Ok, so one of the 4 reasons for the TCN board proposing the delisting is that "removal from the ASX official list will allow the Company's board and management to reset the Company valuation and will open up the potential for alternative private market valuations, funding alternatives and strategic transactions as the Company executes on its business strategy" - see below from the Notice of Meeting.
According to the 2020 Annual Report, TCN did $9.6m in subscription and other recurring revenues in FY20 - see below from p 11 of the 2020 Annual Report. At the last closing price of $0.044, TCN's market cap is ~$9m ($0.044 * 210m shares on issue). Once you back out the ~$4m in net cash, that gives an enterprise value of circa $5m. So TCN is currently trading on a EV/LTM revenue multiple of 0.5x (enterprise value / last twelve months revenue).
Currently, AUS SaaS businesses <$500m market caps trade on average ~10x EV/LTM revenue multiples.
BTI's portfolio, a listed VC manager (a model TCN has sought but failed to emulate) trades on a conservative 5x EV/LTM revenue multiple.
Again, TCN trades on a 0.5x EV/LTM revenue multiple....
[Source: BTI AGM Presentation and Chairman's Address dated 27 October 2020]
So, TCN is trading at 1/20th of the ASX SaaS average, and 1/10th that of another listed VC manager peer. They must be doing something right...? So how does the board propose to address this valuation gap? By de-listing....righto.
Except that we all know that unlisted companies trade at a discount to their listed company peers. While every company is different, the reason unlisted companies tend to trade at a discount to listed peers is pretty simple. Listed companies provide a liquid marketplace for shareholders to buy and sell shares. This adds significant value to any company. All else being equal, the same company should trade at a premium if it's listed vs if it is unlisted.
The "Independent Expert" Report TCN commissioned to support the acquisition of the remaining 50% of Stat Seeker from a related party a few years ago even applies a 1.2x revenue multiple (over double the current 0.5x multiple) and a 40% "liquidity discount" because StatSeeker was a private company, yet here the TCN board is telling us that delisting is going to "reset" the company valuation with the inference being an uplift in valuation?
There are a number of conclusions that can be drawn from this IMO, none of which are overly complimentary towards the TCN board.
Anyway, this is just my opinion. Not advice etc etc - DYOR
[Source: TCN ASX Announcement "General Meeting" dated 22 December 2017:
https://hotcopper.com.au/threads/ann-general-meeting.3928904/]
