Next ANN. may Shock to the Upside... FAST, page-8

Chooo chooo......

I just couldn't help myself...

But seriously, the smart people who trade take the time to understand the different phases a company goes through. Whilst in the development phase a company will be ruled by development based announcements and milestones - just like NUH has benefited from for an extended period. But then, as a company starts to hit the production phase where the market expects outputs rather than flashy announcements the focus increasingly becomes more about receipts and outflows.

NUH is getting hit by the reality check right now - so increasingly in the future - announcements that arent output (receipt growth focussed) will have little positive effect on the share price.

Not many companies move seamlessly between development and production phases and there is inevitably a drop in share price when the gloss wears off directly after development phase before production ramps up (if it in fact does). So NUH beginners need to stop blaming it on rampers, manipulators and bots and actually understand what moves a share price through a companies different phases.

For NUH they need to build receipt numbers quarter on quarter to a sufficent level that indicates they will not suffer from excessive dilution. If NUH can build receipt numbers at a rate of 50% Q on Q they could hit cash flow positive within 4 to 5 quarters and only need circa another $12m in capital raised in order to get them there. So its not an entirely unreasonable proposition.

But does that make NUH currently worth it's $80m market cap and 9.1c current share price when it is also in cap raise territory? In my opinion - no. Although I have seen many more stupidly priced stocks and although NUH is somewhat becoming derisked due to its increased product range it is by no means out of the woods.

As I have stated - NUH has had some major challenges surrounding receipt growth over the last 6 months and this next quarter will be telling. Lets say NUH hits 50% growth in receipts and obtains circa $1.2m in receipts in the next quarter then perhaps one could say NUH warrants a SP around the 8c mark. But if NUH only pulls out a $800k receipt quarter for its impending quarter - them thats terrible - and it should only sit at 7c. One should also be wary of lumpiness with NUH quartely receipts as although pre-orders may move receipt amounts up dramatically for one quarter it is not likely to be repeated Q on Q.

Despite this, If NUH builds receipts Q on Q at a reasonable amount without too much dilution NUH may in the future justify its current share price. Remember a modest ROIC of 10% to justify NUH's current share price would mean NUH would require a NPAT of circa $8m. So when people say silly things like NUH will hit a market cap of $500m - think about what type of reasonable profits something like that would require.

My opinion only - so instead of engaging in typical cognitive bias how about we start to chat about NUH's receipts and outflows.