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Ann: Company Update Presentation, page-12

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Hingdog

23,533 Posts.

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10/07/22

21:11

Post #: 62466295
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Originally posted by madamswer ↑

If you're saying that the company can deliver ebit of 10 million pa in the future, assuming profit after tax of 7 mill on your estimates, that gives a p/e of approx 18.5 which isn't particularly cheap for a microcap.
Are my calculations out?

Arithmetically, no, but two important things I think they omit to consider are:

1.) $22m in Net Cash.

Sure, I know that this is of the same order of magnitude as the $23m Deferred Revenue liability but cash cost of servicing that liability will be nowhere near the level of the deferred revenue. But which time even more cash would have been received by the next batch of incoming students, so the cash is real.

Therefore, if you adjust for that net cash balance, the P/E multiple becomes more like 16.5x

2.) Remember, that $10m in EBIT is predicated on the business operating at a mere 70%-75% of capacity, i.e., $75m out of $100m in Revenue capability.

Given the business's ~55% Gross Profit Margin, filling up the extra $25m of revenue would deliver a further $14m of Gross Profit and assuming (conservatively) a further $2m or $3m in CoDB is needed to support that additional Revenue, we are talking about an EBIT uplift of $11m or $12m (so say, $10m to add an extra layer of conservatism).

Which means EBIT would be more like $20m, and it would bring your raw valuation multiple to around 9.5 times (and adjusting for the cash, down to around 8x).

That's a reflection of the acute operating leverage that exists in a business such as this one.

(What's more that $100m of Revenue is, in turn, based on their existing campus capacity, and excludes them adding campus capacity if the demand is there.)

.

Expand

I'm afraid my eyes glazed over reading all of that but I'm guessing it adds up to the reason why this chart stood out like a sore thumb when flicking through charts this afternoon. Very impressive relative strength and clear accumulation at the end of a long base. A bit more liquidity would be preferable but beggars can't be choosers i guess

ICT Price at posting: 14.0¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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Last 10.5¢		Change 0.000(0.00%)		Mkt cap ! $23.25M

Open	High	Low	Value	Volume
0.0¢	0.0¢	0.0¢	$0	0

Buyers (Bids)

No.	Vol.	Price($)
8	339052	10.5¢

Sellers (Offers)

Price($)	Vol.	No.
11.5¢	224435	1

View Market Depth

No.	Vol.	Price($)
8	339052	0.105
9	454229	0.100
1	35000	0.095
3	625000	0.080
1	50000	0.075

Price($)	Vol.	No.
0.115	224435	1
0.120	1800	1
0.130	37329	2
0.185	54000	1
0.000	0	0

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Ann: Company Update Presentation, page-12

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Ann: Company Update Presentation, page-12

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