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Ann: Suspension from Official Quotation, page-18

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barrah

188 Posts.

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01/06/20

11:09

Post #: 44956370
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Originally posted by kasparhauser: ↑

Economically this dilutes current shareholders almost out of existence. Let's say despite the recent problems in securing new contracts they turn the business around. Sales stabilize around AUD 700 MM, net income at AUD 20 MM. The recent experience has demonstrated the weaknesses of the model, so I don't think anyone will put a high multiple on this. If you assume 10x, the business is worth AUD 200 MM (not ascribing any value to homeground or the tax loss carry forwards as I consider both a bit speculative). With 1.2 Bn shares post equity issue would mean that shares are worth about 16c in that scenario. However, one would have to allow for the fact that the turnaround does not work or works out in some mediocre way. So maybe call it 10c fair value per share risk weighted.

Still surprised that you get institutional investors to commit without real management changes that go beyond handing out new business cards to everyone.

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You miss the potential upside from the as yet unresolved happenings this FY. Its a gamble but its a 65M potential upside gamble. Instos will have a better read on these outcomes than us retailers.

DCG Price at posting: 20.0¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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