Started having a look at this business, micro cap, very tightly held, top 20 hold nearly 85%, very illiquid. At a glance looks interesting, its a supplier of retail electricity and gas services to residential and business customers in Australia. Financials are a bit messy to work out, quite a bit of hedging of energy & currency, impacts the balance sheet and P&L in a distorting way. It does seem to be quite a lumpy business, FCF has been all over the place which makes it hard to value. ROIIC is quite good at around 15% and EV/Sales makes it look undervalued, but operating cushion is low, at 5% so its only turning $1 of sales into 5c of FCF.
Its a bit too lumpy and complicated for my liking, maybe one to watch as it may be able to flatten its performance in time. Very hard to build a position too, so would need strong conviction to buy in.
$2.50 on 30/3/23
