Having a closer look, it is $2.8m rev from the acquisition documents compared to the company forecast of $2.3m
But this really says it all.
Morningstar have updated their EPS forecast for FY22 - 6.4cps and FY23 - 6.6cps - no growth whatsoever, share price has fallen but is still trading on a PE of 32 X normalised EPS. A no growth EPS could trade on a PE of 12, and that would not be good.
I have modelled this stock and watched it closely for the last couple of years giving the Re-Imagination strategy time to work.
My forecasts are close to the Morningstar forecasts.
Of the $54.9m of FY21 revenue
- Class Super revenue was $39.1m with 3.6% growth
- Class portfolio $1.3m 8.1% off a very low base
- Class Trust $0.4m launched FY2020, my guess for FY22 is $0.8m
- Class Engine - could not find any information but FY2020 revenue was $0.15m - inconsequential
$42.3m spent acquiring NowInfinity, Smartcorp and Reckon Docs for forecast revenue of $12.8m and forecast EBITDA of $7.0m
The last 3 years $37.6m has been spent on development costs
Over the same period D&A costs were $25.2m and
they are flagged to be $14.9m next year and they will continue to be very high for the next couple of years
All this money ($80m) on acquisitions and development has been spent for no improvement in EPS and it is unlikely to improve for the next 2 years
The high development costs are killing this business with a lot of money being spent upgrading the traditional Class products that account for 75% of revenues but are low growth or inconsequential in size.
I think I have convinced myself to sell.
Cheers
