Originally Posted by
Beagle
Thanks for the link mate. This bit is really interesting The transaction is expected to contribute additional annual net profit after tax of A$10 million to A$12 million, before any ongoing cost of acquisition debt funding. At this stage, given timing of the acquisition and the transaction costs, there is no change to Heartland’s market guidance for the financial year ending 30 June 2022 (FY2022).
Suppose they fund that acquisition at 4% before tax, about 3% after tax that suggests a funding cost of about $A5m and this acquisition could be earnings accretive by between $A5m - $A7M per annum, say $A6m = approx N.Z$6.4m = ~ 0.9 cps annual earnings. Applying HGH's very reasonable current year PE of 14 to that this suggests this is value accretive to HGH to the tune of 12.6 cps.
Upgraded my view on HGH to BUY on the back on this acquisition.