BIG 0.00% $2.22 big un limited

Should you invest?, page-10

  1. 512 Posts.
    "While Big Un certainly trades on a big valuation,"

    I disagree with that statement. Maybe if you simplistically look at widely published rear-view valuation metrics you would think that, but if one digs a little deeper then Big Un looks cheap.

    From my perspective Big Un looks to be substantially undervalued. I won't go into my full valuation here, let's keep it simple.

    In Q4 FY17 it bought in $9,365k cash and had net operating cash flows (OCF) of $3,826k for around a 41% cash flow margin.
    Extrapolating from one quarter cash flow is fraught with danger, but let's do that to keep it simple.

    Q1 FY18 Big will bring in over $14 million in cash.
    If Big maintains similar margin that'll deliver $5.7 million in OCF.

    That gives a run rate of $22.9 million OCF. BIG has a fully diluted market cap of $227 million when all its deep in the money options are included.

    That means this hyper growth company, that is now self funding and spitting out a growing pile of cash, is trading at a low multiple of less than 10x run rate OCF.

    While a 41% cash flow margin may be hopeful, looking at the margins and growth from a multitude of  likely outcomes all point to BIG being cheap.

    If anyone can point me to any ASX company with similar attributes please do so.
    Last edited by moreld: 08/09/17
 
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