What will actually happen over the next four years? Earnings and...

What will actually happen over the next four years? Earnings and share value?

So far the earnings guidance for this year is to achieve sales of fifteen million , rumours have it that this will be exceeded .

That’s fine but what sales will actually take place over the next four years?

The background environment for prospective sales as I see it involves the following:

NET’s virtual secure network technology is stunning..

“Edge computing” is the next major evolution in information and communication systems.

Net’s product suite is best practice in the edge environment and has unique features which differentiate the technology from the status quo. This is a strong position to be in with an emerging dominant market which will need NET’s product capability.

Net’s technology with the VSN and virtual DMZ built into their platform is also best practice cyber security for the cost.

The “Network Effect” which means when one mass scale deployment by one enterprise will ripple through and become the role model for an unlimited number of major enterprises and governments. One major enterprise on each continent will seed for all continent adoption.

Usage will follow a geometric progression.

Substantial cost savings ( up to 70%) , and improvements in a corporation’s ability to deliver product and services will become apparent.

The sheer ease and efficiency of network connectivity coupled with enhanced almost unheard of integrative capability opens up whole new realms of operating for organisations and individuals. Adopting the technology becomes compelling.

The base foundation code is different for the continents which means each product is unique to a particular region. For example China, India, USA , Japan, Australia and Europe all to be unique.

2020 sales from Q1 $1.6 mill to reach if the rumour is right $6.4 in Q4. Annual 2020 sales to amount to approx $18 million to $ 20 million. An approx 400% increase over the year. Quite spectacular and reflective of the background previously outlined. The sales story will emerge as powerful and strong.

In 2021 , if we halve this rate of increase to 200% for the year we end up with additional sales of approx $40 million and total sales for the 2021 year of just under $60 million.

For 2022 , drop the rate of increase to 100% for the year and we end up with total sales of $120million.

Dropping the rate to 50% for 2023 total sales for that year could end up at $180 million.

Hence what we have is from late 2019 with a figure of negligible sales, to this 2020 year in a pandemic $ 18million to $ 20million sales, 2021 $60million sales, 2022 $120million sales and 2023 $180million sales.

Using two billion shares as issued capital August 2020, we can calculate a potential earnings per share at different revenue points and apply a share price multiple.

An earnings per share multiple of seven times is often quoted for tech shares in the Australian market. Multiples vary depending on the tech company’s particular situation and can be significantly higher. NET is a network technology which is in a much greater league than application technology and deserves a higher multiple. The USA market can apply an average of a twenty times multiple to technology stock generally.

The mid point between the two multiples ( 7 -20 ) is a multiple of 13.5.

Using 13.5 multiple applied to earnings and potential earnings for each year produces the following:

2020 Sales $ 20 million , individual share value 13.5 cents.

2021 Sales $ 60 million, individual share value 40.5cents.

2022 Sales $120 million, individual share value 81 cents

2023 Sales $180 million, individual share value $1.21

If we apply the American tech multiple of twenty times the figures are as follows:

2020 Sales $ 20 million , individual share value 20 cents.

2021 Sales $ 60 million, individual share value 46 cents.

2022 Sales $120 million, individual share value $1.20 .

2023 Sales $180 million, individual share value $1.80 .

This is a broad brush guide but given the serious traction in sales taking place this year and the pipeline of current potential adopters in NET’s facilities this kind of guidance illustrates IMO the company’s strong emerging potential earnings story for the market.