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06/11/19
20:15
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Originally posted by Rokewa:
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Two days away from getting the all important half year results. Been a frustrating year with the relentless sell down, but that will end, hopefully sooner rather than later. Not sure if other’s have looked at the revised guidance, testing how different the financials (by line item) may look going forward. Using the calculated H2 FY 2019 result (FY 19 minus HY 19), we have a departure rate entering FY2020. These show a record 6 months Revenue (USD 53 m), a record Gross Margin % of 63%, OPEX being contained vs the previous half ( + USD 1.2m or at + 3.9 %) and a resultant EBITDA number of USD 1.7m. Now the interesting bit. If they hit the midpoint of the FY 2020 Revenue guidance (UbSD 122.5 m as per latest) and achieve the 63% Gross Margin, then.. in order to deliver the midpoint of the EBITDA guidance ( USD 24 m as per latest), the Operating Expenses would need to reduce to USD 53 m or 43% of Revenue. The previous best achieved in H2 FY 19 was OPEX at 60 of Revenue. So a USD 10 m drop versus the actual achieved in FY19 (where Revenue only USD 96m). The Company recently indicated that their earlier guidance was based on a mid single digit increase in OPEX. Subsequently, they have justified the change in guidance on the basis OPEX will reduce below the FY19 level ( changes which will impact the second half of FY2020). I guess we could see further expansion of the Gross Margin percentage as well. For now, they keep talking 63 + %. All seems seems a bit extreme for me. Higher margin or lower OPEX or a combo thereof will certainly be good news for us. My gut says there may be some accounting changes where the Company capitalise a higher component of Development and associated costs going forward. If this happens, may be driven by some specific needs relating to the balance sheet or simply motivated to improve the income statement. (profitability) Until Tuesday. Rokewa
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Nice to see PPH make an extreme result re Operating Expenses, Rokewa. At US$54M they are pretty much on your extreme rating while exceeding the 2020 guidance for gross margin at 65% over the 6 months, albeit retaining the 63% guidance for the full year. I have yet to analyze the detailed report for factors involved with this but I guess that you are in the process of doing this.