BigAir today put up their HY13 results, and while I (and so it would seem, the market) was expecting better, the results are still solid:
Revenue $15m (up 36%)
EBITDA $5.5m (up 20%)
NPAT $2.37m (up 15%)
Operating Cash Flow $4.48m (up 19%)
What we see is a business priced at $100 million, with annual revenues of $30m, with EBITDA margins around 37%. The key measure BigAir use as a yardstick for the business’ ability to print money is the EBITDA run rate – an annualised measure of the billing base which can be used to calculate the growth in the business. FY12 saw full-year EBITDA at $9.75m. During the second half of FY13, EBITDA run rate is expected to hit $14m. Given a half year EBITDA of $5.5m it is reasonable to anticipate a FY13 EBITDA of $12m, which would give a full year NPAT around $5.4m or underlying EPS of 3.3c per share.
There’s no getting around the fact that after hitting a CAGR of 50% for revenue over the past few years, that the BigAir’s meteoric growth is beginning to slow down. There are additional synergies to be unlocked from the Allegro acquisition but it’s getting harder to justify a 20x earning multiple (as of today it’s 16.5)
As management were silent on the prospects of a dividend it’s safe to say the 1c per share paid in 2012 will be all for this financial year. Right now I think the business isn’t too overpriced, and will continue to hold. If the share price goes up toward the 80c mark I intend to sell.