Hi Madamswer,Thanks for your comments. Their Aussie business...

Hi Madamswer,

Thanks for your comments.

Their Aussie business appears to be well run, gaining size and scale with a reasonable drop through to bottom line and good cash flow.
Suspect that this will continue and mean the value of the company is unlikely to drop materially.

What has me more interested though is their ongoing discussion that they will grow a substantial licensing business in North America and EMEA.
Admittedly they have been banging on about this for several years and using covid-related travel restrictions as the reason for limited success to date.
If they can meaningfully ramp sales via licensing or establishing a local presence I can see the possibility of step function increases in revenue and scale efficiency that could drop to the bottom line.

With a previous Australian investee company (where I happened to serve on the BOD) when the CEO brought an investment case to start selling products into in the USA the BOD agreed... if the CEO would move to the USA and personally launch it. Within 4 years the USA revenue tripled the Aussie revenue. The revenue cost jaws went wide open and there was a step function change in profitability and company value.

I will be reaching out to management to suggest they get very serious about the USA business ramp and put someone quite senior in place there.

Seems to be something of an asymetric risk - if the USA/EMEA component fails the profit from the Aussie business underpins the current valuation... if the USA succeeds then the company value can meaningfully rerate.

Cuppa