While it is tough to buy tech companies in Australia at a reasonable valuation, AI Media may be an exception.
So far, the potential of the company has been hidden due to the legacy business which is decreasing and low margin (labour intensive).
The underlying business (technology division) is growing at a high pace, with a high margin (gross margin of 85 %).
As usual in this sort of case, the valuation seems high if we just look at short term results (free cash flow yield of 2 % based on FY 24 results).
So, it is more interesting to look at the potential of the company, once it has reached a more mature level.
In this case, it would mean a low level of legacy business in 5 years.
As explained in the other thread, I think that the 5 year target seems realistic to me (even it looks a bit high), due to the increase weight of the fast growth business (the technology division).
Based on the company's 5 year target (revenue of 150 m$ and EBITDA of 60 m$), the company could have a free cash flow of around 39 m$ in FY 29.
Main assumptions :
- cash flow from operation which would correspond to this EBITDA after a normal tax rate of 30 % (no impact of financial charges/income and no impact of working capital),
- Capex which would remain flat in % of revenues.
For whatever reason, it is clear that the market has not discounted this 5 year target, as the company is now valued at an EV/EBITDA of less than 2 and a free cash flow yield of 41 % (using FCF 29 estimate above).
If we discount the free cash flow at 10 % per year, this FCF 29 corresponds to a free cash flow of 24 m$ today, which looks quite high.
A few other elements worth mentioning about this company :
- interesting to see that, the main shareholder increased his holding in June (from 14.6 % to 16.9 %, at 31 c),
- according to my understanding, customers are not paying a fixed amount every year (like a lot of SAAS), but they are more volume based, which create some potential volatility for their earnings.
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Last
56.5¢ |
Change
0.005(0.89%) |
Mkt cap ! $117.9M |
Open | High | Low | Value | Volume |
57.5¢ | 57.5¢ | 56.0¢ | $23.35K | 41.52K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 19658 | 56.5¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
57.5¢ | 25000 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 19658 | 0.565 |
7 | 30002 | 0.560 |
3 | 44736 | 0.550 |
1 | 10000 | 0.545 |
2 | 51885 | 0.530 |
Price($) | Vol. | No. |
---|---|---|
0.575 | 25000 | 1 |
0.585 | 25000 | 1 |
0.590 | 4566 | 2 |
0.600 | 5875 | 2 |
0.610 | 133401 | 2 |
Last trade - 16.10pm 07/08/2025 (20 minute delay) ? |
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