PTG (ASX) Ann: Quarterly Activities/Appendix 4C Cash Flow Report

Originally posted by madamswer: ↑

On occasion, even after they have risen significantly in value, some stocks present as even better investments after new information has entered the public domain.

This is one of those occasions, I believe.

Today's update implies the company exiting the FY2021 period on annualised run rates approaching $20m pa for Cash Receipts and around $3mpa for Operating Cash Flows.

Adding in the Revenue and Cash Flow from the Eagle Software business currently being acquired, in addition to further organic growth expected for the next 12 months, and we are talking about Revenue and Operating Cash Flow run-rates at the end of FY2022 being close to $25m and $6m, respectively.

The capital-light business model means that around $4.0m to $4.5m of that $6m of OCF falls through to the FCF line.

The current Market Cap of the company is around $108m (beware the meaningful number of unquoted shares) and the pro forma Net Cash position (after the recent capital raising, settlements of the deferred considerations for acquisitions, and the FY2022 FCF ) is around $12m [*], so an EV of a touch under $100m.

That puts the stock on a 12-month prospective EV/FCF multiple of around 22x.

But the journey for this company is still very much in its infancy and the leading indicators seen and heard today supports the very real notion of this being a business model capable of - within the next 3 or 4 years - generating $35m to $40m in Operating Cash Flow and $13m to $15m in FCF.

That level of cash generation is reflective more of a $200m EV company (at a minimum), than the mere sub-$100m which PTG is today.

PS. For those interested in hearing the "story" and getting a feel for the PTG investment thesis, have a listen to the short presentation made today by the CEO on the Coffee Microcaps YouTube channel.
(Might need a cold shower afterwards).

[*] Pro forma 30 June 2020 Net Cash:

Net Cash @30 June 2021 = $6.7m
Add:
Capital Raised = $16.7m
FY2022 Free Cash Flow = $4.0m
Less:
Acquisition Payment for Eagle Software = $4.1m
Deferred Acquisition Payment for Eagle = $7.5m
Deferred Acquisition Payment for MyDsktop = $3.0m
=> Net Cash Position @ 30 June 2022 = $12.8m

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Fantastic analysis Madamswer. Completely agree that the performance and upside of PTG places it more in the MC vicinity of $200m. Although bullish i am expecting they might achieve this by mid next year.