MXL mxl limited.

Mxl- green alert>15c

  1. 258 Posts.
    I have not stopped following mxl ever since my last post on mxl many months ago. Decided not to share my views any further at that time as some readers were making unsubstantiated comments about what I thought about mxl. I thought after all these months I will write again on mxl for as long as I dont get any rude comments (unless of course I can be proven wrong and they are substantiated). It is good to see that what I have commented on mxl has been right so far although I must say that the share price is relatively low at 11c compared to what it has achieved. But I believe that is because of the market generally and mxl has been sold off unnecessarily and what this means is that mxl is grossly undervalued.

    If we look at the announcements in the last few months especially the partnership with Microsoft, in a good market the price should have tripled if not doubled. But look what happend when it was announced. It did go up to 15c from about 13c and then drift back to 10c recently. That doesnt sound right. The market is obviously ignoring a company that has a lot of potential. For many of you, we have following theis company for many months, I have been following it for a couple of years when it was sub 3c. It has proven again and again that it is able to deliver.

    The last 2 contracts were great, only announced in the alst 2 weeks. The Russian contaract that we have been talking about for a long time has eventuate. It is worth at least $6m and again market has not taken into account. I spoke to the company recently. The problem there many months ago with Russia was the language andthe new version 4 with the adaptation to Russian is now functioning and they were able to close . We should see some good revenue coming from there.

    The UK contract again generates revenue of at least another few million dollars- read their recent announcement for full details. Again this contarct is cashflow positive.

    As I said I review their operation with the company only in the last few weeks- had a detailed chat, about 45mins going thru their current operation , strategies, potentials, recruitment, suppliers, business risks and various contracts, and running costs ie a full analysis of their business. It looks like mxl will be cash positive in the next calendar year. They are negotiating a number of contracts in Aust which looks promising. They did announce the Bond Uni in one of their announcement but I am led to believe that there are more significant contracts coming.

    Mxl is working on their new version of the software, at the same enhancing the product so that they could be utilised outside the normal college management industry. They are enhancing in so that it is able to integrate with a number of general ledger systems so that they are not just reliant on their traditional market. I think this has a lot of potential as new market s are opened up to mxl.

    We havent heard much about Asian contracts. Again it looks like thay are working hard in this region and if you recall I have mentioned this before and hence they have been working for many months on it. Hopefully mxl will be able to report on that soon. Version 4 has ironed out a number of problems with the software that mxl was facing before. So we should see some exciting action from that region of the world.

    On the technical side, mxl has retraced down to 10cents. It was well supported there and looks like it has turned. Volumes have been resanaably low at close to 1m the last few days but looks like it gathering strength and the market depth looks good.

    Mxloa unfortunately has only a couple of months, hence more risks but higher leverage to run but it is well in the money with exercise at 5c. Mxl is very confident that they will be exercised by Dec. It means that the company will make sure that the shares will stay beyong 10cents and higher. I ask them about underwriting the issue but I guess when I spoke to them it was still quite early and they were confident that the options will be very deep in the money- I guess they probably thought that the microsoft announcement should have taken them into th 25cents zone.

    So in summary with the expectation:

    - of a few more positive announcements till the year end, possibly from Asia, and a few more cashflow positive contracts from existiung regions
    - positive cashflow in the next calendar year
    - version 4 improvement
    - enhancement to software to integrate with other general ledgers and hence new markets
    - costs is well under control
    - options will be exercised and they will have heaps of cash
    - have explained well the previous problem with issuing the shares at a much lower value to their top guy( remember his contract was put in place when the share price was substantially lower)
    - still the leader in this area with competitors still a year behind
    - market not recognising the last few announcements, the last 3 especially

    mxl is good value at 11 and we are green alert hopefully beyond 15c, towards 20 by yearend. The market cannot ignore it forvever with the contracts and positive cashflows that are continuously being announced.

    Research yourself and see if you agree.

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