Post by
Newtrader1982 on Aug 17, 2021 1:51pm
Speaking of investing long
If they execute 250 million just from the service side by 2025 this is trading at less than 2 times 2025 revenue just the service side alone. The market is becoming completely irrational about xebec valuation at this point but I guess extremes go both ways.
Comment by
savyinvestor333 on Aug 17, 2021 2:47pm
You have to remember that service companies are low margin slow growing businesses. The real reason they are buying them is for the service and parts sales on the Biostream units. If we don't sell a ton of the Biostream units in the geographic areas as our service companies tare located these service companies will not generate the returns a growth investor wants to see.
Comment by
Newtrader1982 on Aug 17, 2021 2:51pm
Then why waste money on them at all right now scrap that plan and buy capacity to build the Biostream units that will drive growth then go after the service
Comment by
savyinvestor333 on Aug 17, 2021 2:54pm
I believe that is one of Kurk's major selling points. Having the service network to keep them running.
Comment by
investorse on Aug 17, 2021 3:04pm
Service companies have a positive ebidta. Isnt't it what the markets want to see? Both the equipment sale and the service will grow hand it hand and will be profitable. Also, Xebec has a clear competitive advantage when they offer the equipment with a service contract attached to that...
Comment by
Ciao on Aug 17, 2021 3:10pm
I recall that margins for service and maintenance are higher than that for selling capital equipment. No different than car vehicle sales, higher margins come in from servicing.
Comment by
savyinvestor333 on Aug 17, 2021 3:15pm
I agree on servicing the Biostream units will be higher margin but when these companies are bought and only selling compressed gases and other items they are not high growth or high margin. Until the Biostreams are in place they will not be considered a growth driver.