Z1P - Technical Analysis posts, page-47

So they're being cheeky with the bad debt piece, as they are now stretching the way they report arrears out from 60 days to 120 ... naturally reducing the bad debt number... And then suggesting the bad debts will still rise to 4% ... meaning the un-adjusted bad debts as we currently see them, will be far higher.... I'd imagine they are doing this as they realise they have to grow 2-3 fold just to break even, and elevated bad debts will be part and parcel of this

I also agree re the beta... it pretty much gives headway around price fluctuation swings :)

My real concern is around the capital intensive nature of this business and the relatively meager ROE... If you consider 2 year forward Net Profit figure of somewhere between 0-$5m... clearly doesn't equate to a $300m+ enterprise val... more so $50m-$100m at best, the DCF val is clearly far more heavily tied into the following 8 years of Cash-flow, which supposedly show an average at some point in time north of $30m profit p.a, to justify this lofty number.

The problem with this is, the business will require circa $2bn in receivables to hit those numbers... or 8-10x its current size... Even if we assume a 10% credit enhancement to support this growth, it would suggest $150m of new equity would need to be raised to get anywhere near this number... So we need to differentiate what a fair "pre money" val is... which clearly hasn't been done or considered by the market.

Based on this, a $150m+ injection of equity would be required just to hit the FCF numbers its implied $300m-$350m val would require in circa 2021-22, as the business simply does not have the requisite equity to support growth to a break even book size organically,... hence the true pre money valuation as is, has to be <$150m ... probably sub $100m... it's simple maths... the market has priced in a post money Valuation, which is unobtainable without serious injection of dosh.

These guys have also ramped up announcements of late, to stimulate the SP movement... however the market has for the most part seen through it... As @Christos12 suggested, the company will need to raise within the coming months, or run straight into a brick wall from burning the proverbial candle at both ends... namely large losses and book growth, which both burn/require equity growth at an alarming rate...

I wouldn't be surprised to see a near term raise and or sell down soon...