SPA (ASX) Ann: Further Upgrade to First Half Expectations

Originally posted by Marvin_Mindreader ↑

Michael - some good thoughts there, although MWR doesn't warrant 15+x EBITDA multiples as it doesn't have the growth prospects of a lot of straight technology companies. The installation and support that MWR needs to provide is often more for installation.

A few other points for you to consider:

1. The half year result will include expensing of the grant of options to directors and this is a non-cash item, so won't be in the second half, so second half should be greater.

2. The rate of growth of new schools has slowed a bit as the easier ones have been signed up.

3. The pricing of the product is related to the size of the schools. The bigger schools are the ones already signed up as they get the most benefit in time savings. They are also generally the metro schools. As you get out to bigger numbers of schools, the sizes get smaller, so the revenue per new school actually decreases. So you can't extrapolate revenues to school numbers. However marginal cost to support on a per school basis actually reduces, so bottom line profit margins improve.

4. EBITDA multiples are a function of growth. At the moment, MWR doesn't exhibit growth performance or potential that would justify very higher EBITDA multiples. It is why I use 7-8x as the multiple. This is reasonable, whereas to get 10x you need very strong growth. The company is also still very small, so it doesn't have the same level of awareness or coverage which is why it trades more cheaply.

I too am a big believe in the power of education products/space and long term is the right way. I've held MWR for a large number of years. I bought a heap of stock between 15c and 30c. I've sold some around $1, then $1.30 and then $1.70. I'm effectively holding this at zero cost (well actually well less than zero cost). I still think it has very strong growth potential. Any movement into Asia will be a strong positive for me, however there is plenty of competition. This would need to be very well considered, planned and executed.

My preference would be to see them move into additional products and cross sell them into the existing client base where MWR has an existing, trusted relationship. I love the PaySchool product. Now is the time for them to really push this. I wouldn't care if they reinvested their entire profits into this space to get the takeup to a high penetration level. We would then be talking about profits many multiples of current levels once we are out a few years.

I don't care about short term fluctuations in the stock price. I believe that MWR has the potential to be a $50-$100m business. It will take time, but I think if the Directors make the right decisions and execute well, then they will get there.

Regards
Marv

DISCLOSURE: I hold plenty of MWR

Expand

Can anyone shed light on why the number of School/Early learning centers declined from the full yearly to the 1st half 2015?

In the full yearly they stated they had greater than 1,150 accounts in the most recent update they stated they had 1,145 accounts.

This implies growth has come from up selling existing customers, which is a positive. But it also outlines poor demand for the product, and brings into question the competitive position of the business.

They have spent a very small amount on R&D it would not be hard for a larger player to come in and steam roll these guys. A contrarian view is welcome?

No.	Vol.	Price($)
1	277777	1.8¢

No.

Vol.

Price($)

277777

1.8¢

Price($)	Vol.	No.
1.9¢	104001	3

Price($)

Vol.

No.

1.9¢

104001

No.	Vol.	Price($)
1	277777	0.018
2	635706	0.017
3	586196	0.016
4	461774	0.015
3	335780	0.014

No.

Vol.

Price($)

277777

0.018

635706

0.017

586196

0.016

461774

0.015

335780

0.014

Price($)	Vol.	No.
0.019	104001	3
0.020	98267	2
0.021	213507	2
0.022	332871	2
0.023	550000	2

Price($)

Vol.

No.

0.019

104001

0.020

98267

0.021

213507

0.022

332871

0.023

550000

(20min delay)
Last 1.7¢		Change 0.000(0.00%)		Mkt cap ! $8.007M

Open	High	Low	Value	Volume
1.8¢	1.8¢	1.7¢	$490	27.53K

Ann: Further Upgrade to First Half Expectations, page-13

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Microcap Wrap: 5 explorers with news out today

Recce's R327 found effective against E.coli during clinical trial

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Ava Risk Group expands US presence with A$0.7M Substation Deal

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Ann: Further Upgrade to First Half Expectations, page-13

Top Stories

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Microcap Wrap: 5 explorers with news out today

Recce's R327 found effective against E.coli during clinical trial

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Ava Risk Group expands US presence with A$0.7M Substation Deal

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News