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Paradigm Capital Inc, target $1.00 plus

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pointofreturn   Wednesday, 02/19/14 04:24:42 PM
Re: Stocker1313 post# 2
Post # of 53 
Paradigm Capital Inc, target $1.00 plus
Overall, we remain excited about the Loyalist story given the numerous growth levers.
FIrst, we believe the M&A opportunity remains a key catalyst given the fragmented nature of the Canadian ESL market, along with Loyalist's position as the sole acquirer of these assets. Second, we believe the regulatory environment remains extremely conducive to
growth. We note that earlier this month the Canadian government unveiled plans to
nearly double the number of international students in Canada by 2022 to 450,000 (from
265,000 in 2012). Last, aside from tuition fees, we believe Loyalist is on the cusp of
capitalizing on new growth opportunities, such as student housing
and franchising. While still in the early stages, we believe these services could ultimately represent extremely high-margin sources of revenue, which could help the company move above its near-term 20% EBITDA margin goal. Recall the company has already announced that it has pre-sold student housing for 104 students for H1/CY14,and that it has also already signed six franchise agreements. We maintain our Speculative Buy rating and $1.00 target price,which is based on 12x 2014e EV / EBITDA.

Note the EBITDA will be up next quarter imho and so will the target increase then.

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