No-Moat Seven Group will Put China WesTrac Sale Proceeds to Immediate Use in Coates Hire
We marginally increase our fair value estimate to AUD 8.75, but for reasons largely peripheral to Seven Group’s AUD 517 million acquisition of the 53.3% balance of Coates Hire not already owned. We applaud the withdrawal of cash from China, in preference for full ownership of Coates, despite the effective 6.5 EV/EBITDA purchase multiple sitting at a 50% premium to our prior valuation. Seven’s effective opening of the books on Coates reveals a more-robust-than-expected business with potential for...Seven Group Holdings has six segments: WesTrac Australia, which provides heavy equipment sales and support to customers in Australia; WesTrac China, also providing heavy equipment sales and support in Hebei, Liaoning, Heilongjiang, Jilin, Shanxi, Inner Mongolia and the municipalities of Beijing and Tianjin; AllightSykes, engaged in the manufacture, assembly, sales and support of lighting, FG Wilson power generation and dewatering equipment as well as distribution of Perkins engines; Coates Hire, which is an equipment hire company; Media Investments, which relates to investments in listed and unlisted media organizations; Energy; and Other investments.
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