Pinned straw:
This presentation was marked as market sensitive, but I really can't see anything new here that you'd class as material and undisclosed.
One small point, this looks like a bit of a chart crime:
Maybe i'm missing something, but shouldn't that dark blue square should be only 23% larger in area than the light blue..?
mikebrisy
@Strawman its just missing the footnote "Not to scale". :-)
I understand their frustration regarding the SP, but I hope they don't start doing silly things to try to influence market sentiment beyond delivering good results. I can live with a 5% dividend, but beyond that, I believe if they keep executing the results will follow, as you always say.
Over the last few days I have done a deep dive into the accounts of the last 4-5 years and there is a really good business in here that should re-rate quite nicely if it just keeps on executing. I'll publish here when I get a moment over the coming days. But I think I have started to understand why you and @DrPete have such a strong conviction. The leverage they have for earnings growth over the next 3-4 years if they maintain their focus on %GM (better deals through increased volumes and white label contribution) and %Cost of Doing Business (scale, leverage of technology, cost discipline) is quite remarkable. They don't even need growth to $200m revenue to do it, even though more scale would be nice.
I have another order in at $0.145. Some $0.15 sellers this morning dropped their price to $0.145, but there are more buyers than sellers at the moment, and the next sellers are sitting at $0.155. For now, I'll be paitent, as it will take a while to build a stake here.
Strawman
Love to hear that you see it too @mikebrisy (although I'm a sucker for confirmation bias).
I agree it is difficult to see the value proposition looking at the results to date, but the reality is that their strategy just takes a lot of upfront capex. Efficiencies take time to realise, and scale advantages build slowly. So the ROI will take time to realise, and isn't always visible in any one reporting period. But I'm increasingly of the view that there will be a good return on the money invested -- the opportunity is clear, the strategy rational and management is disciplined and consistent. Mike is the biggest shareholder and is well aligned.
No guarantees, of course. And there are certainly scenarios where they stumble. But as @DrPete has said from the beginning, there's a mile-wide margin of safety here.
If all goes to plan, what I'm hoping to see is that glorious combination of rising earnings AND a multiple re-rate. In regards to the former, the realisation of some operating leverage and the fact we're working off an extremely low base, makes the EPS growth potential material in my view. And as liquidity improves and execution becomes more evident, it's not unreasonable to expect the PE to trade closer to 20 or so (especially given the expected growth).
I also think that a lot of the weaker hands would have been flushed out by now. It's been a long, slow grind and only the more far sighted and patient capital remains. I reckon you get a sense of this by looking at the market depth.
Of course, higher prices will tempt out more sell orders. But hopefully the price stays nice and low for a while longer yet.