Good morning all,
This is my first post, however I’ve been following these threads for a long time. I like to read all posts, even the rubbish ones, as it helps me to remain objective and question my investment decisions. So given the current interest and speculation surrounding this company, I thought I’d give a brief outline of what we know and hint at the potential value of the company going forward.
1. What is Currently in the Bag:
SOL and NGAS contracts have been signed, guaranteeing revenue from subscribers in Brazil and Indonesia respectively.
- Subscriber numbers for the SOL deal covering the Brazilian market potentially forecast to be upwards of 500K in the next 12 months, upgraded from the previous estimate of 125,000. This may scale much quicker than initially anticipated.
- The Indonesia deal targets a market of 61 million households. Therefore a conservative uptake of 5% would give a projected subscriber base of about 3 million. I think we will see a quick uptake of our technologies by ISP’s and mobile operators, as companies will try to capitalise on having a first-mover advantage and keep up with their competitors.
- Based on the latest announcement, there is some indication subscriber fees could be in excess of US$1/month per subscriber; although I prefer to keep my estimates more conservative until actual figures can be extrapolated. The fact that revenues are in USD is also advantageous to us, considering the weaker AUD.
2. Potential Market Capitalisation
TV2’s market capitalisation is currently about $18 million (the figure shown on HotCopper is incorrect). Based on the deals currently in place, and assuming a subscriber base of 1 million in Brazil and 3 million in Indonesia can be secured within 12 months, some speculative 12-month projections using various sub fees are as follows:
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Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
Column 7 |
| 1 |
Fees (per subscriber)
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| 2 |
Brazil
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| 3 |
Indonesia
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| 4 |
Total Revenue (yearly)
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| 5 |
Revenue minus Estimated Costs ($10mil/yr)
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| 6 |
Projected Market Cap (P/E 15)
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| 7 |
Forecast Share Price
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| 8 |
30c
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| 9 |
$300K/mth
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| 10 |
$900K/mth
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| 11 |
$14.4 million
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| 12 |
$4.4 million
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| 13 |
$66 million
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| 14 |
6c
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| 15 |
50c
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| 16 |
$500K/mth
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| 17 |
$1.5M/mth
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| 18 |
$24 million
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| 19 |
$14 million
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| 20 |
$210 million
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| 21 |
19c
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| 22 |
$1
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| 23 |
$1M/mth
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| 24 |
$3M/mth
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| 25 |
$48 million
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| 26 |
$38 million
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| 27 |
$760 million
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| 28 |
69c
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| 29 |
$1.50
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| 30 |
$1.5M/mth
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| 31 |
$4.5M/mth
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| 32 |
$72 million
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| 33 |
$62 million
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| 34 |
$930 million
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| 35 |
84.5c
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Notes:
- All figures in AUD.
- Costs will increase as we grow. The amount I have used factors in some expansion in costs over the next 12 months to twice the current levels.
- A market average multiple of 15 has been used for the valuation, however tech companies can sometimes have valuations with multiples much greater than this (the sector average is 25).
- Forecast share price is based on current SOI, not fully-diluted.
Even modest projections give an indication of why this company looks poised for massive growth; and these forecasts are based on just two contracts. With speculation of the company’s involvement in the Chinese market, the potential of deals within other regions, plus various other revenue streams that have been discussed, I personally think that a market cap in excess of a billion dollars is possible within 3-5 years. I will add that the performance shares on issue (convertible after EBITDA milestones of $5, $10 and $20 million per month are achieved) indicate what management believes is possible as well.
I think it may still take some time for the general market to wake up to this opportunity, however once revenues are reported it should quickly rerate.
3. Speculation about Other Deals:
- There is speculation regarding our involvement in the development of ‘Smart Cities’ in China, which would add significant value to the company.
- Considering our relationship with China Mobile, we could imagine a similar OTT offering in China.
- Further opportunities in LATAM and Asia to come, as reported in the last quarterly.
- Still waiting on announcement on progress of DivanTV.
- Revenue streams generated through selling the set-top-box in other markets.
- Potential deal with airlines has been cited.
- Some have also reported that Indian and African markets may be future targets for us.
4. The Possibility of a Capital Raising:
As indicated in the EGM notes, there is the possibility of a CR in the short-term. As we know there was a renegotiation of the PGAS contract in our favour. This relied on less upfront capital injection from PGAS for a better subscriber fee payable to us. This adds more value to TV2 in the long-term. A CR would be the best way to cover this shortfall and ensure more funds are available, if needed in the short-term.
I’ve seen many CR’s that have simply been temporary life-supports for dying companies. However, I trust in this management team and do believe that they are acting in the company's best long-term interest. Therefore, any further capital raised may be seen as positive. Keep in mind, we have a fairly lean operation with expenditure predicted to total $795K for the previous quarter. Monthly invoicing has already commenced, and upon issue of the convertible notes, we will have enough cash to last through this current quarter. Therefore a capital raising could aid in the growth of the company, not simply guarantee it’s survival; an important differentiation when considering how the market may react.
Final Thoughts:
Having been an investor since the RTO, I believe in this company’s potential to deliver significant value to the shareholder. I have watched this forum for a long time from afar, sifting through a lot of noise, misinformation, name-calling and emotional outbursts in order to get to any posts of real substance. It is entertaining nevertheless.
Thank you to those few that have thoroughly researched the company and distilled confidence in the new management, particularly
@Paxti @GPV @Bullish Event @SuperTrumpy and
@kevscranes. You consistently contribute posts of substance and have had the vision to see what is possible, even whilst dangling over the edge of the cliff. Seeing the size of your individual parcels, I’m sure you will be richly rewarded!
All IMO. Do your DD and GLTA. I’m here for the long haul.
Parcels
