Ann: Response to ASX Query Letters, page-242

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Busy Bean

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23/02/18

17:02

Post #: 31298620
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Originally posted by OzJ ↑

In terms of valuing the shares, that's pretty difficult. The cash forward arrangement for this company, couple with the 120-day do-over for finding revenue if a customer goes bad, makes it difficult to value this company.

I think a metrics are needed:

* Revenue without forward financing. Pretending they did a more normal free-financing arrangement. Using something like a deposit for the filming followed by monthly payments (that could even credit the deposit) as a model, then perhaps the current conversion rate to payment plan could be a good marker. Is that 50%? So cut production revenue in half.

* Advertising revenue would remain the same, I think.

* Perhaps they could get better interest rates that 24% with an additional 24% cancellation fee, but that would probably require greater scrutiny of the SME's that sign up. Maybe a wash in terms of revenue.

So, as a first cut, half the market cap because revenue cuts in half and another amount because suddenly lose the mystique of being a crazy cash generating machine. So maybe 65% or so off current value?

Jeez, that's a lot.

Expand

Any percentage drop in value should be off the $4 price before all of this started. We've already dropped 50% so I would say any additional risk this model brings compared to our prior understanding is probably already priced in.

I still need to do full review over the weekend though. I will post my thoughts and conclusions once I've done that.

Last edited by Busy Bean: 23/02/18

BIG Price at posting: $2.22 Sentiment: Buy Disclosure: Held
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0 Great analysis

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