With NPAT topping the prediction range at $2m AUD, CMP clearly starts to benefit from combination of off shoring initiatives, lower AUD and increasing revenue. Current SP of $0.28 ($44m MC) is trading at 22 P/E, with Forward P/E of 16 to 14.
To me, its core business in sleep/neuro diagnostic is thriving. Its smaller division, DWL has significant potential expansion with TCD patent. It is more than enough to justify the current valuation.
Despite of its eHealth and spin-off deals still being on the table and approaching certain conclusion, current valuation looks as if these deals are not likely.
It is very interesting to see how change in market sentiment as reflected in the recent decline in ASX index effectively ignores and de-valuates CMP's future in the face of solid evidence in growing sales and continuous progress on expansion in ehealth/spin-off.
Forward P/E of 16 is quite cheap. I think with growth rate in revenue of over 10%, P/E range of 22 to 27 is generally normal. I think the SP should grow by at least 50% soon. to $0.42.
If eHealth or spin-deal happens, the SP should climb to $0.5.
CMP Price at posting:
28.0¢ Sentiment: None Disclosure: Held
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