Ann: Quarterly Activities Report, page-3

This is an outstanding result, kudos to management. The market will appreciate that 60% of total debt has been repaid with a lump sum payment of $1.5m repaid on the Kalonda loan (associated with Chairman Tony Leibowitz).

From an operations perspective: we are witnessing record revenue (up 35% on PCP), gross written insurance premiums (GWP) of $29m for H1 FY22 (up 70%) YoY, CF+ (for the second quarter in a row) and profit margins increasing. The CEO, Mr Tom Kent, is the second-largest shareholder in ENA himself (having purchased a massive amount on market last year) — it has been a busy quarter and he is continuing to make his mark.

Businesses like Ensurance are valued on a percentage of total GWP, that's how discussions were structured for ENA's acquisition of TK Speciality Risks. For ENA, they are now clearly hitting a higher level of scale deserving of a valuation in the order of 50% of annual GWP. Underwriting businesses with >$100m in GWP can trade for up to 75% of GWP.

ENA achieved $29m for the first half of FY2022 (up 70% YoY). If we annualise this figure to $58m and apply a 50% GWP multiple, we are looking at a business that is very conservatively currently worth $29m (32c) (versus a market cap of $18m at 20c), without considering the growth rate of the business. At the current growth rate, ENA will soon surpass $100m in annual GWP, by which point the company should conservatively be valued at $50m AUD at a 0.5x GWP multiple. With 90m SOI, that equates to a short term share price target of 55c.

Given that the company is CF+ and growing well, in a strong insurance market, with aligned and proven management (Tony Leibowitz owns 18% and Tom Kent owns 15%), this is a low-risk asymmetric play for me. It also helps that I know the management team is honest, hard-working, and driven to make this a massive success. For that reason, I've increased my position here.

The market will wake up to this growth story soon...