'I still believe in my opinion, anything under $1.00 is still a bargain... Laugh as you may you will see in a few months that this was not an outrageous possibility...'
Hi
@JPMax,
If it happens then it certainly would be a life changing event for many of us (not that it hasn't been already ;-)).
But the question is... on what basis can we credibly dare mention a $1 share price in the coming months at least?
To analyse further, I've copied the below posts from Relax1 and also RobbieInAus (both insightful but largely overlooked posts pre-yesterday's ann. IMO) and I've also added my own two bobs worth underneath these.
Relax1 said on 29/6/16:
Just do a quick market comparison for a rough idea.
$15 - 30 million in profits would be in the right range.
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Column 1 |
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| 1 |
MYO[/I] |
Myob Group Limited |
Information Technology |
2,022,230,000 |
0.13 |
2015 Full Year
10% pro forma revenue growth to $328 million (prospectus forecast: $323 million)
19% pro forma EBITDA growth to a record $153 million (prospectus forecast: $151 million)
22% pro forma NPATA** growth to $86 million (prospectus forecast: $85 million)
87% pro forma cash flow conversion
95% recurring revenue reflecting the high quality nature of the revenue stream
8% growth in SME paying users to 545,000 (in line with prospectus forecast)
Dividend of 5.0c per share
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Column 2 |
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Column 5 |
| 1 |
IRE[/I] |
Iress Limited |
Information Technology |
1,932,300,000 |
0.13 |
2015 Full Year
IRESS Limited today announced statutory net profit for the 12 months to 31 December 2015 of $55.4 million, up 9% over the prior year. Segment Profit, a measure of core underlying performance, was $119.2 million, up 7% on the prior year.
Highlights of the 2015 result:
Group Revenue of $361.5m, +10% on FY14.
Group Segment Profit of $119.2m, +7% on FY14.
Statutory net profit of $55.4m, +9% on FY14.
Final dividend of 26.7c per share, +5% on 2014, 60% franked.
Strong growth in UK revenue in 2H15.
Resilient Australian financial markets business.
Double-digit growth in South Africa and Australian wealth management.
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Column 2 |
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| 1 |
TNE[/I] |
Technology One Limited |
Information Technology |
1,631,520,000 |
0.11 |
Full Year 2015
Revenue $218,724,000
Net Profit Before Tax $46,494,000
Net Profit After Tax $35,785,000
Cash & Cash Equivalents $75,536,000
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Column 2 |
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| 1 |
ACX[/I] |
Aconex Limited |
Information Technology |
1,463,840,000 |
0.10 |
2015 Half Year
Revenue from ordinary activities $55,669,000
Profit / (Loss) from ordinary activities after tax attributable to members $4,552,000
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Column 2 |
Column 3 |
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Column 5 |
| 1 |
ALU[/I] |
Altium Limited |
Information Technology |
787,155,000 |
0.05 |
2015 Half Year
Revenue from ordinary activities $42,658,000
EBITDA $10,654,000
Profit $9,147,000
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Column 2 |
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| 1 |
ISD[/I] |
Isentia Group Limited |
Information Technology |
724,000,000 |
0.05 |
Half Year 2016
Revenue of $75.8 million, an increase of 22% YoY
EBITDA of $23.5 million, an increase of 19% YoY
Excluding the impact of acquisitions, organic revenue growth of 9% and organic EBITDA growth of 13%
Reported NPATA of $13.7 million and underlying NPATA of $14.9 million excluding nonrecurring items. Underlying NPATA increased 22% YoY
Revenue growth of 24% in Value-Added Services
Asian revenue growth of 22% with margins increasing to 23% from 21%
King Content revenue contribution of $8.4 million following its acquisition in August 2015
Interim dividend of 3.7 cents per share (50% franked), a 50% payout of underlying NPATA
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RobbieInAus said on 29/6/16:
Start ups/spec stocks (especially tech start ups) are definitely a different beast - largely due to high expectations on growth rates - and their ability to often achieve some sizeable margins in the long term (once they get past the intensive R&D stages).
Have a read of this article - nicely summarizes some loose expectations:Tech start up valuations
At it's simplest form, this article shows you can expect valuations of between 5x-30x of current revenues. (Revenues here, others have been referring to profits). 5x would be lower quality tech start ups and 30x would be your high end serial entrepreneur, silicon valley, type tech start ups.
Considering Xped's board now containing two big names in the tech world, Xped's management team containing a serial entrepreneur (John Schulz) and ex-Qualcomm big wig JS, has been flirting with Intel, agreements with Telink, etc. etc. I'd say we'd be in the middle to high end of that 5-30x. Further, as the majority of our R&D is already completed, we should start achieving high margins much sooner than most start ups as we won't be immediately burdened with those heavy costs. Higher margins translate to a higher revenue multiple. No way we're at the top end, as that's saved for the creme de la creme startups - but I do reckon we'd be in the top half. Let's say 20x.
You then add on a premium for very aggressive growth rates, and apply a discount for how much of that growth rate is achieved due to the inflow of investor money. As we really have no idea on either of these items. Let's just leave it at a multiple of 'current' revenues.
SO with all of that - revenues of around $100mil at a 20x multiple would get you about a $2b valuation on this company. Assuming 50% EBIT margins - you're looking at $50m or so EBIT required....
So that's fairly in line with what other's have been saying. Point is though, you can see there are some seriously wide ranges out there and about a million factors that come into play when valuing early stage companies so who knows really.
Completely my bogus non-expert opinion, so no one rely on any of that!
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In addition to the above posts I thought it might be worth having a quick look at Dolby Laboratories, made famous for their noise reduction and sound improvement technology that became industry standard. I assume you have all seen the following logo and unknowingly or knowingly used their technology at some point in your life.
View attachment 202895
By protecting its IP, patenting new tech and continuing to re-invent itself over the years, Dolby has been an industry stalwart and cash cow for its owners/investors for almost 50 years now. The latest full year results (2015) are as follows:
FY Revenue: $967m (USD)
Gross margin: $873m
Net income: $179m
Mkt cap: $4.84 billion
P/E ratio: 27
Given that Dolby's tech and patents are owned by Dolby Laboratories (a public/NYSE listed and
for profit company), it is the closest 'industry standard' example that I could think of to compare to Xped and what it might become in terms of size and stature in the years to come. Conversely, Bluetooth, Wi-Fi and ZigBee are all 'not for profit' organisations overseen by an industry group or body and therefore these entities cannot be compared to publicly listed owners of IP who's primary aim is to generate profits for its shareholders i.e. like Xped and Dolby who both own/hold the patents in their own right.
So let's assume for a moment that Xped's FY16 revenue and net income comes in at one tenth of Dolby's 2015 result. i.e. $96.7m USD in revenue generating a net profit of $18.7m USD.
That would also imply a Mkt Cap that is similar to one tenth of Dolby's (all being equal)
Therefore $484 million USD = $644m AUD converts to an Xped SP of @26c per share (assuming 2.5 billion shares fully diluted including performance shares).
However what if Xped (under the guidance of Lisa Zhang) are able do as some of us anticipate and confirm agreements with several chipset manufacturers over the next 6-12 months. Could we conservatively triple the above revenue estimate to say $300million USD and assume a net profit pf $60mUSD?
Based on these numbers we are approaching a comparative valuation of $2 billion AUD. Still not quite the $1 per share we are hoping for but getting very close.
With the above in mind lets go back and review Relax1's post for MYO, IRE and even TNE and we can see that the Mkt Cap, revenue and net profit for each of those companies is not so very different to what I think we could reasonably anticipate with XPE in the coming months.
All very rough, still many ifs and buts to consider and the above musings should not be considered as advice of any kind, so please DYOR.
Cheers
Elpha
View attachment 202949
(20min delay)