CGS seems incredibly undervalued right now. Look at the numbers in the report from 1H to 2H of this year since the sale of Axom and the focus back on Clinical Trials:
Revenue - $5.5m to $9.6m
Gross Margin - 48% to 63%
EBITDA - (2.53m) to 0.22m
Loss - (2.66m) to (0.24m)
Note I have taken out the impairment charge in the 2H loss to look at the underlying business.
Those would be mind boggling numbers YoY for any business, let alone HoH.
FY16 already has $10m contracted revenue, and going by previous years it would be reasonable to expect that to double as uncontracted revenue comes in (and sometimes uncontracted revenue comes in much higher than doubling).
And those numbers are just from Clinical Trials! Management seems quite bullish that Precision will start to contribute to the bottom line this financial year as well.
I think it wouldn't be unreasonable to work on revenue figures this year of $20m (which may be on the low end of the range if Precision kicks in) and if they can squeeze margins a bit more we could see $1m EBITDA and possibly a maiden profit?
The other thing to note is that all projections in this report appear to be based on AUD/USD on 30 June 2015 which was roughly 77c. The dollar is now down even further which benefits CGS even further.
I don't currently hold but would like that to change!
CGS Price at posting:
21.5¢ Sentiment: Buy Disclosure: Not Held
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