Big overreaction here I think when it dived below $6
Didn't think of adding more at the time as was distracted by work
CAT Revenue was a bit volatile.
EPS could have been the main negative as it went backward.
S&P consensus. Everyone was expecting 10cps versus 8.5cps Actual
Checking the call transcript, there is a bit of delay from government of dealing with CAT events but JLG expects some of the work to come in the second half
[held]
JLG does get a bad rap sometimes with that insider selling before, but I think the business deserves some credit even though it looks like a big "roll-up"
I wish I took this when they did that recent acquisition. But I'm happy I have this in my comp portfolio too.
The "incremental" backlog of disaster work is the main driving force in this business. Now where have I heard "incremental" before.
Up from 5.55 to 6.05
A bit expensive at 7xEBITDA but the overall margin of the combined group increases
This is because LinkFire and SAA are higher margin businesses. So maybe the 7xEBITDA price tag is justified.
Seems like a logical bolt-on.
Unfortunately was not able to catch this early enough before the share price took off this week.
The SPP was also oversubscribed
Beginning to see a trend here with oversubscribed raisings.
Upgraded FY23 guidance from JLG
Revenue 1145.9m to 1248.1m
EBITDA 111.1m to 115m
Looks solid
But there is an item at the bottom for Porter Davis debt writeoff of 2.3m which hit EBITDA guidance and increase in Commercial Construction writeoff of 15m (10m previous guidance)
Everyone including myself probably looking at those 2 items which would have prompted the sell.
However as per note, Porter Davis looks like a one-off so maybe a bit of a overreaction?
Will be watching those losses carefully and see if these increase when final report is announced.
La Nina difficult to forecast this period. So possibly could be another busy period for JLG
https://www.abc.net.au/news/2023-04-10/el-nino-forecasting-difficult-unpredictable-autumn-climate/102189516
Have noticed price targets from brokers still north of $9. Valuation might still be justified despite all the inside selling. If I put growth at 40% we could see prices north of $9
DCF workings below at discount rate of 6.8%. The numbers are very rough as it was quite an effort to balance the income, cashflow and balance sheet at the same time so it made sense.
Updated to include better screenshot of workings.
Went through previous straws with a bit of "amusement" with the story on director selling etc...
So I decided to do a multiples comparison and valuation using the median. However this is very difficult as it stands as it is hard to find a comparable firm as you can see below
On a multiples basis, got a share price of 3.55. But this is a bit unfair considering that the above firms don't really do disaster recovery although to some extent Downer EDI will be asked to repair infrastructure.
On a DCF basis I get 6.04 if we assume growth will moderate back to around 20% then gradually tail off to 5% over 10 years.
Maybe if the share price pulls back to 6.00 I'll be interested.