
20 x 0.00785 = 15.7c
At 63c, ATM has an awfully long way to fall to get back to fair value. There is some chance, say 25%, that ATM will become an Australia only company in a few years. So such a scenario needs to be factored in to what ATM is worth.
This time I will use the segmented information used on p69 of AR2014. This (I think!) avoids all the confusion introduced with intercompany charges and licence fees that seem to have confused me before.
EBITDA (Australia) |
$4.517m |
plus EBITDA (New Zealand) |
$3.004m |
less Net Interest Charge |
$0.000m |
less Depreciation & Amortization |
$1.900m |
TOTAL EBT |
$5.621m |
Using the Oz 30% tax rate, because the operating profits we are most interested in come from Australia.
NPAT = (1-0.3) x $5.621m = $3.935m
Using the number of shares on issue at the time , 660m, and a PE of 20 ( a figure I judge as suitable for a high growth food company restricted to Australasia) we can calculate the 'per share' value of the company as follows:
$3.935m/ 660m = 0.00596cps x 20 = 11.9c
SNOOPY
HY2015 Australasia Only per share value (reinterpretation)
Quote:
Originally Posted by
Snoopy
$3.3m + $4.2m = $7.5m is the HY2015 EBITDA earnings from Australia before licence fees and less investment in UK market development of $4.2m and the declared 'corporate costs' which reduce EBITDA by $5.2m.
If we assume that 1/4 of corporate costs relate to Australia, while the other 3/4 go to developing China, UK and USA, then underlying EBITDA for Australia is:
$7.5m - (0.25($5.2m))= $6.2m
Since Australia is the only developed market we can assume that all the Depreciation and Amortization relates to that market.
So NPBT = $6.2m - $0.9m = $5.3m
Tax that result at 30% and you get NPAT of $3.71m. There are 660m shares on issue. So this gives 'annualised' earnings per share of:
2X $3.71m / 660m = 1.124cps
A reasonable growth multiple might be 20 if ATM finds itself an Australian only brand in the future.
So fair value for ATM Australia is.
20 x 0.01124 = 22.5c
At 56c, ATM is priced well in excess of Oz market only fair value. So there is a large amount of blue sky built into the share price already.
The plan is to spend $20m in the US over three years ( $US20m/(3 x 0.75) = NZD8.9m per year). They could only do that with current resources if the UK becomes self sustaining (loss in UK for HY2015 of $NZ4.1m). Not enough money to go around (only $9.9m in the bank as at December 2014 ). Cash resouces will be completely drained this year! The likelihood of a cash issue is getting stronger and stronger. ATM will be bankrupt within months if it doesn't do it.
My advice: Don't touch this until the cash issue is announced.
Once again I take a consistent (but slightly different) retrospective approach to assess share value. This is mainly based on the segmented results as listed on p17 of the interim report
EBITDA (Australia & NZ) |
$4.876m |
plus 1/4 of EBITDA (Corporate & Other) |
$0.039m |
plus One off Australian Listing Charge |
$0.762m |
less Net Interest Charge |
$0.000m |
less Depreciation & Amortization |
$0.912m |
TOTAL EBT |
$4.765m |
Annualising that 6 monthly result gives an annualised EBT of:
2 x $4.765m = $9.530m
Using the Oz 30% tax rate, because the operating profits we are most interested in come from Australia.
NPAT = (1-0.3) x $9.530m = $6.671m
Using the number of shares on issue at the time , 660m, and a PE of 20 ( a figure I judge as suitable for a high growth food company restricted to Australasia) we can calculate the 'per share' value of the company as follows:
$6.671m/ 660m = 0.01112cps x 20 = 22.2c
SNOOPY
FY2015 'Australasia Only' valuation
Quote:
Originally Posted by
Snoopy
This time I will use the segmented information used on p69 of AR2014. This (I think!) avoids all the confusion introduced with intercompany charges and licence fees that seem to have confused me before.
EBITDA (Australia) |
$4.517m |
plus EBITDA (New Zealand) |
$3.004m |
less Net Interest Charge |
$0.000m |
less Depreciation & Amortization |
$1.900m |
TOTAL EBT |
$5.621m |
Using the Oz 30% tax rate, because the operating profits we are most interested in come from Australia.
NPAT = (1-0.3) x $5.621m = $3.935m
Using the number of shares on issue at the time , 660m, and a PE of 20 ( a figure I judge as suitable for a high growth food company restricted to Australasia) we can calculate the 'per share' value of the company as follows:
$3.935m/ 660m = 0.00596cps x 20 = 11.9c
Time to revisit the value of by far the most profitable division of A2 milk so far - Australia and New Zealand. For this I use the 'Segment Information' that starts on p100 of AR2015.
EBITDA (Australia & New Zealand) |
$5.724m |
plus 1/4 of EBITDA (Corporate & Other) |
$0.821m |
plus Reversal of one off EBITDA loss (ASX Listing) |
$1.681m |
less Net Interest Charge |
$0.000m |
less Depreciation & Amortization |
$1.949m |
TOTAL EBT |
$6.277m |
Using the Oz 30% tax rate, because the operating profits we are most interested in come from Australia.
NPAT = (1-0.3) x $6.277m = $4.394m
Using the number of fully and partly paid shares on issue at year end , 660m, and a PE of 20 (a figure I judge as suitable for a high growth food company restricted to Australasia) we can calculate the 'per share' value of the company as follows:
$4.394m/ 660m = 0.00668cps x 20 = 13.3c
SNOOPY