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They were brought out at PE of 21x based on EPS of 11.86 cents including fair value gains (PE increases to about 30x on 8 cents EPS excluding fair value gains) for FY 2012. These figures intrinsically indicate very bullish forecasts in terms of revenue and earnings growth while possibly signifying a very strong balance sheet and cash flow statement. However, they have been piling on more and more debt without any new property under construction ( Q2 2013 still has no new properties under construction, meaning a full half year without construction), which isnt congruent with the current valuation. Future prospects may be starkly different but with whats in place and in the past, a 20x-30x PE seems a tad optimistic. a PE of 5-10x (excluding fair value gains) would start to constitute value play (maybe).
In terms of consideration, Panpac's shareholders may have benefitted more from the transaction than UOL's shareholders did/will in the future (not too sure what the total consideration was, but based on the remaining stake acquired and assuming the sort of PE range at which the rest of transactions were undertaken were similar).
However, we have still not seen the type of synergies and efficiencies that this purchase can do for UOL. My opinion would be that it is either an empire building exercise or an intangible building one (in terms of combined brand-name, reliable construction/property company and a mid-level luxury hotel)
BTW a DCF of panpac with 5% permanent growth, constant margins and no expansionary CAPEX (capex = depreciation) yields a enterprise value of 1.2 billion (with 10% WACC).
In terms of consideration, Panpac's shareholders may have benefitted more from the transaction than UOL's shareholders did/will in the future (not too sure what the total consideration was, but based on the remaining stake acquired and assuming the sort of PE range at which the rest of transactions were undertaken were similar).
However, we have still not seen the type of synergies and efficiencies that this purchase can do for UOL. My opinion would be that it is either an empire building exercise or an intangible building one (in terms of combined brand-name, reliable construction/property company and a mid-level luxury hotel)
BTW a DCF of panpac with 5% permanent growth, constant margins and no expansionary CAPEX (capex = depreciation) yields a enterprise value of 1.2 billion (with 10% WACC).