MME - it looks super cheap - thoughts ?

Since they announced guidance of $58-$62m revenue for FY21 I've been trying to understand the business better as I think there is an opportunity to take a much larger position as the market hasn't (or can't) work out what the business is doing.

It's actually been very hard because they haven't published consistent numbers and it's hard to find an underlying EBITDA or PBT information and there is a lot of info on origination and receivables but very little on EBITDA/NPAT etc. I've crawled over everything and managed to piece together a short model and it shows it really is pretty cheap going into FY22 but wouldn't mind others looking at it and commenting.

Note: It wasn't easy pulling together the information which I'm guessing is why it is at a major discount to peers. Normally a company shows this kind of good news in a notable easy to find format.

When they have announced underlying PBT, it has been around 22% (1HFY21 for example) of revenue but since then they have also announced that funding costs have dropped ~2-3% and loss rates have decrease 1-2%, also you can assume that fixed costs haven't increased in line. So we can fairly assume the PBT margin is increasing. To keep it conservative I've assumed FY21 24% of revenue to PBT and FY22 26%, I think these are conservative, given the operational leverage in the business.

The next thing you'll notice is the step up in growth in 2H FY21 ... first half FY21 was $23.90m and the implied second half from their guidance is therefore $34-$38m with Q4 revenue implied at $19-23m. This is a business that has 24+ month loans, so it's highlight likely that number is a base into the the next financial year and they'll grow on top of that. So that puts them on $92-$107m revenue for FY22 (again I think conservative).

I've pasted my model below but using Q4 as a base for FY22 revenue, this is a profitable ($20m uNPAT) business, trading on an FY22 P/E of 13-15x and growing revenue at 49-73% to FY22. If that all checks out, that is stupid crazy cheap, it could be on double or triple that PE for that growth rate with lowering costs and operational leverage.

Love to your thoughts?

DYOR