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#Bull Case
Added 4 months ago

A well reasoned and balanced Bull Case from Alex Hughes at Intelligent Investor:

Click here

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#Business restructure
Added 4 months ago

Ellex has sold the majority of its operations to French based Lumibird for $100m. Due to settle in March 2020.

This segment relates to ~80% of group sales, and 77% of group assets, and leaves Ellex with just two products: iTrack and 2RT. The business will also likely be unprofitable for the coming years.

In FY19, iTrack accounted for $14.3m in sales (up 29% on pcp) and 2RT with $1.8m in sales (up 49% on pcp). Both have significant potential, but also risks -- especially 2RT which is yet to get FDA approval.

After the transaction, Ellex will have $97m in cash and be debt free. It intends to return the majority of this to investors (maybe a special dividend or buyback) -- the full amount equates to ~67c per share.

Given shares are (at time of writing) trading at 78c per share, the majority of market value is represented by cash. Put another way, after the transaction is complete, the Enterprise Value of Ellex will be ~$16m. Not a lot given the market opprtunity of retained products and the fast pace of growth to date.

Thanks to Alex Hughes from Intelligent Investor for the suggestion. I think it's an interesting prospect.

ASX announcement re sale is here


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