Well,
12 months ago before COVID hit, management made a forecast of SPS $32m, this was hit. Recurring revenue of $9.1m, this was missed by $1m. CES of $120m underpinned by the IC project, $56m was recognized with remainder being extended into FY22.
Now bear in mind when the forecast was made 12 months ago the SP was 0.395, currently trading at 39% discount.
Going forward, FY21 SPS revenue forecast (mid-range) up 31% from FY20, which was up 22% from FY19. This is underpinned by existing projects, so the revenue forecast is NOT including potential new business wins from my understanding. $27m in cash will be released over next 18 months plus $3m in cash refund from SQ project, so that's about USD$65m in total cash which is about AUD$84.7m, which is about 44% of current market cap. Fundamentally speaking, I can't pinpoint anything wrong this company, all the financial metrics are heading in right direction with rising margin and decreasing SG&A cost. I don't like the restructuring cost of $7m which will be spread out in FY21 but that's a one-off. Thoughts?
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