RE:SXP worth over $5 per share, 100% more than current SP?
shareholders1 wrote: SXP needs to be taken out by larger US competitor to surface SXP real & hidden value.
Worth over $5 and maybe $6 per share?
Possible rationale for over $5 per share:
1. Before sale of 2 owned real estate properties:
Annualized cash flow (Q3 6,694,995 X 4) = 26,779,980 @ just 6x multiple = 160m
Less Debt of say $52m (but will likely be lower at the Dec 2021 year end)
Equity value = 160m - 52m = 108m / 26,714,067 shares = $4 per share
2. After sale and lease back of 2 owned real estate properties:
Assuming the 2 properties combined after tax value is about 52m, meaning sufficient to fully pay down $52m debt. Cash flow remains the same after sale and lease back, because higher rents are offset by eliminated interest costs:
6 x CF = 160m
Equity value now (because debt is gone) = 160m
160m/ 26,714,067 = $6 per share
3. Check: Compare to Book Value per Share:
Current BV = 94m/26.7m = 3.50 per share
Adjusted Book value after sale and lease back = about $5 per share
Hi shareholders, one point I'd like to make is that you should include lease liabilities both current portion and long as part of your enterprise value if you're including right of use depreciation and lease interest as part of your cash flow numbers.
I personally like to go back pre Ifrs-16; that is, I subtract the lease repayment from cash flow but I only include interest bearing debt as part of my enterprise value. Either way, both should give you the same final answer.