Revenue slightly down on last quarter, but same thing happened last year Jun to Sep, so it may be seasonal. Regardless, receipts up, and the $700k outflow looks better when you consider that this quarter has an additional $600k in staff costs and $500k in working capital. You have to spend money to make money, and judging by the continual increase in that revenue pipeline you can't argue with CGS's strategy.
FY16 revenue now $18.7m, nearly an extra $1.5m since the last update on the 29 Sep. Less than a month, over another million added. Well on track for at least $25m revenue this year, the bullish part of me will hope for $30m!
Most importantly was this little nugget:
Cost control: The first quarter saw Gross Profit margins within Management’s target of 57%- 60%. On a constant currency basis, Management expect FY16 overhead costs to remain broadly in line with the levels of 2H15 (annualised).
Makes our calculations much more accurate now with management confirming these numbers. Last year's overheads were roughly $13m. Applying 60% GM to $25m revenue with $13m overheads leaves $2m EBITDA. Get more bullish with $30m and EBITDA could reach $5m.
Then chuck some Precision on top as well.
Current EV of $28m, could be trading on 5.5x EV/EBITDA at current prices. Should at least be 50c for mine.
CGS Price at posting:
30.5¢ Sentiment: Buy Disclosure: Held
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