Short n’ sweet – MYOB is no Xero

Editorial director of Switzer
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On our sister publication – Switzer Daily – Switzer Super Report expert Paul Rickard has today written about the upcoming MYOB IPO and what he thinks about it.

With an expected price of between $3 to $4, Paul writes that it would be too expensive for him at the higher end of that bracket.

“MYOB is forecasting a NPATA (Net Profit after Tax and adding back the tax effect of amortization expenses) of $90.3 million for the 12 months ending June 2016. This number is based on tight cost growth of less than 2% over the previous year, and revenue growth of just under 9%,” he says.

“At a price of $3.00, this puts the company on a multiple of 20.9 times. At $4.00, the multiple is 24.9 times.”
You can read the full story here. He also has some interesting comment as to why he might be one of the few voices that are not so positive on the float.

But before you start to think Paul is unnecessarily pessimistic, take a look at his track record on the big IPO calls.
In November 2013, he concluded that the Nine Entertainment IPO wouldn’t rate – and it hasn’t.

20150402 - nine“It is not a buy for yield, the growth story rings a little hollow, and given the pricing premium, there is no compelling case for it over Seven West. And that’s without worrying about all that stock held (or more realistically, not held), in escrow,” he said then.

Paul also wasn’t that impressed with the Medibank IPO – but did buy some shares.

“Despite this IPO being overpriced at the top end of the range, this is still a government privatisation and the first from the Abbott government. It is hard to imagine the government wanting to disappoint circa 1,000,000 shareholders (voters),” he said.

The FN Arena brokers also have it trading at a 5.3% discount to its consensus target price and at $2.37, it isn’t that higher than its listing price of $2.21.

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