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CM8 5.3¢

Valuation of Crowd Mobile

  1. The Wise Owl report is a great report because it gives a very clear overview of the business and highlights the history, some progress and the potential.

    But I think it misses out on a few things and undersells part of the value of this business.

    WiseOwl says one of the key risks is that it is easy for anyone to come in and launch new apps. Yes it is easy to build and launch, however the value in the backend system for answering questions and the network of people available to answer questions isn't easy to replicate at all.

    The management team and non-executive directors are also exceptionally strong. They have proven they can build large business and scale them. The value of this should not be under estimated.

    Crowd Mobile have a crowd of 500 people answering questions. They have been found and "hired" and trained. This is a strong advantage for Crowd Mobile. This can't be easily replicated at all.

    They have a valuation of $0.38 per share. Until we get some additional information, that is slightly above my valuation, but I'm waiting for a couple of triggers to step up my valuation. I have a "now" target price of about $0.325 (based on last year's performance and the Sep2014 quarter). This could increase with the release of the half year results as I don't know what % the first quarter results were (they said it was the weakest quarter, I just don't know how weak... I have actually assumed it is equal for each quarter to be conservative).

    What I'm looking for to increase my own personal assessment of the value of CM8:
    - half year results revenues and normalised EBITDA
    - understanding impact of new countries that have been launched, but won't be included in first half results (there could be some costs included, but I think any revenues will be minimal)
    - indication of launch of a new apps
    - indication of take up of those new apps
    - any strategic distribution deals of existing or new apps

    Any of these things would increase my view of the value... some of them very significantly.

    I also assess the risk on Crowd Mobile as significantly less than a lot of other players due to its strong profits and cash flow. The fact that it has been able to pay out dividends in the past (when it was private) is a very good sign to me. This shows it throws off plenty of cash.

    The above is my own opinion.

    Regards
    Marv

    DISCLOSURE: I hold plenty of CM8

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