RE: Terrific interim results today27 Sep 2018 15:05
An excellent summary elsewhere from "simso" which I hope he won't mind me pasting here, giving an NAV of around £15.53p per share - over 50% more than the current share price.....and that's with a number of relatively conservative assumptions:
"An updated view on how I would calculate a valuation based on today's Interims.
1) Impetus: Made £1.9m PBT in the first half 2018, and indeed £1.9m in the second half of 2017. The large contract was in place for both those periods, and now we have news of a new contract. While smaller than the first, it must be material, or why mention it! The new contract starts in September 18, so 3-4 months benefit. Even with no other Organic Growth, I pencil in £4m PBT in FY 2018.
A crucial question is what valuation multiple would you apply / hope for if they sold it? I see from Stocko's front page that the median average current year rating for UK stocks is 13. An argument for lower valuation is simply that "Its in the Automotive Sector" where Dealerships in particular have must lower ratings at the moment. However, to counter this I would say that we are not selling cars, and point to the contractual nature of a significant part of forward revenues. Also the business has doubled in size over three years of ownership...so a strong forward trajectory. On balance I think a market average 13* post tax would be fair, and round it down to 12 for prudence. I assume a Tax rate of 19%. That would value Impetus at £38.9m in total, and £32.3m after the 17% minority. I then deduct another 10% as an assumed Lander Bonus...so £29.1m net.
Shire made £0.6m in 2017, and that included a one-off impairment of assets of £0.2m...so underlying £0.8m. The first half 18 was slightly better than last year. The second half should also benefit from the new Capital spend of £1m. I estimate £1m profit, and put it on a lowly / prudent rating of 5* Post Tax. I add the £2.6m Freehold, deduct minority of 20*, assume 10% Lander Bonus, and my valuation is £4.8m.
I assume nothing for Sira....although perhaps a little harshly as there are signs of life in the Statement. I try to maintain my prudent approach throughout!
We currently have £20.5m Cash/financial instruments, and I estimate this improving to £22m by year end, given my profit estimates above.
If I give no value to Goodwill and Plant and Machinery (£5m+ on Balance Sheet), and take Current Other Assets (mostly receivables), less total provisons and liabilities, that nets out to £1.4m....say round down to £1m after minorities.
This gives me a valuation of exactly £57m, or £15.53 a share."
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