I haven't posted on this one for a while but I think it looks...

I haven't posted on this one for a while but I think it looks very compelling from here.

The set-up is essentially:

• The stock at 8.1c is on a fully diluted market cap of $31m. $4m of net debt = $35m EV
• The business generated $2.7m of real equity free cash flow last year which equates to a trailing eFCF yield of 8.7%
• There was $1m of "one-off" expenses (adviser fees) in FY24 that won't re-occur given the Strategic Review has finished
• Assuming +5% organic revenue growth this year (very conservative when considering the recently announced Global deal on 9/09 for $2.4m over three years which should be at a ~50% EBITDA margin - so $400k per year of EBITDA roughly notwithstanding further wins here), the strongish Aussie macro and industry tailwinds) and a flat EBITDA margin gets you to ~$7m EBITDA for FY25e.
• That would means roughly ~$4m of equity free cash flow for FY25e. That is a 13% equity free cash flow yield for a business with a clean balance sheet and great organic growth prospects - totally bonkers !. With that cash they will continue to pay down debt, and fund its recently announced dividend which is running at a fully-franked 3% dividend yield currently albeit only a 35% payout ratio of eFCF - assuming they up this to a 50% next year would mean a 6.45% dividend yield.
• I also think there's a chance of a reverse stock split as well as the launching of a share buyback. The blue-sky option is they decide to pay out 75%+ of eFCF as a fully-franked dividend which means a dividend yield of 9.5% - 13% which would likely lead the stock to immediately double.
• On top of that, you have the optionality from 1) More large Global deals announced (highly likely given a very pedigreed Head of Sales has just been announced for Global - he was 16 years at Tata COmms: https://www.linkedin.com/in/patrick-simon-5689b0/) 2) The interested bidders from last financial years strategic review re-approach the business) 3) Accretive M&A

We could see a share price of 20c within the next three years with downside covered from clean balance sheet, >90% recurring revenues and the ridiculous equity free cash generation which underpins a growing fully-franked dividend.

Icahn