I agree with everything you’ve just said and at the moment we’re...

First 24 Last

Share
Profile

Follow
Andyrooooooo

4,183 Posts.

219

10/06/18

14:23

Post #: 33623287
Share

Originally posted by tarecq ↑

Great analysis. Keep in mind that shareholders make money by the share price going up. Not by the company making a profit. And these are 2 separate things. You don’t need one for the other to occur.

That’s why companies like Get Swift and One Page were trading at valuations in the hundreds of millions... They were valued on ‘potential’ and then the market and hype did the rest. In the long run though, the profit needs to then play catch-up and justify the valuation, or things start to go bad.

The reason I’m saying this (and apologies if it’s stating the obvious) is that our SAP partners have some 800 mining clients on their books.

If we can get just a few SAP sales this year to kick us off, and they are signed to reputable miners/clients, the market won’t simply re-rate K2F shares to match that extra $1.2m to $2m cash injection... Instead, the market will hopefully see the first transaction or two as the initial dominos that will precede many more sales to come and then ask the question, what’s this company worth? If they get 10%? 25%? 50%? Of the 800 miners across the line?

I don’t know what the answer is. The market will do what it will do. But I can assure you it’ll be a lot higher than it is now. At 20c currently, the market has placed NO value on ANY potential SAP deals. Maybe the marker is skeptical? After some of the shenanigans in the tech space it’s probably somewhat justified. But all of that will be put to bed soon.
Money talks.
The SAP deals will do the talking.
For now, it’s bargain-hunting time for anyone who’s cared to do their research and do the sums.

Expand

I agree with everything you’ve just said and at the moment we’re priced to be continual CR raisers who need $3m of cash p.a. so WHEN they can seal 3 of those SAP deals we will be profitable/cash flow neutral.
Might be too late to invest then though so IF I buy it’ll be before the first SAP deal lands at the currently reduced cap.

Let me ask you my main question directly; will there be any direct costs relating to winning a SAP contract?
I couldn’t see anything in the announcements I’ve read and I really don’t want to wait until Tuesday to ring the company and ask them.

In the model I threw up I think I guessed:
-$2.7m revenue was needed to break even
-($1.08m) (40% of revenue) would be direct costs
This is a HUGELY conservative cost I’ve run in there and its effect on the bottom is very material. It could see the SAP contracts required to b/e drop from 5 to 3. :\

K2F Price at posting: 21.5¢ Sentiment: None Disclosure: Not Held
Upvote

0 Great analysis

Reply