Conclusion & Valuation
Intertainment has several businesses in its development pipeline that
have the potential to be winners when the time comes for their respective
IPO’s. Successful business incubators have been able to enjoy substantial
capital gains from successful spinoffs of their developing companies.
Intertainment’s Ortsbo shows significant market potential, and
Intertainment has even been approached to sell the company to other
firms. We believe that Intertainment will be able to spinoff Ortsbo successfully
and enjoy significant revenues, both from the spinoff as well as by continuing
to hold a significant portion (approximately 50%+) of Ortsbo’s common shares.
We are rating this stock a “Speculative Buy,” with a 12-month Target
Valuation* of C$1.23 to C$1.47 per share, contingent upon the Ortsbo
spinoff:
Given the potential valuation of the Ortsbo spinoff and historical value ranges
of INT shares, we have generated a potential price for INT of C$1.23 per share
without a spinoff of Ortsbo, and a total value to the share holder of C$1.47 with
a spin off.
* Valuation derived according to Table 1 on page 8