In my calculations I have included further capital raisings in...

In my calculations I have included further capital raisings in FY09 of $50m and FY10 of $50m.

I have assumed that Revenue will be proportionately greater than the calculated Shareholders Equity. From the revenue figure I have assumed net profit will be 18% (this ties in with the NMS figures). From this it is possible to calculate an estimated EPS. Then, assuming a price earnings ratio of 15% (the long-term average for Australian stocks), I have worked out my estimate of the share price.

My figures (which are likely to be horribly wrong):

FY08 FY09 FY10
Revenue $80m $240m $480m
Profit (18%) - A $14m $43m $86m
Capital raised (est. @ $1/share) $50m $50m
Shareholders Equity $118m $168m $218m
Shares in issue - B 300m 350m 400m
Profit per share - A/B=C $0.05 $0.12 $0.22
Share price - C x 15% $0.72 $1.85 $3.24

Bear in mind these are my rough calculations. From them my conclusion is that NMS is a worthwhile buy at the current price. In the above, I have concentrated on figures but obviously there are plenty of other considerations.

Hopefully, my calculations will stimulate a bit of debate and some of the others who follow this stock might post their calculations.

I expect the first thing questioned in the above will be the prediction of Revenue tripling between FY08 and FY09 and then doubling between FY09 and FY10. This obviously makes a big difference to the share price figure calculated at the bottom of the table. I think when you consider the Shareholders Equity as a proportion of Revenue these increases are not unreasonable.