re: to evo1 Hi evo1,
Of course, that is entirely possible. But, at the same time, the patterns are similar:
1)
earlier this year, Directors lending $300,000 to the Company in the form of a Convertible Note @8.95% (11/2/03);
2)
a number of Appendix B, working capital announcements (including in quick succession);
3)
the spruiking of a favourable research report (ok), but not on the basis of the report being independent (connected, yes, but not independent);
4)
the preparation of this research in a manner where the report was not certified by the analyst in question (ok, but a break in behaviour and governance now being practised by most investment houses);
5)
a deficiency in net assets;
6)
total assets of $6.1M, including intangibles of $1.5M (comprising Goodwill), and total liabilities of $7.3M;
7)
a Current Ratio of 0.59x meaning that current liabilities exceed current assets by a ratio of 1.7x;
8)
annual report spruiking the virtues of the market place (in ATC's case, using pre-paid costing 2c to drive customer growth in China by selling @20c) whereas MUL's comments are slightly more circumspect:
"Our two-way satellite solution covers a large area - 60% of the world’s population. We have proven over the past 20 years that we have been able to deliver into international markets; that is where our skill set and experience is".
9)
inherent uncertainty as to how (and why) the $4.25M Findlay capital raising was organised, especially now that a further capital raising (<6 weeks later) is required (>3x magnitude);
10)
accumulated losses of $59M vs contributed equity of $58M meaning that MUL has, to date, been responsible for wiping out the equivalent of ~75% of its current MC;
11)
the issuing of a number of ASX releases which whilst good on the PR side, have been rather poor in "bringing home the bacon"; and
12)
a share register that is close to joining the "one Billion" club.
I do not, however, agree that MUL is another ATC. I do though consider that MUL is practising woeful corporate governance and is managing its shareholders in a less than transparent way (ie: much the same as EBR, for instance).
I also consider that MUL is claiming the satellite broadband space (locally and globally) as its own, when in fact this has never actually been the case, nor will it be. Perhaps, its time to do a proper analysis of the availability and provision of satellite broadband in Australia (and beyond).
If, however, MUL is:
1)
investing in infrastructure;
2)
operating at breakeven or better on recurrent operations; and
3)
signing up profitable customers (with limited upfront connection CAPEX required),
...
then, yes, they may well have a business foundation from which to develop. But, at the moment:
1)
they are struggling to return to profitability;
2)
have a gross margin of 17% (before sales & marketing, admin and borrowing costs of $8.1M, or 2x the current gross margin);
3)
have an apparent and continuing net asset deficiency of $1.1M, and a net tangible asset deficiency of $2.7M; and
4)
are valued at 3.5x FY03 sales, 20x gross margin, 13x total assets, and 20x current assets.
In my language, this is a recipe for caution and prudence to be exercised in the days, weeks and months ahead. Nothing more, nothing less.
MUL
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