Thank you for your analysis, l always appreciate these posts. It calls out a clear kryptonite amongst other weaknesses of EOS. In fact, when you look at the net profit surplus during 2017 and 2018 - one could argue they only achieved this due to the significant capital raising the company did during those years.
Though I'm not here to challenge your position, it may benefit the forum to ask ourselves why EOS has had such sustained poor profitability. My analysis led me to looking at what EOS is spending their money on - particularly their biggest expense item.
As outlined above, over the years it looks like EOS has consistently contributed roughly 50% of their revenue into raw materials and consumables. l think its evident that EOS's product offering is capital intensive. This isn't news to us because we know it's expensive for EOS to make what they make and to produce at scale. Effectively, the trade-off that's happening here is that EOS has been developing a competitive moat at the expense of profitability. Since their financials don't differentiate between R&D, l can only assume this category includes product dev.
Personally for me, I'm not expecting the company to achieve profitability anytime soon - I'm more interested that EOS is materially upscaling their products to fit into the high-profile and niche end of the market. When we look at the nature of this industry, where contracts are few and far between (and costly to win), it makes perfect sense that they focus on quality rather than quantity. However, I'm not happy with everything either - l think a key callout is the over-inflated salary package for Mr Greene, which has consistently seen increase despite the mismanagement of Spacelink venture... it also doesn't help that the shareholding voting system is essentially rigged.
But overall, like you - I am eagerly awaiting 2023 final results & future guidance. I'm cautiously optimistic here since we've stopped the bleed from Spacelink, the V-shaped recovery of customer receipts and injection of capital from contract asset conversions. But this is EOS, so who really knows ..
-- Just like everyone - learning more everyday. I'm not precious if I've gotten something incorrect above.
EOS Price at posting:
$1.48 Sentiment: Buy Disclosure: Held
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