So what is QTRH worth now? Reminder of what I wrote a couple weeks ago.
With today's results the normalized ITS earnings are currently at $15M annually. At a 7X multiple you get $105M. At 10X you get $150 million. At 15X you get $225M.
The 1.29 target was at $30M EBITDA for ITS and the current 7X ITS multiple for peers.
I am at a complete loss of words of how bad these ITS results are. And no pipeline and no forecasts. Wow!!!!!
And definitely no NCIB
..............
$1.29/ share is the current value of QTRH if it matched the value of small cap IP and ITS stocks trading in the United States TODAY.
The current price is a 65% premium to the individual constituents. That is a 65% premium you are paying to the Board of Directors and Quarterhill management to make this investment for you.
I have kept the 2022 forecasts from analysts the same. No change in margin. This is $30M EBITDA for ITS at a 7X multiple. I have also kept the original Apple win. This is the table from the Cannacord report. Just using CURRENT market multiples
In other words an investor is paying a huge premium to buy the QTRH package vs synthetically creating the QTRH structure by buying Pure Play PIPCOs and ITI / REKR directly. You also don't need to finance the corporate overhead structure at QTRH.
This is the equivalent of buying a fruit basket for $16.50 (Quarterhill) or you can pay $10.00 and make the basket yourself (strategy below).
Why buy QTRH when you can synthetically create the same exposure to ITS companies and a PIPCO at $1.29/share? You can buy a portfolio of 20% VHC for less than cash value (and has a $500m district court win against Apple) and a mix of 40% of ITI and REKR (trading at 7x 2022 EBITDA).
The only reason QTRH hasn't collapsed to this level is because of the passive flows into the TSX due to the rise in energy and materials.
Component / Multiple / EBITDA/ Total Value
WiLan: 0X / 9 / 0
IRD + ETC: 7X / 30 / 210
Corp: 10/ (11) / (112)
Apple Win: - / 81
Cash: - /91
Debt: -/ (118)
Total: 153 Million Enterprise Value
Fully diluted shares: 118M
Price/Share: $1.29/share