NET (ASX) Ann: EGM Management Presentation

Originally posted by SimpleJim: ↑

Hey mate, I jumped in at 8.1c this week and I'm not worried. But, there is a big reason why I am not worried. I understand this is a pure speculative play and the size of my holding reflects that. For now it makes up 1% (not a typo) of my portfolio. Even on a forward price/slaes ratio assuming sustained 30% QoQ growth fro the entire of FY21 (currenty forecast for the first half.. second half has no forecast yet) this company is FAIR VALUE. It's not a bargain, you're paying a 12 month premium for a speculative company who's management can't really disclose what they offer as a product and why it is different to competitors products.

Like@Fangk has enquired, I too dont understand the product enough and dont trust management, even ahving read most annoucements and everything on the website. What I do like is the revenue growth and the 'story' or the parts they show. They seem to be marketing wild dreams at the moment and against my better judgement I'm in for the ride, but ready to exit at any point.

I wouldnt make this a large holding unless this it is a bargain (think 3-4c), revenue growth is sustained through FY21 or you're given enough information on the business and product to make a decenet decision (and understand the information). If you throw money at a bunch of stocks like this you will get burned in the long run. There are simply better investments out there in the long run.

In saying that, I'm happy with my 1% holding and will top up in to 2% at some stage (yesterday or this mornign may have been the time to do that, but there's no hurry). Moving forward, I'll be watching this one closely and i'm happy to jump ship at any point where I dont think they're going to sustain revenue growth.. after all that is the reason i'm in this stock.

In you situation, that's a lot of many for me to have in a stock like this. Based on your comments I assume you're quite new to the market (sorry if i'm wrong) and you're still learning. If I owned $15k at $8.3c I would be looking to decrease my holding on the next spike to ensure I only have a few percent of my overal portfolio in this stock, really no more than 4% at this stage. Yes, you may kick yourself later if this turns out to be a great stock, but know you made the right decision regardless of the outcome. The right decision being not loading up on a speculative hype stock that you dont know much about.

All just my general thoughts and attitude, you're going to have to make your own decisions at the end of the day. The best thing you can do is learn about the company and quickly!

On a sidenote, @Fangk, I just want to say thanks for all your posts and screw anyone that calls you a down ramper. You're actually asking the right questions and it's posts like yours that keep me coming back to Hot Copper, not the upramping dribble and condeming of anyone who asks an intelligent question that doesnt seem super bullish.

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I'll provide my calculations using the assumptions you have made.

We know that to meet the current revenue forecast, NET has to make $10.7m over Q3 & 4. So Q3 revenue has been noted at $4.7m and I've used a 30% QoQ growth factor from there on.

Q3, 2020 - $4.7m
Q4, 2020 - $6.1
Q1, 2021- $7.9
Q2, 2021- $10.3
Q3, 2021- $13.4
Q4, 2021- $17.5

If we use the 2021 calendar year to calculate their annual revenue, we get a total of $49.1m.

NET's Total Expenses for 2020 FY was approximately $25m. Let's say the cost of sales goes up (due to increased sales), but R&D and lending expenses goes down (as has been confirmed by management), and we maintain total expenses of $25m.

Total NET Profit for the 2021 calendar year would be $24.1m.

Earnings per share: 0.01205

@ PE of 20, Price is 24.1c

@ PE of 50, Price is 60.3c

@ PE of 100, Price is $1.20

A PE of 50 is by no way uncommon for a high growth tech stock.

Please let me know if I've made a mistake in my calculations and I'll take it on board. Looking forward to seeing how you worked out the fair value.