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I am shocked at your analysis.NET has accumulated losses of...

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Rajiv2021

251 Posts.

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12/12/21

10:49

Post #: 58238345
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Originally posted by WolfOfWestPerth: ↑

I came into this stock via a placement in December 2020 last year.

On reflection even I was caught up in the market frothiness that has encapsulated the past 12 months of investor activity on ASX.

My mistake of course. These things do happen.

Now this is not to say the company will not recover, small caps have a way of being able to pivot business models or restructure things rapidly, purely as a function of their size.

There are some qualitative characteristics that stand out for me:
1. James Tsiolis (CEO/Executive Director)
Significant skin in the game (130m shares)
I don't like how his salary is $600k for FY21 though

2. Stephen Gibbs (Chairman)
He is the chairman of Australian Ethical Investment ($1.3b company)
His reputation is massively on the line here if NET fails

3. Shareholders
Regal is a notable substantial shareholder (not great they have recently offloaded a bit of their holdings)
There are other funds/institutions holding shares
Top 20 is ~49% of register which is fairly tightly held

Some of the quantitative aspects that stand out are:

1. MC/Enterprise Value/Cash on Hand
~$51m/$43m/$9m respectively
While I am sure they will need to raise capital again in the future, it should not be required during these doldrum times

2. Revenue is growing YoY, but not profitable
$0.6m (FY19) to $14m (FY21)
It is not uncommon for a tech business to have top line growth but be unprofitable

3. Revenue is becoming easier
Lions share is now recurring
This should translate into much higher margin (i.e. software has infinite ability to be sold over and over again as opposed to "capturing margin")

4. Cost are reducing
Hopefully it wont be to the detriment of sales

5. Debt free (almost)
~$1m in debt (factored in to EV above)
The company has done its best to restructure its balance sheet and rid the debt

I would say the valuation has reached a point of potentially attractive entry. The business is revenue generating and has a strategy it is trying to execute on. Its not exactly throwing darts at a dartboard. This is valued at roughly 3 - 4 times its FY21 revenue which is low in the tech world.

Of course buy at your own peril. I am down so much on this that I may as well wait it out to see what happens.

Wolf

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I am shocked at your analysis.
NET has accumulated losses of $100m. NET has does nothing but make promises that have never delivered and is the master of raising more and more capital. The promises are so ridiculous it amazes me that there has not been a class action.
NET even claims to be in the IoT business, has tens of thousands of Chinese sales reps that have delivered virtually nothing...the list is long. Typically, NET signs agreements for distribution that are ineffective and only serve to pump up the price of the shares. Fortunately even this tactic is failing.
NET Price at posting: 1.6¢ Sentiment: Sell Disclosure: Not Held
1 Upvote

0 Great analysis

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