Ann: Business Update and Appendix 3D (Changes to Buy-Back), page-12

That is certainly one way to look at it. And for the moment it seems the market agrees with you.

The other way to look at it would be that the board thinks the stock is cheap. And if they hit their FY19 guidance of $7.5-$8.5m EBITDA then the board will be proven correct.

So its worth considering how likely they are to hit FY19 guidance.

They have already said they will come in towards the higher end of the FY18 guidance range ($1.5-$2.3m). Lets call it $2.1m.

1H18 was $0.6m. Meaning 2H18 delivered $1.5m of EBITDA. Annualised run-rate of $3m EBITDA.

Then you have to factor in the synergies that were realised in 2H but have yet to hit the bottom line and so won't show up in FY18 numbers (but will in FY19).

$1.6m has been realised from staff savings, but don’t kick in until Nov/Dec this year. $0.8m of it will show up in FY19, and $1.6m the following year.

They saved $0.4m in rationalising office space. But it only kicked in from May. So call it $0.35m additional EBITDA in FY19.

$0.5m was realised from service providers, but less than half hit 2H18. Call it another $0.3m benefit in FY19.

So the run-rate EBITDA exiting FY18 is $4.5m.

Then there are the remaining synergies that MGP has quantified but not yet realised. It is at least another $1m of synergies (see latest presentation and todays update). Lets say half of it is realised in FY19 for +$0.5m.

There will be significant savings from the already announced super acquisition through internalising currently outsourced services. The acquisition is awaiting regulatory approval and should be completed soon.

There will be savings in the platform integration (AWS costs, integrating front end and eventually back end, etc) along with a substantial improvement in the platform features and aesthetics. In todays announcement they are saying we will give more detail in August. But lets just assume any cost savings are reinvested for a nil financial benefit in FY19.

You’re looking at $5m+ EBITDA before factoring in growth and any as yet unquantified synergies. And the business continues to grow nicely.

The market is pricing the stock as if they will miss guidance. As they start to show they are close then the stock will re-rate.

$8m EBITDA is the middle of the guidance range. EV/EBITDA of 7x. Deserves at least 10-12x in my view and is cheap on absolute terms. I don't like relative valuations but a quick look at HUB OVH NWL & PPS suggest MGP should trade much higher than 7x.

$1.5m of development spend. Strip out non-cash amortisation from Linear acquisition. No tax for a while.

NPATA of ~$6.5m. P/E of 9-10x.

There is even a chance of a dividend in FY19.

Seems decent value to me.

Shaws was never factored into FY19 guidance and looks a bit opportunistic in hindsight. The Linear acquisition was transformational but its taken time to integrate. A large number of funds came in on the raise and were scaled back, many have since exited into an illiquid market, pushing the stock down.

Eventually if they hit guidance the stock will re-rate. If inflows accelerate off the back of the wrap launch and new platform development then it might re-rate hard.

If the board thinks they are likely to hit guidance, then they are right to be buying back stock while the market disagrees. They keep reaffirming FY19 guidance to the market too.

Seems to me they are closer to hitting guidance than it appears at first glance.

So lets wait and see.