Australasia Only Segment Valuation: FY2015
Quote:
Originally Posted by
Snoopy
$18.7m is the EBITDA earnings from Australia before licence fees and less investment in new market development of $7.5m and the undeclared 'corporate costs' which reduce EBITDA to $3.6m. So licence fees and corporate costs must be:
$18.7m - ($7.5m + $3.6m) = $7.6m
If we assume that 1/4 of corporate costs relate to Australia, while the other 3/4 go to developing China, UK and USA, then underlying EBITDA for Australia is:
$18.7m - ($7.5m + 0.25($7.6m))= $9.3m
Since Australia is the only developed market we can assume that all the Depreciation and Amortization relates to that market. We also assume zero interest costs.
So NPBT = $9.3m - $1.9m = $7.4m
Tax that result at 30% and you get NPAT of $5.18m. There are 660m shares on issue. So this gives earnings per share of:
$5.18m / 660m = 0.00785cps
A reasonable growth multiple might be 20 if ATM finds itself an Australian only brand in the future.
So fair value for ATM Australia is.
20 x 0.00785 = 15.7c
The above estimate was for the Australian arm of ATM only, assuming the global expansion plan fails. All based on FY2014 published results. This was never a prediction. Just a calculation of what could happen if the rest of the world expansion went pear shaped.
So time to redo the above calculation using FY2015 results for future comparative purposes. Note that there are several changes in my approach, different to how I did things last year.
Time to revisit the value of by far the most profitable division of A2 milk so far - Australia and New Zealand. For this I use the 'Segment Information' that starts on p100 of AR2015.
EBITDA (Australia & New Zealand) |
$5.724m |
plus 1/4 of EBITDA (Corporate & Other) |
$0.821m |
plus Reversal of one off EBITDA loss (ASX Listing) |
$1.681m |
less Net Interest Charge |
$0.000m |
less Depreciation & Amortization |
$1.949m |
TOTAL EBT |
$6.277m |
Using the Oz 30% tax rate, because the operating profits we are most interested in come from Australia.
NPAT = (1-0.3) x $6.277m = $4.394m
Using the number of fully and partly paid shares on issue at year end , 660m, and a PE of 20 (a figure I judge as suitable for a high growth food company restricted to Australasia) we can calculate the 'per share' value of the company as follows:
$4.394m/ 660m = 0.00668cps x 20 = 13.3c
SNOOPY