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Ann: $100M Lasers & Ultrasound business sale to Lumibird Group, page-46

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musky45

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07/02/20

07:54

Post #: 42793936
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Originally posted by pseudonym1 ↑

Hi Joe - we may have different investment objectives, but I take the opposite view. Laser & Ultrasound is the steady-as-she-goes conservative (and profitable) part of the business, but has little growth. iTrack and 2RT are the high (and extremely high) growth prospects of the company, and at the current valuation, are quite cheap. iTrack is only a few years away from generating positive cashflows, and the potential for 2RT is almost unquantifiably enormous. You can get both at the moment for little more than $10M. That's an utterly ridiculous multiple.

While I'm a very long term investor and take little interest in short term price movements, it might be reasonable to expect that once Ellex is free of the conservative low-growth part of the business, that the multiple applied to the exciting startuppy bits left over might be more reflective of their status as potential centres of significant growth and cash flow.

If as you say, you bought in at 75c, you are buying these two very exciting businesses for about 7 cents, or a market cap of about $10M or so. To put that into perspective, they had combined revenues of $16M last year. Prices/sales isn't everything, but at that level it really sticks out.

If your game is to do things like buy at 75c only to sell at 82c shortly thereafter, none of this matters much of course. But like I say, I have a different view...

Lumibird is a large, mature French company. They were probably mostly interested in the Lasers & Ultrasound business, but I doubt the Ellex board would have been eager to sell their more "interesting" business assets either. It has long been their strategy to use cash from the former to fund the latter, and the focus has really been on getting iTrack and 2RT up to speed.

This will now be their sole focus. I'm not selling my shares.

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completely concur - and what you’ve articulated underpinned my investment thesis. The sum of the parts was always greater than the whole.

we now have a small, high growth business with a war chest of cash - and that’s something you don’t get much in the ASX. No risk of dilution here.

ELX Price at posting: 80.5¢ Sentiment: Buy Disclosure: Held
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Last 21.0¢		Change 0.000(0.00%)		Mkt cap ! $48.10M

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Ann: $100M Lasers & Ultrasound business sale to Lumibird Group, page-46

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Ann: $100M Lasers & Ultrasound business sale to Lumibird Group, page-46

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