ASC 6.67% 1.6¢ adultshop.com limited

Porn still undervalued by 50% ??

  1. 1,263 Posts.
    WHY ASC IS STILL MASSIVELY UNDERVALUED

    On Monday Adult Shop ( ASC) announced its profit forecasts in conjunction with a roadshow.. The share price jumped from 24 cents to 32 cents. Initially I took profits before properlly looking at the figures.I believe I may have made a mistake and from my calculations it seems that ASC should be valued at least at 50 cents, possibly more depending on the discount applied. By the way , ASC has been meeting or exceeding its forecasts lately, and so no reason to doubt the figures at this stage.

    Consider this :

    Market Cap according to NAB research is $99 Million, I think might be worth a bit more now at current share price.

    Revenue for 2001/2002 $118 million. Revenue for 2002/2003 at least $212 Million, but more likely closer to $260 million if the growth rate continues.

    Profits have grown from $272 000 in first half of the year to $5.3 million in second half of the year.

    Profits expected to double again in first half of next financial year to 11.6 million. Assuming growth rate continues, ASC should expect a 2002/2003 profit somewhere around $34 million.

    So to put this in perspective. Lets say you own acompany that was worth $100 million, and you made a profit of $34 million dollars in one year and growing at 100 percent. What other investment can give this return on the investemt.

    In my opinion, to bring this company back into value with its pers, the market cap has to increase substantially, ie its shares are very much undervalued at present.

    By the end of the financial year the company expects to have $30 million in cash reserves.

    So - appears to me that although ASC has jumped, its share price has not nearly caught up to its valuation. I may have made a mistake in taking profits and would appreciate some feedback....not on gut feelings or trying to ramp down or up, or sour grapes of having missed out - but after analysing the financials of the company and offering a valuation.

    Thanks



 
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