Blue sky projections for AJX, page-28

This is an opinion piece as I cannot get round not being able to interest various parties I have spoken to. Interestingly MHM was also backed by significant investment from clients of Baker Young so they have that in common. Before you all jump off the cliff - No I dont think its the same here but I can think that after that experience their clients may well have been more sensitive about investments in new tech businesses.

1. I don't think the Institutional investor will go with a 4c. In fact from my experience if the half year is not as they are told it will be then many dont even wait until the full year even if management say they will make up the shortfall. So I think that they will look for profitability or at least break-even from a cash flow point of view before trying to pin down whether its investment grade. The licencing actually detracts from it as they may see this as not regular. So my view is that it depends on the 4c and the half year. Then the next opportunity is the full year results. Ti illustrate PGC had a poor 1st half in the 2014 year they dropped from 41c to 23c in June of that year as the few insto's sold. Even after delivering slightly more than the forecast via a great second half the share only climbed back to 34c in September 2014.

2. I think that as a speculative stock the smaller brokers must have a lot of clients in the red. The few that made a profit are gone , pure opinion. This must have been a traders dream in November 2014 to mid 2015. They are not investors though so I expect that that's a past deal and those that range trade this are happy where it is. So where are the buyers going to come from: I think that the USA listing may well be a source of new investors but strangely I suspect that there are some already invested via the ASX. Huge market though.

3. I think the number of new shares issued each year and the mature business style of management rewards is a concern to smaller investors here. certainly if each year 20% of the shares in issue get issued then they absorb some of the demand. I for one am unhappy with the remuneration deals , I hate it that the STI is converted to shares at these prices - give them cash and then we will see if they invest. Just converting it to equity actually works against a higher share price. I know its not what is logical but its real.

4. I do worry that it has to make around $17 million profit before tax to sustain its market cap today at a 15PE. When will it hit that... How many more shares will be in issue when we get there.

5. The other issue is how many are waiting to offload as they just want to get their money back and how long will they continue to hold.

6. With all the HC punters and how many see this as the bargain of the decade its clear that their ammunition is out. There is no way they would be passing up this offer if they had or would allocate more to this.

So all in all I think we will have to wait for a catalytic event to bring the next momentum. Confirmation of cash flow positive no new CR. Confirmation of regular profitability. Under promise and over deliver. I think all of that suggests we may have to wait until after the full year to see a sustained price above a dollar. Obviously the listing in USA could change that but I cannot predict that... I would be happy with a dollar in August 2017. I wont and dont get to your number $2.00 a year later would be stunning but so would $1.30.

All businesses transitioning from development to regular predictable income streams face this wall. In USA with the right marketing you can create a WeWork and get valuation even unlisted that are just amazing. Not here in my opinion , we just dont have the depth of investors and investment is a narrow band outside of the large investment houses.