PHX 0.00% 3.1¢ pharmx technologies limited

COO appears to have two investment stories. The quick and most...

  1. 616 Posts.
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    COO appears to have two investment stories. The quick and most popular one is that the share price has tanked because they are losing customers in a consolidating market, and revenues will erode to nothing, so get out while you can.

    The second one however is much more appealing from an investment viewpoint, is that it is extremely cheap, summarized as follows:

    - H1 EBITDA was $1.4 m. After adjusting for provision movements, and assuming that there was some more revenue weakness in the second half, EBITDA should conservatively be ~$2m for the FY. Cash at the half was about $9.4m after adjusting for the Jan tax refund, so lets assume for the full year they actually used some cash as they increased their R&D spend, so cash at the FY is $9m. Based on on a share price of 4c, COO's market cap is $10.2m, and its EV is $10.2-$9m=$1.2m. Accordingly, EV/EBITDA is <1x.
    - So you are paying $1.2m for a business with $2m EBITDA, a large customer/revenue base, and significant IP/new products underpinned by recent investment. This doesn't even consider any value for the ecommerce business.

    I can only assume that Mr Market will become a lot more upbeat on COO if the FY results give even a hint of progress on retaining their customer base and/or there is any update on the strategic review.
 
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3.1¢ 3.1¢ 3.1¢ $47.02K 1.517M

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1 500000 3.0¢
 

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3.1¢ 1090130 3
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