OTCPK:JENGQ - Post by User
Post by
mingzhuon Oct 02, 2020 3:52pm
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Post# 31659227
nice analysis on Yahoo message board
nice analysis on Yahoo message boardMy contribution to clarity, as I see lots of confusion down there.
Shares outstanding still unknown (the company undertook to issue shares to back-stoppers if they did not get a minimum amount). But anywhere between 46.6 million and 50 million. Market cap today approximately $210 million.
Net financial position (including the $74 million of cash raised with the new equity issuance) is $320 million.
Enterprise Value (sum of market cap and net financial position, or the market price of the assets) = $210+$320=$530 million.
Current EBITDA guidance for FY 2021 (ending 3/2021) = $100-120 million.
At the mid point of the guidance, the company is trading at $530/110 = ca. 5x EBITDA.
Avenues for shareholders' value creation.
a) Improve EBITDA. The company has announced cost savings, but the reality is that they should deliver approximately $100 EBITDA/Residential Customer Equivalent. With 3.2 million RCEs they are delivering approximately $30-$35 EBITDA/RCE (management wake up!). At $100 EBITDA/RCE and 5x EBITDA, the share price would be $27/share.
b) If unable / incapable of improving EBITDA, sell the company. M&A in the sector is picking up with Duke Energy and NexEra looking at a merger. Granted, they are larger utilities, but JE assets (3.2 million RCEs) can be better served and more profitably served by a large utility.
c) Communicate to the market. Management has to come out and "say what they will do" (and do what they say they will). No longer time to hide behind the recapitalization. Is this management team capable to manage from an operational / industrial point of view the assets extracting the maximum of shareholders' value (i.e. $25-30/share)? If not, please sell the company.
My 2 cents.