Hi JCoure
I would see anything less than 20% sales growth as a 'lose' situation.
The AUD/USD exchange rate has has improved from an AUD reporting perspective. The average exchange rate for 6 months ended 31-Dec-13 was 95.33c, compared to the average AUD/USD rate of 92.41c for the 6 months ended 31-Dec-14. Sales should increase on currency movements alone.
At a 20% p/a compounded sales growth, my modelling spits out a -9% p/a return based on my 78c buy price and the following assumptions:
- 65% gross profit margin
- 7% annual increase in overheads
- Tax rate of 30% from year 1
- Trading on a p/e multiple of 22x in year 5.
This is my bear case scenario and the assumptions could obviously be tweaked. For example, I were to assume:
- 70% GP margin
- 5% annual increase in overheads.
- 0% tax rate (carry forward losses utilised)
- Trading on a multiple of 25x in year 5.
My return would be an estimated 5.86% p/a over the 5 years. Still hardly impressive and if you bought at the current price that return drop into the the negative again to -3.35%.
Note: The above return doesn't account for possible dividends or cash held, but arguably a p/e of 25 would account for some cash on hand.
If I assume a 30% sales growth (ie: FY19 sales of ~$80m), using the above two scenarios my forecast return increases to 13.37% pa and 30.70% pa respectively based on my 78c purchase price, or 3.5% and 19.32% p/a on todays price of $1.23.
$80m would represent only 27% of their potential market ($300m as stated by NAN), so there is potential to extrapolate those numbers out further. In the interests of conservativeness I'll stick to $80m and 5 years.
Regards
Gralynchett
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$2.83 |
Change
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Mkt cap ! $857.4M |
Open | High | Low | Value | Volume |
$2.87 | $2.87 | $2.82 | $3.640M | 1.284M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
4 | 21844 | $2.81 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$2.85 | 3896 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
4 | 21844 | 2.810 |
4 | 8337 | 2.800 |
3 | 7250 | 2.790 |
6 | 18965 | 2.780 |
2 | 1600 | 2.770 |
Price($) | Vol. | No. |
---|---|---|
2.850 | 3896 | 1 |
2.860 | 15133 | 3 |
2.870 | 5146 | 2 |
2.880 | 4588 | 2 |
2.890 | 1955 | 2 |
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