Thursday, 16 February 2017
Novabase: full year results. What now?
First of all the disappointing points:
1) Dividend: 0,15€/sh.
2) EBITDA guidance: >10M
3) 2016 EBITDA impacted by a 7M unexpected cost in a single project
About 1 and 2) I expected either an higher dividend or an higher guidance (since cash investment should result in an higher guidance). Unless this guidance is relative to attributable EBITDA (I don’t think it is), this should mean they expect the small growth in sales to be accompanied by a fall in EBITDA (excluding that 7M cost).
About 3) Since what matters to me is actual cash generation (see the positive points below) this charge should make no difference. It is a one off. The only thing I find strange is how can they have an unexpected 7M cost in a single project? Somebody must have screwed up big.
And finally, the positives:
1) Net cash (as reported, I know it includes African debt) of 25,7M, which does not include the 44M received of the IMS sale. Actual cash generation was 14,4M. As such, net cash including the IMS should be about 69,7M. Which is 12,6 M above what I expected
2) They totally froze the problem of African debt. As such, held to maturity investments already fell 1,5M since June, and are now at 9,3M, 4,4M to be received in the following 12 months. Things are improving in this point. I will quote from:
"Deixou de ser possível comprar equipamentos a parceiros, pagá-los em dólares e depois receber em kwanzas ou em meticais", diz o gestor, confirmando que a empresa irá continuar a ter presença direta nestes países lusófonos "quando o pagamento é feito em euros ou dólares". "Já recusámos projetos no valor de €20 milhões porque não havia garantias. Não vamos trabalhar para perder dinheiro"
In English (loose translation by myself): no more Kwanza or metical payments. Presence in Angola and Mozambique will continue when payment is made in euro or dolar. 20M in projects was already refused due to lack of guarantees. No working to lose money.
And the updated math:
Market cap 84M
Net cash: 69,7M
Enterprise value: 14,3M
EV/EBITDA guidance: 14,3/over 10= under 1.43
Disclaimer: I own Novabase shares. I am and will be wrong. Always do your own research. Always read the introduction post.