Road block again at 97c 97.5c, page-62

What I didn't address in my last post, and what is certainly worth mentioning is the Enterprise Value of KMD. Looking at the EV is where you can see the true underlying value of a company as opposed to a simple market capitalisation.

After completing an equity raise, this is extremely important too, because as I mentioned before, comparing KMD to its own share price pre-COVID is comparing apples and oranges.

The EV takes the current Cash & Cash Equivalents into consideration.

Take for example KMD when it was valued at $2.40 with 300m shares, the Market Cap might be approx. $710m. However, the cash held by KMD, particularly just after their acquisition of RipCurl was extremely low, approx. $5m at the highest point. This means that the Market Cap of the business was very close to enterprise value as the company held minimal cash. The Enterprise Value in this instance would have been around $705m.

At its current standing however, KMD is valued at $0.99 with 700m shares, the Market Cap is approx. $700m at the moment, very similar to pre-COVID days. However, the cash held by KMD is significantly more than previous. Now, with over $200m from the huge equity raise, the enterprise value of KMD is approximately $500m give or take. Meaning that the underlying business has lost $200m in value since the pre-COVID days, however maintains the same Market Cap, as the difference has been funded by the equity raising.