Top member reports
Consensus community valuation
$0.020
Average Intrinsic Value
50%
Overvalued by
Active Member Straws
##Balance Sheet
Added a month ago

I’ve been considering the possibilities here. The fact is despite looking good for breakeven this company has no cash (less than 1m). They have said they will explore “non-dilutive” funding to meet cashflow requirements.

 

Option 1. Cap raise – Colour me sceptical regarding their reluctance, if they need the money they will do it. Likely this will be proceeded by some positive news most likely the quarterly (likely to be their best this year) accompanied by a rosy outlook. Against thisn possibility would the buy in by the Smedley family office at 1.5 cents last year to be a cornerstone investor and now director. They are unlikely to want to see their investment diluted at a lower price than they paid. Due to the share price I also feel this would be a mistake but if it appreciates to ~2cents or more then it is much more appealing.

 

Option 2. Loan (either from bank or related entity)– I actually think this may be the best funding option. It certainly seems to be what the commentary in the reports is implying. If the company is able to go to a cashflow positive situation in FY21 then a loan for working capital makes sense. A major shareholder may also front up this cash and I’d want to look carefully at that deal.

 

Option 3. Cap raise for acquisition + a bit extra – Has also been mentioned in commentary and new “strategy” hence the name change to AD1 holdings. Potential targets mentioned in passing without elaboration. If EPS accreditive as implied may not be terrible option. However, acquisitions tend to introduce a lot of risk to businesses and often are less than value creative. Given the related commentary this may be the most likely option.

 

Other possibilities that I consider less likely

-       Advance payment by customers

-       Sale of utilities billing business

-       Just scooting along with barely any cash buffer

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#Business Model/Strategy
Last edited 3 months ago

Essentially whitelabels employment portals for nsw vic state government and now pharmacy guild. 

Thesis:

- Profitability inflection point.

- Reasonable balance sheet. (1mil, no debt)

- Pre COVID stated good pipeline of projects

- Current customers are very defensive (government / pharmacies)

 

Too early to give an specific valuation  but with a current enterprise value of 4m any profit is likely to result in dramatic upswing in the market cap. Most of CEO’s incentives are tied to share price that is significantly greater than the current one.

 

Risk

Without going into a lot of detail the recent history of this company has not been kind to shareholders and a merger with one of the board members other companies was highly dilutive to the common stock. You have to have a bit of faith that going forward management will be kinder the common stock holders. This is more likely in my opinion due to a recent private cornerstone investor as an addition to the register. However, take that with a grain of salt because if you do a search on that guy you find out he inherited his money, used to be a banker and otherwise seems to be only known for some domestic violence accusations (point is I’m not sure I’d trust his judgement).

Any customer loss would be a significant blow but this seems unlikely as government customers tend to be sticky clients and changing your employment portal would be a significant headache.

 

Scroll down to the bottom of any of these pages to see the “powered by ApplyDirect”

 

Company Website

https://www.applydirect.com.au/

 

Pharmacy Guild Career portal

https://www.mypharmacycareer.com.au/

 

Victorian government career portal

https://careers.vic.gov.au/

 

NSW government career portal

https://iworkfor.nsw.gov.au/

 

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#Insider buying
Added a month ago

Cornerstone investor and director Mr Smedley buying $15k on market at $0.01 / share. Sounds like not much but thats all the volume there is.

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#Bull Case
Added 2 months ago

Whitelabeling SaaS business with government and utilities as customers (sticky).

Price to sales of 1.7x

Forecast breakeven inflection point Q4 FY20. and FY21 full year.

Should subsequently have reasonable operative leverage.

Aiming to adopt an EPS accrediative aquisition strategy (presumably with leverage) 

 

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