Ok, some rough numbers. Looks like this contract will be...

Ok, some rough numbers. Looks like this contract will be entirely 1H19. Announcement says order to be delivered in calendar year 2018, and given we are 16 days from the end of FY18 you can safely assume all will be booked 1H19.

The FY18 annual report will give us some deeper insights into revenue and costs (I suspect there was a ton of extra R&D in the 1H) but all eyes will be on 1H19 after this company making contract.

1H18 was $4m revenue. If we assume the other businesses have small growth and this contract is completely greenfield then we can say $4.5m from existing revenue + $6.5m from this contract (converted to AUD). The gross margin 1H18 was 54%, but let's assume a contract this big has some volume discounts and the gross margin falls to 52%. That leaves gross profit of $5.7m.

1H18 had overhead costs of $1.7m. This will no doubt increase but by how much is hard to say. Let's be very conservative and say $2.5m mostly from a full period of the sales office in Singapore. I suspect there is a lot of room for that number to come down, particularly from lower R&D spend which was high in 1H18 from new products and removal of any costs associated with opening new manufacturing facility.

This leaves $3.2m EBITDA, RFT has minimal interest or depreciation and tax is variable (there are deferred tax assets and accumulated losses, but RFT paid tax in the 1H18). Let's assume 28% leaving us with $2.3m NPAT.

Now, can we annualise this? I don't think so given this order is not recurring revenue, but the company has clearly said a few times that they expect future orders from customers. Regardless, even if 2H19 saw a 25% decline you would still have a business that is doubling it's revenue trading around 10x.

Market will wake up to this one soon. Should be 5c at least.