valuation

Here is my attempt to place a valuation on Engin.

Known facts

Number of customers required to break even = 30,000 – Source Page 2 Annual Report 2005

Average monthly spend per paying customer = $45 – Source Annual Report

Hence revenue with break even number of customers = $16.2M

Total shares on issue = 196,896,175

Number of paying customers at end Nov 05 = 15,000 AGM presentation 29 November

Here is where it gets tricky. What will the growth rate be – I have assumed 5% per month. This gives the number of paying customers as 37,228 by end June 06.

Assume 37,228 times $45 per month = annual revenue of $20M or Net profit of $3.8M ie Earnings per share of 2 cents. On a price of 16.5 cents that’s a PE of 8.3

Give it a growth PE of say 25 and I get a valuation of 50 cents per share, based on projected numbers to 2006.

Unknowns to me at this stage are – Cash on hand to fund the growth and the implications of broadband Over Power Line trials.

Now where have I gone wrong ???


Bev