Research notes

As planned, EBO has increased its shareholding in Transmedic to 90% (from 51%). The additional shareholding will be funded through existing debt facilities and is priced in line with the original acquisition of LifeHealthcare. A recent trading update noted underlying EBITDA growth of 8.8% for the first four months of FY24. We are siting slightly ahead of this growth rate and are comfortable with our forecasts. We have made no changes to our valuation and have ~19% upside to our target price. We have an Add recommendation and see EBO as a quality growth company.

Avada Group (AVD) is a founder led, ASX-listed traffic management services company with an extensive network of operations in Australia and New Zealand. A market leader, operating in a highly fragmented industry, AVD has a long-runway of potential accretive M&A opportunities ahead. Through 1Q24, AVD delivered group revenue growth of 30% (vs pcp), which comprised strong inorganic (+17%) and organic (+13%) contributions. In FY23, AVD delivered A$183.3m revenue, A$38.4m gross profit, A$16.1m in underlying EBITDA and A$4.7m NPATA. Within the result, the group noted 7% of LFL revenue growth (ex-acquisitions) and gross margin improvement HoH (~22% in 2H; ~20% in 1H).