Chart, page-5456

@saintex, it's very apparent from the recent trading that you're not the only one unsure how to look at it.

The business did $NZ1.7m of revenue in the December half and NZ$36.6m in the June half. This resulted in a pre-tax loss of NZ$0.7m in H1 & pre-tax profit of NZ$21.1m in H2.

Given the CEO's (understandable) reluctance to try to forecast the unforecastable, market participants appear to have decided this means the good results from H2 can't be repeated.

If the second half revenue/earnings run-rate is replicated, the implicit FY21 result is NZ$73.2m revenue, pre-tax profit of NZ$42.3m and NPAT (using the 28% NZ corporate rate) of NZ$30.4m (AU$28.1m). At $1.96 per share (the theoretical ex-dividend price), the market capitalisation is $320m, so the forward P/E assuming zero growth on H2FY20 is 11.4x.

That would be a 107% growth on the FY20 NPAT, and I can recall very few situations where a company growing NPAT at >100% in a low-CAPEX, cash generative business with significant unexplored growth traded at such a modest multiple.

If the Q4 result can be annualised, the numbers described above would be ~15% higher, so the implicit forward P/E more like 10x.

The market operates in a state of uncertainty though and is clearly taking a wait and see approach, wanting to see proof before believing the recent trajectory will be sustained - Eternalgrowth