FY21 revenues - temporary increase?, page-7

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08/12/21

10:46

Post #: 58152453
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Originally posted by ShaneW88: ↑

What you mean nothing wrong here?
If revenues were driven by ad-hoc hotel work then this is assumed to be not stable revenue & therefore not normalized earnings.
The business achieves 20% gross margins & 1-4% EBIT margins. If their revenue gets cut from less ad-hoc work the business is going to lose money. I think there is alot wrong here. Once I didn't get a response on the 36% customer I was unsure if they were a stable recurring customer or a once off short term ad-hoc contract customer (Government) given the hesitation in his response & lack of transparency I got out quick. I may ne wrong on that decision but I won't regret getting out as I believe I made the right decision based on the information I had & believe this was a good investment move.

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Yeah, couldn't fault you for getting out fast.

But I am staying.
I believe this long term customer is stable (Most probably mall security).

However the increase in revenue in the last year could be due to the additional hotel quarantine work.
If I am wrong on this, and revenue can remain long term, all the better...

Hence I take valuation from pre-covid period + new contracts (Health + some more shopping venues) -> this company is slightly cash flow positive already during those period. So this give me the base case.

At this low market cap, and its stability, dominance in WA, the reward of upside is much greater than the down.

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MSG Price at posting: 5.9¢ Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

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