Pinned valuation:
Just tweaking the valuation - Assuming EPS of 0.33 cents per share (current quarterly profit run rate, and a PER of just 10, I come up with a valuation of 3.3 cents...
Firstly, the negatives:
1) One major customer, General Motors Courtesy Transport Program. All the eggs are in one basket here.
2) Average investor relations communication.
Positives:
1) CXZ has been profitable for many years now, and will report about $3.7 M AUD PBT for 2024 (CXZ has a market cap. of $25M!) .
2) CXZ has been growing revenue over the last 3 quarters at a rate of 15% pa.
3) CXZ share count has been fairly stable. Share count inflation of 3% since 2021.
4) +90% of revenue is subscription based. The GM network is 22% of all US franchised LV dealerships in the US.
5) There is no optionality or growth priced in. So, CXZ drive to expand offerings of it's Connexion platform, and its direct to dealer strategy.
5) Capital management. Management is has implemented strict capital allocation policies as per 2023 AGM presentation, which has allowed them to remain profitable for many years.
Valuation. For the valuation, I am discounting future cashflows by 20% to take account of key customer risk. I am assuming marginal success in expanding its customer base, and product offering to existing customers.
Assuming CXZ achieves $26 M AUD revenue in 2029, and $4.4 M AUD profit, at a PER of 17, I come up with a valuation of 0.031....
DISC - HELD
@Rapstar on stable SOI, I note they are buying back a fair amount of shares but then also issued about 5% new shares as part of share-based compensation.
While revenue is growing strongly, so are costs. R&D I can understand and would expect, as it been well-signalled and explained. But sales and marketing and G&A also increasing so strongly? I guess its OK at this stage in their evolution, as they need to be developing the product and dversifying the customer base.
It's been a while since we had Aaryn at a SM Meeting - any interest in invting him back?
Disc: Not held