Hi SS, firstly I'd like to say thanks for taking the time to...

Hi SS, firstly I'd like to say thanks for taking the time to respond in such depth, really appreciate it.

I have a couple more questions and points to make.

The stats you quote regarding the fixed overhead costs are impressive, however I still have doubts that can be sustained for a company that's expanding in a growth stage. Winning new contracts and developing you tailor made products will undoubtedly result in increased overheads, perhaps greater than your discount of 6% from 24% profit margin to 18%.

Have these 'fixed' costs as you call them remained constant going back further than 2012-13, 2013-14 was probably one of their more stable years in regards to reaching break even point from the investments they made in previous years and the contracts they currently have on the table.

If we ignore the above contention about how fixed the fixed costs are and how much you can rely on that to justify a high p/e, even if we assume that the maximum amount will flow to bottom line based on their forecast guidance this would result in $1.3 NPAT and a p/e of 76! I still say wow....

However, if the future gets even rosier then 76 p/e could be fine, meaning as you say AT LEAST one of those new contracts has to come off. What about the existing ones? Do any come off next year? Their business model doesn't strike me like one that has contracts in perpetuity, is it more likely that the volume from their existing contracts will increase or decrease next fin year?

One other really big factor that stood out to me is that in their presentation they say that a new contract may result in 1 million units over multiple years, not per year as you have factored into your figures.

How many units are they selling per year now for an average price of $100? $60 mill so $600,000? Surely you wouldn't be factoring in them selling more units from one contract than they can manage from the 6 or so existing ones they have?