News: ESK Etherstack says unit received Australian government order valued at A$1 million, page-3

Very interesting little business. Niche product that relies heavily on the capex spend of governments and utilities, naturally a very cyclical business. CEO owns nearly half of the business as well which is a good sign.

I agree it is undervalued. Obviously the size and liquidity are the main reasons, but I see a couple of others too.

First, despite providing guidance for future financial visibility, the guidance itself isn't clear. All of the inputs required are there, but you need to dig through past reports and do calculations to come out with an EBIT or EBITDA figure for FY17 or FY18.

Second, the company reports in USD, so anyone quickly opening a result and comparing to ASX price/market cap may not dig deeper.

Third, large non-cash amortisation charges really mask the bottom line. The company does try to break this out and show visibility moving forward, but the market really does focus on the NPAT line, ESK wouldn't be showing up on any P/E scans.

Anyway, do agree it looks undervalued. $20m market cap, no debt (although roughly $650k in convertible notes). On my back of the envelope numbers I think they can do about $2m EBITDA this year, potentially $3m in FY18.

The blue sky here is finding out how much of the new contracts are already factored into guidance. About $2.5m of new contracts signed since the guidance was provided, could be blue sky.