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26/07/12
16:43
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The company is now trading back at a fairer market cap @ around $20m in my opinion
Too much upside for future revenue was priced in the past months.
If they can double their subscriber base and create a strong brand and provide a good service then they are in business.
I cant see this trading on a high PE and with a No Contract business there is always that risk open to investors.
I am thinking 5-8 times NPAT
Just looking at their costs for the last 12 months
* Staff Costs - $6.5m
* Adverstising/Marketing - $6m
* Other working Capital - $10m
* Digital Services Costs - $1.5m
Total - $24m
Just as a hypothetical lets say all stays the same but Advertising/Marketing grows to $10m (which I think it has to to continue growth phase)
So lets say $30m in expenses
2011/12 revenue from customers was $18m
As a base case assume all customers were on streaming only at 14.99/month = $180/pa per subscriber
$30m (my estimate) / $180 = 166,000 subscribers to breakeven
At 200,000 subscribers with the same expenses =
34,000 subscribers above breakeven @ $180 = $6.1m
= 4m NPAT x PE 8 = 32m MCAP /450m shares on issue = 7 cents
IF QFX can achieve 59% growth again this year that would take them to 177,000 subscribers July 2012
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