The result of the half-yearly result is OK and expected.
In terms of segment profitability(EBITDA), USA division has picked up with $1.5m, while Australia/Asia is breaking even with Europe losing $0.4m.
Based on profitability analysis, CMP has a good gross margin for its product at about 55%, but its fixed cost is too high, with the cost of admin, marketing/sales and R&D taking up to 17%, 22% and 15% of the revenue.This cost structure is similar in many small-medium business, where economy of scale is yet to be achieved. If CMP can continue to grow its revenue, its profit growth will be substantial.
I believe the introduction of low-cost/low-end products is a good way to grow revenue by gaining market share more quickly and realize some benefits from economy of scale in the next 2-4 years.
But, the long-term revenue growth depends significantly on eHealth (Somfit/Nexsus) and MEG, not so much on its organic growth (which remain a bit uncertain at the moment).
On positive notes, "Somfit asset....with first commercial transaction expected in H1, FY19". I think Somfit will be in the market by the end of this year.
As usual, I believe it is better for CMP to sell off its DWL and focus on its sleep/neuro core business, MEG and ehealth.
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