I agree this stock is undervalued , bought a few today , after reading the research note luckily before it jumped to .009 , will look to try get some more if it comes off over the next few days
I have just read the annual report and make the following comments mostly good , some bad.
1. The ceo is overpaid ($250,000 + ) at this stage of the companies grwoth is overdone , he is the largest shareholder so , I would prefer to see it more like $175,000 until revnues are $5m , I think a Sydney or melbourne based director would aslo be of benefit to help them look for new business add ons , or alliance partners
2. The Tax losses of $6.5m are not capitilzed , so this is worth $1.8m tax saving as the business moves forward, absolute no value placed on this great asset , in fact this asset is more than the total market cap .
3. Revenues grew slowly for the 12 months , but it seems the 2nd half was where trhe company showed improvement with new schools signing on up 20% +
4. The EBIT is close to $600,000 , at a current share price of only 3 times ebit and showing growth characteristics , which included $600,000k on research youd say the upsdie is at least6 3 times
5 The share consolidation of 30 for 1 , will be very good for the market cap as it will show the market just how low the market cap is compared to the EPS , and EBIT . If you look at current EBIT at 600,000 up agsinst a business with less than 8m shares , it is around 8c per share .
6 the fact that the management and board have a track record in this space and have taken a business from start to takeover before is all good
Overall I see this as a high risk 2-3 year opportunity but at this market cap , there is almost no downside in my opinion
A shell company costs $1m , this is no shell, and the tax losses alone are worth $ 1.8m , as a trade sale youd expect the bsuiness would be worth at least its revenue ie 2.5 , so add then altogether and my guesstimate value is $5.3m market cap .
MWR Price at posting:
27.0¢ Sentiment: LT Buy Disclosure: Held
