Post by
giovinco on Mar 17, 2022 10:14pm
BMO Financial given IVQ 'Neutral' rating with $2 CAD target
Back of the envelope calculation:
Total asset went from $1.5B to $1.3B, while debt went from $1.052B to $0.894B.
So, if they were to dispose of all their assets while reducing debt then they would be debt-free at ~$200M USD using the same ratio of reduction.
Of course, the current difference between total assets - total debt = ~$400M USD. I am being conservative and adding in the discount of disposal.
Since they were currently disposing of non-core assets, I believe they would get a better valuation on the core assets. So, the terminal value would be somewhere between $200M to $400M USD.
They are still cashflow positive, after the interest payment, so they would earn at least $5~6M USD per quarter while they dispose of all their assets if they chose to do so.
I am getting a different valuation from what BMO has. What is missing?
Comment by
Capharnaum on Mar 17, 2022 11:17pm
I think there is a lot more value than $2. However, targets are going to be low for a while due to the risks facing the business. They are still over leveraged and their tenants are facing costs that grow faster than revenues. I think they'll get through and the $2 per share target is too low, but management's still got a lot of things to work on before the shares appreciate further.
Comment by
pjn0987654321 on Mar 18, 2022 8:33am
Sooner or later, the costs have to be passed on to the residents. They are getting too good a deal. Neither IVQ nor the tenants is a charity. If management won't make the business perform, then new management is needed.