My prediction (and I would be very happy with it being achieved,...

My prediction (and I would be very happy with it being achieved, even though it is lower than the forecast from @Calvo above) is as follows:

• CY2020 EBITDA = $106M AUD
• CY2021 EBITDA = $131M AUD to $140M AUD
• CY2022 EBITDA = $162M AUD to $185M AUD

The low end of the range assumes 24% growth in EBITDA YoY. The high end of the range assumes 32% growth in EBITDA YoY. Astute observers will note that this is a +/- 4% range from APX's guidance around growing earnings in line with industry growth (28% p.a.)

Anyone who is expecting more than $140M AUD for CY2021 EBITDA is perhaps a bit too optimistic. Or perhaps I am being conservative by discounting the power of operating leverage and expanding margins. Regardless, in my eyes, anything above $140M EBITDA for CY2021 would be a spectacular performance (that would be up 32%+ YoY).

If the midpoint of the above EBITDA ranges are hit, on current prices, APX would be trading on 19x CY21 EV/EBITDA and15x CY22 EV/EBITDA (noting $126M in cash as at 30th June 2020 and a market cap as it stands today at $2.8 billion AUD).

Is that too high? Perhaps. Historically, across the markets as a whole, the general rule of thumb is that EV/EBITDA under 10x is attractive and undervalued. However, that is for the market as a whole, not the tech sector, which commands higher multiples due to stronger growth.


Worldwide, the average value of EV/EBITDA in the technology & telecommunications sector as of 2020 was a multiple of approximately 21.1x, an increase from 15.1x in 2019.

• Afterpay is at 971x EV/EBITDA.
• Tesla is at 128x EV/EBITDA.
• Wisetech Global is at 102x EV/EBITDA.
• Xero is at 95x EV/EBITDA.
• Altium is at 58x EV/EBITDA.
• NextDC is at 55x EV/EBITDA
• SEEK is at 42x EV/EBITDA.
• CarSales.com is at 32x EV/EBITDA.
• Appen is currently on 25x EV/EBITDA (assuming $106M AUD in CY20 EBITDA)

Today, there are some examples of eye-watering high levels of EV/EBITDA in the tech sector, but APX, at current prices, is not one of them.

T.E.P.