To arrest the drop in the SP, AVA decided to drop news early and...

To arrest the drop in the SP, AVA decided to drop news early and it certainly did the trick! Back up to 64.5c, the question is, will it leg up?

Delving into the numbers, AVA are suggesting a $34M revenue and $12M EBITDA for H1.

Q2 drop in EBITDA is a big one. By my calcs, if those conditions remain, thats a difference of 45% GM and 24% GM. So lets go worst case to see where current value stands..

Rev outside of IMOD has been Q1 $13.4M and Q2 $13.9M.

EBITDA ex IMOD (assume IMOD ~60% GM) was Q1 $5.5M and Q2 $1.84M - OUCH!

As non-IMOD rev grew 3.73% Q1-Q2, lets conservatively assume thats what we get Q3 & 4. So Q3 would be $1.96M and Q4 $2.1M EBITDA, giving a total FY21 EBITDA of ~$11.44M.

PE of 15 and you have an MC of $171M and SP of 71c. Not bad!

By my calcs, if you add in IMOD, then we are on track for something like a $20M EBITDA for FY21 and ~$300M SP.

Now, are they going to replace IMOD? My guess is no. So what if I take Q4 from my ex IMOD model and turn it into an IRR. My estimate is Q4 will be ~$14.96M Rev and ~$2.1M EBIDA. x4, that means an ARR EBITDA of $14.29M and an SP target of 88.7c, or a 37% upside.

Now this is all on a relatively conservative growth of ~12% pa for non-imod contracts. Nor does it account for the potential multiple growth available if/when they sell the services business. So plenty of upside yet to come!