A bit of harmless speculation on a saturday afternoon.Let's...

A bit of harmless speculation on a saturday afternoon.

Let's start with the average price of our two leading instos:

• Thorney's 25% has an average price of about $1.92
• Regal's average price is harder to calculate given their trading activity since they entered in 2017, but it somewhere around $2.20 for their 18% at best, if one assumes they chose to sell their lost expensive shares from 2017.

We know that $2.8M worth of convertible notes come due at $2.80 on 11 July. Thorney hold $2M worth of those. I'm going to assume that a positive outcome will be recahed on these given Thorney's commitment to this company, that won't impact the following cash use speculation.

Brain Lane has been pretty tight on his forecasts, and we are told that the next two quarters with use less than $1M in cash each. This would put the end of FY22 cash position right on $5M.

That leaves $5M in cash to get through FY23 as revenues rise. The forecast of cash breakeven in Q1 FY24 certainly looks possible assuming 9% q-on-q growth in revenue, and given cash use on operating activities should be below $1M per quarter. Some additional costs for the RCT will also need to be covered, and that could be above $2M before cash is exhausted by Q1 FY24.

So, to get to the point:

• The two big shareholders have average prices at around $2
• Cash positive at Q1 FY24
• Revenue for FY24 could easily be US $15M, or say Aus $20M
• Valuation at Q1 FY24 for a cash positive Opthalmic business would be cheap at 6x FY24 revenue, or $120M Aus
• At this valuation, SP for a sale would be $5

An exit sale of the business around Q1 FY24 to Menicon or Johnson and Johnson would be attractive for all concerned.

Happy to accumulate in the low $0.30s.