Putting sp movement on daily basis aside which has nothing to do with the true value of the potential worth of the company. It is, at this stage, the functions of how many day traders buy and sell, how many need to get out because they don't have money to pay their Comsec account, how many manipulators try to force sp down to push other small naïve traders to sell cheaper to them.....Basically, it has nothing to do with how EN1 have been progressing lately and its important metrics of revenue, revenue growth, expenses, cash flow, and ultimately profitability.
So, let's look at the bigger picture here and see where EN1 is going and its potential to make us rich in the coming quarters and in the years ahead. The question I start asking myself lately is: are we at the beginning of a sp trajectory that could be one of the best on ASX in the next 12-24 months? I am sure many of us have, many times, seen many stocks on ASX over the last few years and said to ourselves "damn, it wish I have bought that stock and held it until now". There are plenty of them on ASX. Think of A2M, APT, Z1P, NEA, ISX, AVH....just to name a few.
So, let's review what has been achieved by EN1 lately.
First of all, the latest trading update:
- AdCel’s revenue doubles again, at 400% of April’s daily average.√
- AdCel is now run-rate profitable. √
- EN1 reached daily revenue of A$59k. √
- Preliminary May revenue A$1.44M. √
- May gross profit margins grew to about 45%. √
Based on the above update, I now revise my revenue calculations for quarterly revenues as:
- Q1 = $1.92mil
- Q2 = $4.5mil (April = $1.2mil, May = $1.44mil, June = my estimate of average $62k/day * 30 days = $1.86mil)
- Q3 = $10mil (lower case = $9.2mil to upper case = $11mil)
* My current estimate for daily revenue has reached $65k/day and 2nd batch of activations has been completed.
* 3rd batch of activations will be started in July and completed by end of August, adding $15k-$20k/day to daily revenue
* Adcel is expected to add extra $5k/day by end of July (as announced by Ted) and I believe Adcel will add total extra $15k by end of Q3 (September)
* StartApp integration/boarding: expected to be live by end of Q2 (as last time Ted mentioned about it in an ASX announcement). However, let's say it will be live by end of July to allow for any possible delay. I expect StartApp will add about $25k-$30k by end of Sep and will reach $50k/day by Nov-Dec as indicated by Ted in the firechat videos.
* Seasonality effect: Q3 and Q4 are typically double the amounts in Q1 and Q2. Basically, those same customers in Q1 and Q2 will spend twice as much money in Q3 and Q4. Ted has mentioned about this many times before. Most recently and more concretely, in the AGM presentation, Ted specifically outlines that funds deployed for prepays will be exhausted by the end of each month, instead of every 3 months cycle as typically seen in Q1 and Q2, due to the higher demand in the Q3 and Q4 seasons.
So, this is my estimated figure of Q3 revenue = Q2 revenue of $4.5mil * 1.15 (conservative positive seasonality effect of 15% on Q2) + AVERAGE extra $15k/day from 3rd batch of activations*90days + AVERAGE $10k/day from Adcel*90days (even though I estimate extra $15k/day by the end of Sep, but I take THE AVERAGE for 3 months of Q3 as $10k/day) + AVERAGE $20k/day from StartApp*90days (again, I expect $25k-$30k/day by end of Sep but I take conservative AVERAGE of $20k/day for 3 months in Q3)
= $5.175mil + $1.350mil (3rd batch of activations) + $0.9mil (Adcel) + $1.80mil (StartApp) = $9.23mil
(all of the above figures are conservative and therefore my estimated upside is around $11mil, still not counting any revenue from IconicReach platforms, and that would give us an average estimate for Q3 of around $10mil).
- Q4 = Q3 revenue of $10mil*1.15 (seasonality effect) + average extra $10k/day from Adcel*90days + average extra $20k/day from StartApp*90days + average extra $15k/day*90days from 4th batch of activations = $11.5mil + $0.9mil + $1.8mil + $1.35mil = $15.6mil
* Note: still not counting any revenue from IconicReach platform, and any possible aggressive revenue ramp-up once the debt facility (non equity-based debt) is completed in the next few weeks. I strongly believe Ted and his team will intensify the speed of cash deployment of ad inventory prepays and speed up activations of publishers once we have the debt facility secured. This may add plenty more upside to my estimates above.
So, if those above estimates are achieved or surpassed by Ted team, then where our market cap should be? Let's take a look at again at some other small tech stocks as of today:
- LVT.ax: Information tech software
* Current MC = $270mil
* March 2019 quarter rev = $5.2mil
* Cash flow = negative$7.8mil (Dec 2018 quarter cash flow = negative $9.6mil)
* Cash in hand = $21mil
- ISX.ax: Online payment security
* Current MC = $700mil
* March 2019 quarter revenue = $1.85mil
* Cash flow = negative $1.66mil
* Cash in hand = $7.2mil
* Latest update from the company = reaching run-rate cash flow break-even (EN1 is also reaching cash flow break-even currently)
I encourage everyone to look at WZR, AVH, NEA, Z1P, MP1....Take a good look at their major metrics of quarterly revenue, revenue growth rate, cash flow, market cap, cash in hand to work out their EV, their nature of business,....When you look at them closely, you may get your socks blown off when you compare to EN1's current MC of $21mil and other metrics. Why should we compare? That's an important question. It is because it may means 500%-700% return on investment for many of us here, stead of winning 5%-7% today and losing 10%-15% tomorrow.
Do your own maths
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