SOI - 332m
Cash - 9m
Mkt Cap - 36m (at 11c)
EV - 25m
Asian focused, Australian & NZ tourism and retail sales business. 23 bricks & mortar stores along with a very large & well established Diagou presence. In May it completed and has been bedding down a transformational acquisition for which it raised money at 16c. It is now seeing the benefits.
I've taken a position here as this is the official 'calling of the bottom' on the SP IMO and hence a monster STT Tip
The last September quarterly was good with the following metrics: Revenue 18m
GP 17.2%
NCOA +3.5m
Usually the market wants to see a follow-up result to see if the first 'good' results weren't an outlier.
Today we see a monumental upgrade in performance from that (already good) September result with the following data:
*Note this is ONLY for 2 MONTHS trading being Oct & Nov
Revenue >18m
GP >20%
Positive EBITDA
So the business has accelerated & significantly.
Gross margins are significantly improving also as the trend is excellent now being 14.7% (Q4FY19) to 17.2% (Q1 FY20) and now >20% (Interim Q2 FY20)
This says the acquisition has been completely bedded down & the synergistic gains are flowing like crazy in to the operational performance of the business.
Given the historical SP performance of AU8, sure, there are going to be a lot of disgruntled shareholders and a little stink or skepticism about the results in the initial period. However this sentiment will turn with the fortunes of the share price.
Recent director on-market buying also validates the turnaround story and the business is now generating significant scale.
Finally, was over 9m in the bank as at Sept 2019, a figure which I fully expect to increase by 4-6m in the current quarter when the results are released in January given this extremely strong interim trading update.
That means with 15m cash, and only 330m shares on issue - the current share price means the enterprise value of this significant business which is growing now at a rapid rate is only 20m ...
In my book & IMO, this is a money for jam stock & one I'm happy to hold post today's trading update
