CXZ
CXZ
Connexion Media Ltd General Discussion
My rough back-of-the-envelope estimates based on the recent $3m USD boost to ARR:
Assumptions:
- $1.5m USD boost to rev in 2023e (half of the financial year remaining)
- $3m USD boost to rev in 2024e (versus 2022) (all $3m USD of the ARR boost flowing through)
- NPAT margin expands to 25%
- PE of 15
Leads to a share price estimate of 3c for FY23e and 3.8c for FY24e, versus 1.9c currently.
We're back to all-time highs in performance.
Would love to get other thoughts.
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Good timing on your Connexion post @TEPCapital -- we just lined up a meeting with their CEO for next week (see Meetings page)
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I feel that this little Aussie SaaS business in the automotive (telematics) industry, Connexion (ASX:CXZ), is very much flying under the radar:
- $9.9m AUD market cap. No debt and $2.5m USD in net cash and investments ($3.55m AUD).
- They provide telematics software to all General Motors dealerships, among other OEMs.
- Currently at an all-time high in gross profit.
- Given they are purposely operating the company to be bottom-line neutral (investing for growth), I consider gross profit the next best indicator of valuation
- Annualising the last quarter, I get $3.6m USD in gross profit, which equates to $5.11m AUD GP at current FX.
- That's an (annualised) EV/GP ratio of 1.2x [($9.9m AUD mc - $3.55m AUD cash) / $5.11m AUD GP]. Seems very cheap to me.
- They had a small blip in revenue a while back, due to the global semiconductor shortage
- This fed through into the size of dealer vehicle inventories but this now seems to be recovering well.
- What has Mr Market got wrong at 1c/share? I think the market has either overlooked it, or it has been tainted by its early years, when it was highly unprofitable (before landing GM as a cornerstone client in August 2018). Mr Market may also want to see further customer diversification.
Would love to hear thoughts on the company from everyone here, particularly our fundies @Wini & @BkrDzn if you have the time. :)
Cheers,
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