Alexium is close to being valued at a level it should be without retail hype.
If the growth continues to come in (which I feel is likely) this is going to transition from 'speculative' to small cap growth.
When it hits small cap growth (based on 4c financials) new investors/ new blood will come into alexiu,
If (When) the financials show 18.5mill US revenue this year we'll be on our way. This would suggest run rate of 25-30 million AUD (or much more) by the end of CY 2016, Once we have significant QoQ growth in high double digits, with double digit revenue per quarter, that's when the financial metrics really come into play. At this level, we'll see the next big re-rate of alexium.
Because they have stated a few things with a bit too much vigour (such as military revenues expected and 'commercial trials' that seem to have lasted >6months prior to revenue production), confidence in what management is saying is at a low. Mr Market (which in truth means the actions of those who currently hold) doesn't have much confidence in AJX nor what AJX is saying. So as the share price drops, the lower share price is having the effect of scaring more and more holders out of the stock.
I would say, with quite strong confidence, that if we are hitting a run-rate revenue of 40 million AUD by 4Q 2016, we'll be valued at 300-500 million AUD. I think its quite easy to find examples in that range. There is precedent for that level.
To me, that suggests that if alexium management aren't blowing smoke up our collective ass'... We're looking at 50-150% gain in the next 9 months.
Specifics of COGS is close to an irrelevancy. The company will make a gross profit on goods sold once they hit steady state... It's not a hard thing to model with some accuracy.
The question at the moment ISNT "is 18.5US a year worth 180AUD in market cap?".
The question for AJX is "Will AJX hit or miss their revenue target?"
The good thing, the drop in share price from 1.00 to 80c, or 80c to 60c has no bearing on the chance of the company hitting revenue targets.
Compared to two weeks ago, I'm a lot more confident of these targets. We just had significant quarterly growth, we had 2 weeks of good cash flow at the start of quarter 2 CY2016 so things seem to be on track.
AJX Price at posting:
59.5¢ Sentiment: Buy Disclosure: Held
