Hi @francisfogliani

Many thanks for sharing your thoughts.

I really think you have hit the nail on the head, being:

• classic turnaround scenario, and
• a case of risk decreasing in tandem with the share price increasing

Although I have monitored MSL for some time, I have only recently dipped my toes in after being convinced that a turnaround is occuring and Pat Howard is delivering and not just talking the talk. Importantly, as you astutely noted, the turnaround has occured much quicker than most people had anticipated.

On a risk-adjusted basis, I believe that MSL still offers investors a attractive investment proposition. However one wants to value the company, be it EV-R, EV-FCF etc, the current share price does not look overly demanding at all.

Hence, assuming that the management continues to successfully execute, I would really feel comfortable to average up because things are just starting to turn to the upside.

Some additional information that any potential and/or existing investors should note are:

First, MSL has achieved four consecutive quarters of positive net cashflow and is hence not requried to lodge 4C moving forward

Second, top line revenue growth in the past two years has slowed when compared to, for example, 3 or 4 years ago. However, this is primarily driven by the company's strong focus on transitioning to recurring revenue through the provision of software as a service (SaaS) contracts rather than perpetual licenses.

This is perhaps not something that many investors appreciate as it is not widely communicated. You have to read the footnotes accompanying the annual report and/or query the management to appreciate this.

In my view, it would probably take another few years for a full transition in their revenue model. In the meantime, we need to closely track the uptick in recurring revenues.

RUL provides the most recent example to my mind in how the market can sometimes temporarily undervalue a company by not fully understanding the context underpinning the headline revenue growth figures. Before you know it, RUL went from around $0.40 to almost $2 once the market catches on the story.

Third, the four consecutive quarters of positive operating cashflow in FY21 were primarily driven by the company's very strong focus on reducing costs and resetting the cost base to be one in line with its new predictable recurring revenue model. A substantial portion of this lower cost base is permanent via reduction in salary costs from lower headcount.

In my view, MSL is likely to report strong topline revenue and recurring revenue growth moving forward, as economies and the sporting industry continue to re-open (fingers crossed). Together with a more efficient lower cost base, lower investing cash outflow (about $1.0M to $1.5M per annum in my view), this means that MSL has the 'potential' to generate significant free cash flow moving forward.

Based on available information (both publicly and in my correspondence with management), I do believe that it is possible for MSL to achieve a free cash flow of $6M (or just below) in FY22. Given that the company is currently valued at just over $62M, I do feel that the market is perhaps undervaluing the company.

Please note that the above FCF estimate does not consider the possibility of MSL monitonising the current untapped opportunity to monertise the $5bn pa of turnover which goes through its POS platform.

An extract from the latest edition of the publicly available TechInvest Magazine.

Gives a quick snapshot of the market opportunities, potential catlysts etc.

MSL is a company that I have had on my watchlist for some time and the recent 4C suggests that management is successfully executing and delivering, and, more importantly, the company has 'truly' reached inflection point.

• previous 4Cs were to an extent inflated by government grants (covid assistance to companies) but the latest 4C has really demonstrated that the company can deliver positive operating cashflows even in the absence of government grants
• capital light model and the scability of the model across different geographical markets suggests a positive outlook as the world starts to reopen. If that is the case, I am confident that free cash flow would accelerate strongly
• the rationale for using MSL solutions in sporting arenas has only increased as sports resume in a post covid world. Not only it provides a line of defence, it would also offer strong data analytical insights in the areas of inventory and consumer preferences at your fingertips
• the currently untapped opportunity to monertise the $5bn pa of turnover which goes through MSL's POS

Nevertheless, I believe the company is still flying under the radar of the market due to some legacy issues, including the failure to deliver by past management and holders who are still sitting on a significant paper loss.

The recent drive by the CEO of MSL, Pat Howard, to engage the broader investment community via presentations (including Coffee Microcaps, Ausbiz etc) does suggests that management have learnt their lessons (albeit through difficult experiences) and are making a concrete effort to rebuilt trusts.

In summary, my view is that the positive evidence to date in a period of market hesitancy has provided an excellent opportunity for any new investors to initiate a position in this little hidden gem. Accordingly, I have started to build my position in MSL.