Funny about how people can interpret and assume things from what you say....Right
@beefarmer ? ...
And funny because I don't believe I gave specific ' time frames ' on my ' Calculated ' price expectations for the SP based on well thought out
' REAL ' comparative data and
' Peer ' performance figures.
And there is a lot of ' number crunching ' involved in doing this properly with the first step being to ' verify ' where the Company's actually got it's estimates from ( ie $225,000,000 Gross Transactions .....or $100 Billion total Australian addressable market ).
Once you determine the validity and credibility of these numbers , you can then move on in the Steps by then calculating numbers which correlate between Industry Peers based on numerous valuation matrices and performance measures as well as conservative assumptions which may or may not exist between in the relationships between these Comparative Companies. And that's what I've been doing ALL along since I evaluated this PLAY back at 1.0 cents .....whereas I believe there was TA put up which was sending off completely different signals like ' there was ' No Buy at 1.2 cents .....LOL '
So again - FIRST step is to identify , validate , and understand where the numbers that CRO communicated came from in the first place. In order to do that , you need to go back to the following ' STUDY ' below conducted for Xero ( who's Spenda platforms are compatible with ......as well as MYOB ....both MASSIVE endorsements by the important Industry Players )
STUDY
- Conducted by : AlphaBeta Advisor's for Xero in June 2019
Xero data provides insights into payment behaviourTo better understand the extent and impact of late payments,this report uses data from Xero Small Business Insights (XeroSBI). It includes information on more than 10 million invoicesissued by more than 150,000 SMBs. We selected businessesthat had been on the Xero platform for several years and thatwere connected to an advisor. The data was aggregated andanonymised before analysis to protect the privacy of SMBs andtheir counterparts.
Late payments to SMBs are a systemic problemOur analysis reveals a systemic problem with late payments tosmall businesses. Just over half of trade credit invoices sent byXero subscribers (i.e., invoices where payment is not due until atleast one day after the day the invoice is created) are paid late.These are customers of all sizes, and their payments arrive anaverage of 23 days after they are due.2
If we assume big businesses pay a similar proportion of theirSMB invoices 23 days late, we can estimate the national valueof large businesses’ late payments. Based on Australian Bureauof Statistics (ABS) trade figures and AlphaBeta estimates, wecalculate the value of big businesses’ late payments to smallbusiness is about $115 billion a year.
Resolving this situation by paying SMBs more promptly coulddeliver a net benefit to SMBs and to the economy. If largebusinesses paid all invoices to SMBs on time, it could effectivelytransfer $7 billion in capital from large businesses to SMBs. Thiscould deliver a benefit to SMBs of $4.38 billion over ten years byreducing their financing costs and encouraging them to invest.
Large businesses pay an estimated 53 percent of SMB invoices lateTrade between large businesses and SMBs is a critical part of the economy.Australian SMBs sell an estimated $280 billion worth of goods and services tolarge businesses each year, based on ABS figures. Some of that amount is paidimmediately, and some is made on trade credit, ie, by issuing invoices.
In this report, we estimate that 23 percent of small-business invoices issued bylarge businesses are paid immediately, with the remaining 77 percent made on tradecredit. A large business is defined here as one with 200 or more employees.
Applying this percentage breakdown to the $280 billion figure above suggests SMBsissue an estimated $216 billion a year worth of trade credit invoices to big businessesacross Australia.
Roughly how much of this $216 billion is paid late by big business?Xero SBI dataprovides a guide: when looking at SMB invoices to customers of all sizes, justover half (53%) are paid late. By assuming that same percentage applies to bigbusinesses, we estimate the value of their late payments to small businesses is $115billion each year ( and that's how CRO has defined their estimated $100 Billion per year Market )
O.K so next step before looking to in depth into other Peers actual reported performance and financial measures would be to just summarize the ' Top Line ' of significant comparative figures and perhaps some of the similarities.
One of those for me would be Merchant , Consumer , and / or relative and absolute Customer ' Numbers ' which I would start by putting up Xero's because they are at least in the ' Software small business ' segments of the Market so are important to highlight comparatively and because CRO derived it's main ' Target ' figure from their numbers :-
Xero's ( XRE ) Customer Numbers at ' Start ' = 150,000 = Mrkt Cap = 4.22B
Splitit ( SPT ) Customer Numbers ( Merchants ) = 720 = Mrkt Cap = 539 m
Sezzle ( SZT ) Customer Numbers ( Merchant ) = 16,100
" " Consumers reference only = 1.5 mill = Mrkt Cap = 1.14 B
Cirralto( CRO) Customer No's ( Bus/Merchants) = 22,000 = Mrkt Cap = 77 m
As I have stated in previous posts , there are numerous comparison's which can be made , drawn , and concluded in so far as ' Peer Comparison ' . And I have done many of them so far. But for the purpose of this exercise , I have specifically chosen ' Splitit ' because of where we are compared to them before they made their TWO significant deals in 2020 , and so where we would then be expected by the Market to follow along similar lines. And Management knows this. So what I am really saying before I get into the numbers is that the ONLY thing really separating Splitit and CRO is it's two completed deals with Mastercard and Visa , as well as it's significant Cash and Cash equivalents on Balance Sheet due it's opening cash and cash equivalents PLUS it's TWO raises in 2020 amounting to $106 million which total approx A$130 million.
Lets forget about cash and cash equivalents for just amount though , because in many ways there are different calculations involved , and completely different capital structures between the two with ' in the money options ' ( we don't have any yet ) , and escrow shares( we don't have any yet ) tied up with Splitit until 29th January 2021.
O.K so back to what lies just below the surface in terms of Comparison's to Splitit - Splitit has produced an average of $122,222 per it's 720 Merchants per annum which equates to $10,185 per Merchant per month. So if we then were to use Splitit's ' Monthly ' average of $10,185 and multiply this by CRO's approximate 22,000 Customers ( Was advised 20,000 and had a 10% increase in July = 22,000 ) , we would then arrive at a near enough figure of $224,074,074 to that of the $225,000,000 per month ' Gross Sales Transactions ' advised by CRO Management. And this comparison is very conservative given the CRO's management has reported that the average ' Transaction ' to be much higher potentially than $10,185 per customer per month.....but for the purposes of this exercise , we'll stay with Splitit's number.
So if we continue with the Slitit comparison , we would then extrapolate out the entire ' Gross Sales ' income per annum for CRO based on their 1.45% transactional fee structure to $38,988,888 . Again using Splitit's calculated earnings gross margin of 29 % based on their 2019 full year results , this would translate into a forecast EBIT of approximately $11,306,779 for CRO.
So currently Splitit is trading around 354.54 times earnings at it ' Net ' of cash and cash equivalents adjusted Market Capitalisation....so even if CRO were to achieve ONLY 10 - 20 % of its forecast estimated growth in Gross Transactions - That would be roughly between $1,130,678 and $2,261,356 per annum times 354.54 = between $400.87 million and $ 801.74 million market capitalization in it's own right.
As I stated above , ALL of these assumptions would be contingent on CRO entering into or announcing a ' Flurry ' of similar deals which Splitit has only recently strung together in the last six months ....like with Visa and Mastercard or similar.
If it gets them , then the valuation comes up to somewhere's between 25 - 50 cents per share.
Interesting that when you do the same analysis and Industry / Company comparison's to others like Sezzle which reported it's Half Year Accounts today , you can easily see CRO being the SECOND company behind Splitit in achieving the ' Billion ' dollar Market Capitalization threshold in as little as 12 months.
Of course $300, $400 , $500 million and so forth will naturally come between now and then with perhaps $500 million coming in as little as 5 months. It will only really take a couple of ' Financial ' deals , and a first reports or forecast earnings figure to set off these MASSIVE legs , waves whatever you want to call them . So there will be a lot of price points in between .....like 29 cent , 37 , 63 etc....
This is why I stated that it's not a BAD idea to measure CRO's development based on these $100 million dollar Market Capitalization increments.......and this is also how you effectively ' re-set ' your RSI's ....starting with the 10 ' Pips ' between each FULL cent move from here until 10.0 cents.
Whatever the case or methodologies you want to throw at it , I have looked CRO UP , DOWN , and SIDEWAYS against ALL others , and ALL comers , and which is why I have suggested that the 25 x 25 projections be well and truly dusted off in time for Christmas.......
(20min delay)