Thanks for that, you make a lot of sense. Plus the buy side is...

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Milo7

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21/07/16

13:54

Post #: 18327723
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Originally posted by ValueTrader82 ↑

Hey mate,

Quick question, from a more value driven trader, I am struggling to understand just because AFY is stupidly overvalued, why ZML, should follow the same suit, particularly when its constrained by having to facilitate its own loan book.

In order for AFY to be worth the $400m market cap it has currently, in a normal non spec case it would need to pump out $20m+ NPAT... similar to OFX... and while they are vastly different businesses, AFY and OFX have very similiar net revenue margins ( generally 50-100bips per transactions). Now bare in mind OFX does $25bn in annual transactional volume, while AFY has done $20m .... it needs to grow 1200x its current size just to match its current value.

Now if ZML had to even facilitate $1bn of annual transactional volume, it would probably need to have a $250m warehouse facility/securitisation program at the minimum... meaning huge dilution for shareholders...considering there is a $100m facility now in place with 80% max availability...so you would need 2-3 times more than whats there... so there abouts another 50% dilution of shares at minimum.

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Thanks for that, you make a lot of sense. Plus the buy side is almost non existent at this point so with what you said factored in, i expect it to drop below 60c in the short term atleast.

ZML Price at posting: 61.0¢ Sentiment: Hold Disclosure: Held
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