Yeah I'd go with an average gross margin of 30% - I think they have current margins of 30-60%, but I'd imagine most of the larger customers will have lower margins and that's where most of the revenue will come from.
Also going forward if they licence out the use of their chemistry this may mean a lower margin also.
You also have to add in operating expenses which for the half year were around $6m excluding share based payments, so perhaps $12m for a full year - these will rise as the years roll out as well and more staff are hired and international offices are opened.
I'd also be looking at financial years not calendar years and I hope Alexium will do this too going forward when releasing revenue forecasts as this is what Analysts will look at.
So for financial year 2015/16 ending 30 June you'd have to be looking at a loss if the half year was a loss of $8m. Perhaps a full year loss of $12m?
For the financial year 2016/17 ending 30 June 2017 anything could happen - I'm expecting anything from a small loss to breakeven to a small profit to ??? - now this is statutory profit, not cashflow, which the company has indicated they will be neutral from 1 July this year.
So as a potential scenario for 2016/17, $40m AUD in sales gives a gross margin of $12m, less operating costs of $12m gives a neutral profit result under my conservative numbers above
But Sales of $50m AUD under the same margins and costs would give a profit of $3m
And sales of $60m AUD a profit of $6m etc ....
And say for 2017/18, with Sales of $100m and opex of $15m, may give a profit of $15m being conservative.
It maybe the average margin is more like 35%, operating expenses may be more or less as well. Revenue could leap in huge measures as well.
P/E wise - I'd imagine we could operating at 60+ in the short term. So a potential $600 mkt cap on $10m profit, but we may get that before we even announce a profit.
Just keep watching for the growth in the cash receipts in the quarterlies, by end September we should be cash positive and by end December statutory profit positive (on an annualized basis) and that should bring a major re-rate in the shareprice ...
Also automotive, polymers and military announcements before then should see strength in the share-price particularly if one or more brings in $20-30m+ a year
AJX Price at posting:
58.5¢ Sentiment: Buy Disclosure: Held
