I think MSL is one of the best ASX small cap exposures to...

I think MSL is one of the best ASX small cap exposures to technology driven solutions for sport and leisure centres in a COVID safe world.

I expect a strong finish to the year for MSL and a re-rate as market begins to appreciate the transformation of the business both operationally and financially. The COVID environment has completely thrown off venues globally and compliance is becoming a big issue. MSL has been very quick to address risks and government requirements with its technology solutions.

I expect growth to return very strongly in FY21 from its traditional products (in seat ordering and click n collect) which are fantastic for avoiding queues and contactless payment and customer interactions.But more importantly, and if you follow the company closely on social media you will have noticed, its new products rapidly developed and released to existing and new customers are going to propel FY21 growth:
QR patron registration for contactless compliance for contact tracing
Self cleaning UV based POS terminals
Biometric based next-gen POS - currently being successfully trialed and rolled out in the UK via Verteda subsidiary and technology partners such as Hitachi. This is getting serious traction after quite some time because its contactless (unlike finger print scanners) or facial recognition which is very unreliable. The applications are enormous, and it seems the product is getting governmental endorsements in the UK according to my research.

The risks are real for businesses because non-compliance results in fines and forced closure.

I can’t imagine MSL hitting a brick wall on many of its leads right now, every target customer will want to know about its products.

The company has almost $20m of recurring revenue and priced at $20 market cap. So its already hit the ground running and an excellent base to market its new products.

It is heavily discounted IMO because of two reasons. 1) growth has been stagnant and 2) the previous management ran it into a substantial loss.

Cash flow losses have been eliminated completely. I expect a cash operating profit in Q4 because the last trading update mentioned improved quarterly performance.
Operating cash flow
Q1 - (1.542m)
Q2 - (1.565m)
Q3 - +0.037m
Q4 - ???
The company also said it maintained its balance sheet strength, so any concerns of an immediate capital raise are also eliminated.If you have two quarters (Q3 and Q4) with positive operating cash flow, I can’t imagine a negative 2H EBITDA.
EBITDA 1H - (1.563m)
EBITDA 2H - ???

I am familiar with CEO, CFO and Chairman of this company, which were all appointed in their roles late last year. I can’t rate them any higher, they’ve been incredibly quick to understand and turn around this business and I think they are doing a fantastic job. Also, they are not spruikers, and would rather deliver first then promote.

I think now is a great time to look at the company, before the full impact of the financial turnaround has come through and the shares remain heavily discounted.

DYOR