Pinned valuation:
The HBT acquisition obviously changes things. As usual, i'm going to keep it simple and (hopefully) somewhat conservative.
They have guided for FY28 revenue of more than $500m, with an EBITDA margin of 8-12%, and a NPAT margin target of 5-8%.
Let's be conservative and assume $450m in FY28 revenue at a 5% net margin to get a profit of $22.5m.
Let's assume 3% annual growth in teh share count to get to 142m shares on issue, which gives us an EPS of 15.8c. To that, I'll apply a PE of 16 for a FY28 target price of $2.52.
If you discount that back by 10%pa you get a valuation of ~$1.90.
For comparison, if you take them at face value and use a revenue of $500m, a net margin of 6.5% and a terminal PE of 18 the valuation you get is ~$4.40.
Selling a portion of my SGI today (here and in real life tomorrow).
While I still am generally positive about the business, and will retain a significant holding, there's been some good observations here that make it hard to justify such a high weighting. And the higher price, the smaller the margin of safety. Every time i've done this I've regretted it... but I think it's the right thing to do.