RE:RE:RE:Jarilowsky Fraser / BNS - after settlementRonbromleygross wrote: How true Tomperns
As I have stated many times, the current share price of $20 means nothing to me.
The intrinsic value of SNC's assets are what matter most. To an informed investor who has done their homework, that value is much higher than $20.
The value of the 407 (roughly $13) plus the nuclear and concessions (roughly $15 adjusted upwards based on good Q1 results) less the cost /risk to complete the LSTK projects (assume $8 but this is too aggressive and overstated) will get you to the current share price of $20 when you net the 3 components out.
Assuming the 3 recent directors they promoted and/or hired are actually working and doing something to earn their pay, I assume they get nothing or something very small to sell off the Resources and money losing Constructuon divisions. That is gravy if they get anything for them.
This means the value of the Engineering division (and most prized procession of SNC) isn't even included in the current market trading share price. What is the value in that?? Assuming we simply take the price that SNC bought it at and nothing more, then you are looking at a value roughly $20 there. ($3.5b / 175m shares o/s). We haven't even factored in the fact that the value of Atkins has increased since the 2017 bought deal from SNC.
There were many suitors interested in buying Atkins from SNC when the problems on the SNC scandal surfaced and SNC was contemplating what to do to stem the bleeding and shore up their balance sheet and restore investor and institutional ownership. They went the route of selling the partial 10 percentage ownership of the 407. When interviewed on the decision to sell the 407, Ian Edwards said despite getting several inquiries to sell Atkins from suitors, Ian said Atkins was not for sale and that Atkins would form the "jewel/crown" on a refocused and transformed SNC into a pure play Engineering company. The future is on Engineering.
That $20 value we place on the engineering division today will be worth much more in the next 2 years when the balance if the LSTK projects are completed and the risks or overhang on the current stock price is gone.
Buy while it is cheap or average down imo.
Parience is all that is needed here.
Ron
Oh god they sold the 407 stake instead of getting rid of Atkins. I'm still looking for those synergies and increased revenues 3 years later. They essentially bailed out Atkins who had the bulk of their clients in the Gulf states and sold a 99 years old concession cash-cow. I wont even bother comparing the NPV from that trade, it's utterlly disastrous.
Still looking for those 12B in revenue and 120$ millions in synergies.