Pinned valuation:
Valuations are always tricky, and especially so when it comes to acquisitive companies. But let's just extrapolate things forward to get a rough sense of value.
In the last 3 years through to FY25, revenue has grown at roughly 16%pa. They usually average a net margin between 7-8%, and from what i can tell that's not overly ambitious given the potential for some operating leverage, and the fact that some players in the space do closer to 10%.
On an underlying basis, AIH has called for $387m in FY26 revenue (year ended 30th Sep), which is again around 16% growth.
I'll use $385m as a starting point and grow that by 12%, 15%, 17% for the next 3 years through to FY2029. To each of those, i'll apply a net margin of 6%, 7%, and 8%. (All on an underlying basis).
That gives my FY29 NPAT of $31m, $41m and $49m (rounded to nearest whole number).
Let's account for 3% dilution on the share count each year to get FY29 shares on issue of 460m, which gives me FY29 EPS of $0.071, $0.089 & $0.107.
The midpoint here represents an EPS CAGR of ~13%, ranging between 5% to 20%. Which is quite the spread -- but not unexpected given the sensitivity of things like compounding growth rates and margin differences. But i'll select a series of terminal PEs of 15, 17 and 20x which dont seem to require sentiment to do too much of the heavy lifting.
Using the simple valuation model, i get these results:
Obviously, there's a big difference between the top and bottom valuations, but the idea here is to get a sense of a reasonable range and see if there's a favourable skew -- which is, in fact, exactly what you do see.
There's a nice heads i win, tails i dont lose too much situation here. a ~12% downside vs a 79% upside over a 3 year period. At least on these numbers.
Weighting the three scenarios at 25%, 50% & 25% gives me an average valuation of $1.17.
Now... that's all super rough and based on basic extrapolation. And it's worth remembering they are acquiring Matrix which does close to $80m in revenue and Imenco Aqua which does $15m. Add another sizeable acquisition or two and layer in some decent organic growth and things really start to take off -- especially if they attract a high multiple and push those margins higher.
But the point is you don't need to. They just need to keep pushing forward at a reasonable rate without too much margin slippage.
The current PE of 15 just gives you a good margin of safety, and the potential for a bit of a re-rate if they can deliver attractive EPS growth in the coming years.
But, of course, none of this counts for squat if they drop the ball in any serious way.
@Strawman I've ended up with similar numbers, and also a similar range, although I am less bullish. So for the sake of comparison, I'll set out mine here using your method so we can see how the differences in assumptions affect the outcome.
A large range is appropriate
There's going to be year on year variability based both on the capex "cycle" and lumpiness of any large contract wins, so the way I am thinking about it, is that there is a significant uncertainty in EPS at 3 years out. And if the EPS tends to be lower, the growth rate will be lower and the market will award a lower P/E. The converse is probably true in the high case. All of which is to say that I agree that the range is necessarily large, based on the data in front of us.
Why I am less bullish
Where I am less confident on the higher growth cases, is that I have not been able to unpick from the prospectus how much of the earnings growth is organic vs. inorganic.
What I can glean from the Prospectus is some of the revenue that acquistions have brought in. The following are clear:
- SRP Subsea Ltd (acq. Nov-22) Revenue was $76.7m in FYE Sep-2022
- Ovun Group (acq. Sep-25) Revenue was $29.9m in FYE Dec-2024
- GAP Plastics (acq. Aug-24) Revenue was $2.8m to FYE Oct-23
- CAPSE Ltd (acq Apr-25) Revenue was $5.4m to FYE Jul-24.
Older acquistions significantly pre-date the historical financials that start in FY22, therefore I take their contribution as organic.
So in aggregate, of the FY25 Revenue of $335m, some $115m (or 34%) is inorganic in nature.
Interestingly, in the prospectus, the FY25F revenue forecast (exlucding Ovun) was $299m, representing 14% growth over FY24.
Given that the bigger you are, the more work you have to do to sustain a % growth - particularly in a mature market - I was thinking that over the long run if might be hard to achieve revenue growth much above 14% over successive years.
My Valuation
So, I've ended up with Revenue Growth Scenarios of 8%, 11% and 13%.
I've also plugged in lower %NM scenarios of 5%, 6.5% and 8% (I'm less confident we have enough margin history)
For a comparison, if I use all your other numbers and method I get:
Low: $0.59 (25%)
Mid: $0.95 (50%)
High $1.45 (25%)
Expected Value: $0.98
Conclusion
So, at a SP of $0.89 I see the shares at closer to fair value and agree with your conclusion that there is more upside potential than downside risk.
My main uncertainty is the margin history, because if you look at the Propsectus financials, there is a lot of variability in the data presented. That's the key factor that probably has me standing back from this one.