Author Topic: ECL.AU - Excelsior Capital Limited  (Read 7998 times)

Spekulatius

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Re: ECL.AU - Excelsior Capital Limited
« Reply #20 on: April 25, 2019, 04:08:21 AM »
I donít think the coal industry in Australia is terminal, metallurgical coal is pretty much alive. I think one thing I donít like about dividend payers in Australia is the high withholding tax of 30%. At least when held in an IRA, there is no way of getting it back.
Life is too short for cheap beer and wine.


alexbossert

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Re: ECL.AU - Excelsior Capital Limited
« Reply #21 on: August 29, 2019, 06:58:49 AM »
Excelsior Capital reported earnings yesterday: https://www.asx.com.au/asx/share-price-research/company/ECL

For the year ended June 30th, 2019 the Electrical Components segment earned pre-tax profits of $7.72 million vs $6.98 million in the prior year.

Overall, the company reported net income of $4.25 million for the year (adjusted for non-controlling interests). I make a few adjustments to net income to arrive at free cash flow for the underlying business. I add back the gain or loss on the investment portfolio net of tax ($.799 million), add back depreciation & amortization ($.386 million) subtract capital expenditures ($.322 million), and make an adjustment to normalize taxes ($.263 million).

I get FCF of $5.38 million ($.185 per share) for the year.

Here are the current figures:

Share price: $1.265
Market capitalization: $36.68 million
Net cash and investments: $18.41 million
Annualized free cash flow of the underlying business: $5.38 million
Net current asset value + securities: $38.98 million
Enterprise Value (market cap net of cash & investments): $18.27 million

At todayís market price of $1.265, Excelsior Capital is trading for an enterprise value of $18.27 million and the underlying business is producing $5.38 million in annual FCF. At the present price, Excelsior Capital is trading for just 3.4 times FCF net of cash & investments.

I'm quite happy with how the business is performing and the stock remains deeply undervalued.

kab60

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Re: ECL.AU - Excelsior Capital Limited
« Reply #22 on: October 25, 2019, 09:09:48 AM »
Why don't they take it private? Only reason I can think is that being public with a rock solid BS helps them win orders, but the upside seems pretty huge for Leanne. Could be financed with the BS. Anyone into aussie takeover-rulles and know whether we risk getting Brookfielded? I bought a position, Leanne also bought more the other day. Pretty crazy setup (though that big Rio Tinto mine is delayed).

Deepdive

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Re: ECL.AU - Excelsior Capital Limited
« Reply #23 on: October 26, 2019, 07:42:52 PM »
Why don't they take it private? Only reason I can think is that being public with a rock solid BS helps them win orders, but the upside seems pretty huge for Leanne. Could be financed with the BS. Anyone into aussie takeover-rulles and know whether we risk getting Brookfielded? I bought a position, Leanne also bought more the other day. Pretty crazy setup (though that big Rio Tinto mine is delayed).

In the short term, they are trying to create an asset management subsidiary that they can potentially spin off at a later date if they are successful with capital raising and performance.  So there is no short term 2-3 year risk of a take under.  In the long run, I generally find these large insider/family control companies to not think about these topics like a distressed investor like a Brookfield or Oaktree.  If they have a public vehicle, they tend to leave it alone.  Culturally, I believe having a publicly traded company in Australia is more of a social status.  Back to the fundamentals, it trades below liquidation value, pays a healthy dividend, and actually has a pretty good operating business. 

Stuart D

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Re: ECL.AU - Excelsior Capital Limited
« Reply #24 on: October 26, 2019, 08:28:12 PM »
For anyone looking for more discussions on ECL, I just discovered another blog "hotcopper" that focuses on Australian companies. After signing up I wasn't able to post for ~24hrs, but it seems to be okay now that admin have approved my account. Curious if anyone else uses the that forum?

Also, I love the verb "Brookfielded"

kab60

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Re: ECL.AU - Excelsior Capital Limited
« Reply #25 on: October 30, 2019, 12:49:03 PM »
Why don't they take it private? Only reason I can think is that being public with a rock solid BS helps them win orders, but the upside seems pretty huge for Leanne. Could be financed with the BS. Anyone into aussie takeover-rulles and know whether we risk getting Brookfielded? I bought a position, Leanne also bought more the other day. Pretty crazy setup (though that big Rio Tinto mine is delayed).

In the short term, they are trying to create an asset management subsidiary that they can potentially spin off at a later date if they are successful with capital raising and performance.  So there is no short term 2-3 year risk of a take under.  In the long run, I generally find these large insider/family control companies to not think about these topics like a distressed investor like a Brookfield or Oaktree.  If they have a public vehicle, they tend to leave it alone.  Culturally, I believe having a publicly traded company in Australia is more of a social status.  Back to the fundamentals, it trades below liquidation value, pays a healthy dividend, and actually has a pretty good operating business.
I don't see why their AM aspirations (which I'd value at 0) would stop them from during a takeover. At these levels it must be very tempting, and I'm not sure there's much social status either in owning a majority stake in an illiquid microcap nobody has ever heard of. Protection for minority investors doesn't seem too great here, and since I actually think Glennon has a thoughful investment strategy (no idea on his returns, just read some of his fund letters and he seems rational - though), why wouldn't he buy hand over fist? This is not some obscure situation or overly complex situation. The value is actually extremely visible which means we either have a 100$ bill lying around, or there's a lot of fear of a take-under. And probably more risk than I initially assumed.

Cicero

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Re: ECL.AU - Excelsior Capital Limited
« Reply #26 on: May 13, 2020, 07:38:31 PM »
Anyone still following the situation? They cut the dividend which I thought was interesting in light of the liquidity and cash generation of the business.

alexbossert

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Re: ECL.AU - Excelsior Capital Limited
« Reply #27 on: May 13, 2020, 08:26:47 PM »
Here is my latest update:

Excelsior Capital Limited named Oliver Schweizer to the board of directors. Oliver Schweizer runs 22 Capital. 22 Capital specializes in "Corporate transaction advisory services, business and financial instrument valuations, and opportunistic investments."
 
This is the second recent appointment of a director with primarily capital markets experience (the other being Danny Herceg who joined the board on October 4th).
 
I can't help but draw the conclusion that a sale of the electrical services division is a real possibility.
 
Legend Corporation (a good comparable to ECL's electrical business) was acquired at 8x EV/EBITDA in August of 2019.
 
Based on the 2019 statutory accounts, ECL's electrical business delivered $8.107m in EBITDA and at the same 8X multiple as the Legend acquisition, it implies a value for the electrical business of $64.9M or $2.24 per share. If ECL sold the electrical services business, I would expect them to distribute those proceeds to shareholders via a special dividend.
 
Value of the Electrical Services Division (per share): $2.24
Net Cash and Investments (per share):  $.63
Total Per Share Value: $2.87
 
This compares to the current share price of $1.17. The stock remains very cheap.
 
2020 should be an exciting year for Excelsior Capital.
 
Sources: 
 
https://www.asx.com.au/asxpdf/20200113/pdf/44d7jyp4rrkwhr.pdf 
https://22corporateadvisory.com.au/
https://www.afr.com/street-talk/bye-bye-legend-adamantem-secures-shareholder-vote-20190808-p52fdh
https://www.legendcorporate.com/investor_relations/asx/445s28bf1nn1qz.pdf 
https://www.asx.com.au/asxpdf/20191025/pdf/449vscpmvf3tz6.pdf   
« Last Edit: May 13, 2020, 08:28:41 PM by alexbossert »

Cicero

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Re: ECL.AU - Excelsior Capital Limited
« Reply #28 on: May 14, 2020, 08:27:30 PM »
Thanks Alex. Helpful colour.

8x EBITDA seems almost a bit conservative given the economics of the business and the current point in the mining cycle. Let's see how it plays out.