With a new contract win (actually with every new contract win) it's appropriate to add to our running value of 'fair value' which is at the beginning of this thread.
Remember the key valuation metric here is 20x sales... Q1FY17 had 1.385m in sales (annualised is 5.54m) which = valuation of 110.8m (or 18.5 cents per share) on current run-rate!
New contracts add 20x sales to the valuation!
Now we don't actually have a contract value assigned to this new one, however lets assume it is rather small at say $250,000. This would result in a 20 x 250k = $5m increase in the fair value of the company which was 110.8m.
So - new valuation is 115.8m or 19.5 cents per share.
This incremental increase in the fair value may not seem like much, however it is extremely powerful given our CEO's comment in the announcement being :
This is super exciting as I'm now expecting more & more contracts on this particular revenue stream to roll in the door at a rapid rate.
Let's not forget that this is only 1 of the multiple revenue streams the company has commercialised & the 'big contracts' are in the wings with a lot of speculation surrounding multiple large >1m contracts being negotiated in the NZ health space.
Very exciting stuff & lets not forget we are already cash flow positive !!
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)