Trending >

Norsat is very undervalued, says Global Maxfin’s Garcea

Norsat
Norsat
Norsat CEO Dr. Amiee Chan. Global Maxfin analyst Ralph Garcea says Norsat’s management team has demonstrated experience at deriving value from acquisitions.

Yesterday, Norsat (Norsat Stock Quote, Chart, News: TSX:NII) acquired the assets of an unnamed US-based satellite communication systems company for (US) $530,170.

The Richmond, BC, based company said the pickup would allow it to additional areas within the satellite communications markets with solid state power amplifiers, high power block upconverters, SATCOM baseband kits and Microsatellite terminals.

Norsat CEO, Dr. Amiee Chan, said the new types of business afforded by the acquisition can make a meaningful contribution.

“Strategically, this acquisition is consistent with Norsat’s ongoing growth strategy. Through it, we will broaden our portfolio of products and services, and the solutions we provide to customers,” she said. “The expanded sales team and larger product range it brings will enable us to address new market opportunities in the US and around the world. Accordingly, we believe the acquisition will create strong value and has the potential to be accretive to shareholders.”

Global Maxfin Capital analyst Ralph Garcea says this addition is a great strategic fit for Norsat in terms of product and intellectual property. He thinks the deal could add more than $5-million in revenue and half a million dollars in EBITDA annually. He says Norsat’s management team has demonstrated experience at deriving value from acquisitions, pointing to the 2011 acquisition of Sinclair. In a research update to clients yesterday, Garcea reiterated his STRONG BUY rating and $1.00 target on Norsat.

Garcea says Norsat is undervalued relative to its peers. He says the company is currently trading at an EV/Sales of 0.7x and EV/EBITDA of 6.0x, but its comparables are trading at 1.1x and 7.5x, respectively. Recent takeout multiples in the space, he points out, are even higher, at 1-2.5x EV/Sales and 8-12x EV/EBITDA. These numbers, says the Global Maxfin analyst, support a C$1.25-1.50 takeout value for Norsat.

At press time, shares of Norsat were up 2% to $.51.

  •  
  •  
  •  

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

Comment

One thought on “Norsat is very undervalued, says Global Maxfin’s Garcea

  1. “Global Maxfin Capital analyst Ralph Garcea says this addition is a great strategic fit for Norsat in terms of product and intellectual property. He thinks the deal could add more than $5-million in revenue and half a million dollars in EBITDA annually. ”

    Typical analyst BS. How can he determine revenue and EBITDA without knowing anything about the company that was bought.

Leave a Reply

Your email address will not be published. Required fields are marked *