The company has entered a bid implementation agreement with IBNA following the announcement in June. Also, Steadfast Group is seeking expressions of interest to acquire the total rebate from network brokerages in Australasia.
If the acquisitions are partially funded by existing cash, Credit Suisse calculates the accretion could be up to 7.5%. The broker increases the target to $3.60 from $3.00, incorporating the acquisitions into the valuation.
Neutral rating retained. Credit Suisse assesses, for a company growing by acquisition, as long as the gap between private and listed market multiples remains wide, it can continue to issue shares and make accretive acquisitions on the arbitrage alone.
Target price is $3.60.Current Price is $3.74. Difference: ($0.14) – (brackets indicate current price is over target). If SDF meets the Credit Suisse target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).