WCG have already flagged they're reviewing options for the...

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Bailey241

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15/07/22

11:49

Post #: 62552293
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Originally posted by fourbees: ↑

Just looked through some recent updates from the company, as well as a few researches here and there.

What I like:

- Increase in recurring revenue in the form of Managed Service. I estimate it to be around $14mil for FY22.
- Current MC is about 2 x Recurring revenue
- Increased focus on Service revenue (Managed and Professional service).
- H2FY22 is much better than H1, hopefully the restructure and turnaround is a success.
- Directors (Mr Everingham and Mr Waterworth) have been buying on market.
- Mr Everingham seems to have a good network in WA and ACT, while Mr Waterworth seems to have an investment analyst background. They seem to be the type of person who can realise and capture a good opportunity.
- Cash of $9.6mil (1/3 of MC)

What I don't like:

- Enterprise product still accounts for more than 70% of revenue.
- Top 4 clients look to account for 30% of revenue. That's a risk to me.
- Q4FY22 seemed to be not as good as Q3. I suspect it is because of the election.
- Webcentral still hold more than 150mil shares (figure at 31/12/2021). This is the biggest overhang that have been suppressing the share price imo.

I have already bought some shares.

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WCG have already flagged they're reviewing options for the holding:

Short of finding an alternate bidder for the whole company to take them out, they're likely staring down an exit via a discounted block trade. At $0.03 it's a $5m trade. Company could use the existing cash balance for a selective buyback of their holding. Accretive for all other shareholders if done at a discount and removes the overhang on the stock of a known large seller.

CNW Price at posting: 3.2¢ Sentiment: Buy Disclosure: Held
7 Upvote

0 Great analysis

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