from 2017 report it is stated that Telstra takes 24% of revenue.
Say worst case scenario, it is Telstra who terminated the contract, so IMS lost 24% revenue.
In financial year 2017 total DCB revenue is 24m (out of group revenue of 52m), which means Telstra contributed 12.5m revenue (52 x 24%). This is about 52% of total DCB revenue (12.5 / 24).
DCB EBITDA for 2017 was 5.4m. For 2018 we don't know yet, however let's assume IMS cut down DCB business investment by 30% (which is reasonable according to their latest market update), which means EBITDA 2018 for DCB would be around 3.8m before impact. If we count into impact (52% decrease) that figure would be 2m less for the whole year (theoretical), further take into account of fact that Telstra stops service from March (1/4 of the year remaining), which means (theoretically) EBITDA would be impacted by 0.5m - 1 m top for 2018.
IMS stated that 2018 EBITDA would be improved over previous year, lets say forecast EBITDA is 6m, and the Telstra incidence impacted the figure by 0.5 - 1m, a mere 6- 12% decrease (that is assume IMS gets no compensation from Telstra). Yet market punishes the company by 27% down in share price...
Say EBITDA is 5m for 2018, if we use 10 EBIT multiplier (which is very conservative for a growing company, only assuming 10% annual increase), the market cap should be at leaset 50m, which equals 11 cents in the price.
Pardon my messy analysis, my point is, the stock price can't just go down forever ignoring the fact that company is earning positive and improving its financials. At the current price which market cap is merely 15 million, IMS looks very attractive to me.
All my personal opinion only.
IMS Price at posting:
3.5¢ Sentiment: Buy Disclosure: Held
