CM8 on the move broker target 65c, page-90

Have done a bit of digging back through some historical ASX announcements to try and get a better feel for the business.

The Independent Experts Report completed prior to Crowd listing had a few interesting insights.

Firstly, revenue ranges for paid messages via SMS and via Apps:



The following extract from the 29 August 2014 presentation gives a split on how revenues are divided between CM8, the 'researcher' and the mobile carrier or app platform (Telco's in the table below link to revenues at point a) above, Apple Store and Google Play Store link to app revenues at point b) above):


Some crude forecasting based on monthly message volumes could help to extrapolate the current run-rate.

Secondly, the report references a list of comparable businesses for an earnings multiple fair-value analysis:


Taking the outlier adjusted mean in the report above of 11.5x EBITDA, and applying that to H1FY15 normalised EBITDA of $1.4M ($2.8M annualised), that would imply a fair value at the end of December of around $32.2M. We know that since the December half crowd has smashed the monthly message volumes, so there should be a substantial increase in revenue and earnings for the full FY15 year. This would suggest based on the current SP CM8 is already trading at a discount to peers.

If we take CM8 annualised H1 results of $2.4, add in track $13.5M and multiply that the mean of 11.5x we get a market cap of $187M. That gives a bit of perspective to where CM8 could be headed, and bear in mind that MBE is trading >20x EBITDA, so we can dream of what that multiple would do to the CM8 SP should the same earnings multiple apply.

And yet here we are valued around $27M today. Disallowed potential from here? Not out of the questions within a 1-2 year timeframe. Hopefully the above helps to quantify the magnitude of what could happen to the SP should the Track deal complete.