chart, page-7

Hi all,
I highly doubt this share price action is to reduce the price at which new capital is to be raised. The new capital is $1.5m - $2.5 m over 2 years - this is not a significant amount.

Connxion Directors (such as those that have interest in FCP which in turn has a large interest in CXN) do not want to see their shareholding diluted further and further. Recall a few months ago CXN came out and said that they will raise less under the SPP so as not to dilute shareholders as much. I believe they want to see the share price rise back to a more realistic value.

As for the shareholder selling, correct, the Hong Kong investor sold over half his holding some couple weeks ago though he only had 16m shares, sold to 8m then, so probably nothing left by now. If that's the case there may be other shuffling going on and yes most of it is occuring off market depth in the sense that blocks of 500000 shares or so appear on both sides of the bid/ask and then transact at 2.6 or 2.7 though predominantly at 2.6. When this will cease i dont know that the top few shareholders only represent a small % of the overall float so what we really need is to get the general punter on board and improving liquidity which will flush out this re shuffling a lot quicker.

I keep reviewing past reports and one report (by Shaw from memory) used a multiple of sales as a measure of market value. A multiple of 1.5 looked reasonable (given mkt cap and business model relative to other peers mentioned). Given FY11 sales of $38m we would derive a market value of close to $60m or approximately 5 times the current share price i.e. 13cents.

So at this stage we have EBITDA, PE and now cashflow multiple showing a value in the order of 6c - 13c. Current share price of 2.6c remains signficantly undervalued. This is based on simple valuation metrics, not ramping.

If management can deliver as they have been, and show us an EBITDA of $1m + for the quarter, next week, then we will see this share price get to the valuation range soon -half yearly reports / statistics etc will for the first time start showing a positive EPS and ridiculously low valuation metrics such as PE ratio and EBITDA multiple.

Comments / thoughts welcome