Had a look at Class.
Analysis as follows:
BENCHMARKING
Compared with Reckon, MYOB and Xero.
PROFITABILITY
Estimated for 2016 , Class will have revenue of $21.7 m and EBIT of $6.9m. Based on previous growth and reduced .
Based on this, margin for Class is 32 % versus others in range of 24 to 27 % and Xero still makes a massive loss.
ASSET MANAGEMENT
Based on pro forma balance sheet Class earns a 31 % return on assets with others in range 7 to 23% and Xero makes a massive loss.
PRICING
This industry is expensive and Class at $1 is more expensive than Reckon and cheaper than MYOB. Classify this space as great businesses being sold at outrageous prices.
Given that Xero is still in loss making territory it is hard to rate it against the other three.
To compensate for this Can probably compare market cap versus revenue generated. On this basis Class about 10% cheaper than MYOB and 70% cheaper than Xero. They are all more expensive than Reckon.
IPO THOUGHTS
This is unquestionably a liquidity listing only. If they only raise $5m then they will still list and the vendors will not sell down anything. For this reason they do not need an underwriter . Even if they sell the maximum, the vendors are selling down very little . The only problem will be post listing demand if they are not actively using a broker.
When Xero first listed they gave accountant clients an opportunity to buy. Those that did have done very well.
In this case they are offering 18m shares to accountant clients and there are about 800 of them. This is only about $25k per client and reckon they will fill it easily.
In short, this is a very cavalier listing and it probably means that they anticipate massive growth. However, they are selling their shares at a high price even based on extrapolated 2016 forecasts.
Can anyone get some views from accountants who currently use the Class SMSF software ?
