BUY 0.11 0.39 0.69 SHARE PRICE CASH EARNINGS ($M) COMPANY DATA & RATIOS
CONTENTS Competitors Products Sales channels Pricing Model
INVESTMENT THESIS
COMPANY OVERVIEW
INDUSTRY OVERVIEW
COMPETITORS BOARD AND MANAGEMENT
BUSINESS MODEL PRODUCTS
SALES CHANNELS PRICING MODEL
FINANCIAL FORECAST
BOEQ Cash Basis Assumptions (A$) 1H16 2H16 FY16 1H17 2H17 FY17 1H18 2H18 FY18 New Customers 19 31 50 39 74 113 120 120 240 Renewing Customers - - - 7 25 32 37 79 116 Total Customers Added in Period 19 31 50 46 99 145 157 199 356 Average annual revenue per customer ($) NMF 12,000 12,000 30,000 30,000 30,000 33,000 33,000 33,000 Assumed % of Annual Upfront Payment 100% 100% 100% 100% 100% 100% 100% 100% Cash Revenue 201,705 254,000 455,705 1,380,000 2,955,000 4,335,000 5,174,400 6,560,400 11,734,800 Operating Costs 2,786,536 2,250,000 5,036,536 2,700,000 2,700,000 5,400,000 3,000,000 3,000,000 6,000,000 Cash EBITDA (2,584,831) (1,996,000) (4,580,831) (1,320,000) 255,000 (1,065,000) 2,174,400 3,560,400 5,734,800 $10 $8 $6 $4 $2 $- 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Cash Balance Revenue Expenses
BOEQ Accounting Basis Assumptions (A$) 1H16 2H16 FY16 1H17 2H17 FY17 1H18 2H18 FY18 Customers at start of period - 19-50 86 50 150 260 150 Net Customers Added during the period 19 31 50 36 64 100 111 100 211 Total Customers at the end of the period 19 50 50 86 150 150 260 361 361 Average customers over the period 10 35 25 68 118 100 205 310 255 Total Revenue for the period $ 157,566 $ 232,000 $ 389,566 $ 610,000 $ 1,681,250 $ 2,291,250 $ 3,551,350 $ 5,258,275 $ 8,809,625 Average Monthly Revenue Per Customer $ 2,764 $ 1,121 $ 1,299 $ 1,495 $ 2,380 $ 1,914 $ 2,889 $ 2,823 $ 2,878 Annualised Total Revenue run rate at period end $ 600,000 $ 600,000 $ 1,950,000 $ 4,485,000 $ 4,485,000 $ 8,589,900 $ 11,899,800 $ 11,899,800 Monthly Cost base $ 464,423 $ 383,333 $ 423,878 $ 450,000 $ 450,000 $ 450,000 $ 500,000 $ 500,000 $ 500,000 Total Cost base over period $ 2,786,536 $ 2,300,000 $ 5,086,536 $ 2,700,000 $ 2,700,000 $ 5,400,000 $ 3,000,000 $ 3,000,000 $ 6,000,000 Reported EBITDA $ (2,584,831) $ (2,068,000) $ (4,652,831) $ (2,090,000) $ (1,018,750) $ (3,108,750) $ 551,350 $ 2,258,275 $ 2,809,625 BOEQ Forecast (A$M) 1H16 2H16 FY16F 1H17 2H17 FY17F 1H18 2H18 FY18F 1H19 2H19 FY19F 1H20 2H20 FY20F Revenue 0.2 0.3 0.5 0.6 1.7 2.3 3.6 5.3 8.8 7.7 9.6 17.3 13.1 15.3 28.4 Growth rate 287% 562% 403% 482% 213% 284% 116% 83% 96% 71% 59% 64% EBITDA - 2.6-2.0-4.6-2.1-1.0-3.1 0.6 2.3 2.8 4.4 6.3 10.7 9.5 11.7 21.2 Growth rate -21% -49% -33% -126% -322% -190% 690% 181% 281% 118% 85% 98% EBIT -3.00-2.43-5.43-2.51-1.41-3.92 0.14 1.88 2.03 3.95 5.98 9.93 9.10 11.37 20.47 Growth rate 16% 42% 28% -106% -233% -152% 2674% 217% 390% 131% 90% 106% NPAT -2.24-2.38-5.36-2.46-1.38-3.85 0.17 1.93 2.11 4.03 5.23 9.26 6.59 8.26 14.85 Total NPAT Growth -10% 42% 28% -107% -240% -155% 2214% 170% 339% 63% 58% 60% Total Customers at Period End Total 19 50 50 86 150 150 260 361 361 465 585 585 704 817 817 Annualised Revenue Run Rate 0.1 0.1 0.1 0.1 0.4 0.3 0.8 1.0 1.0 1 2 2 2.34 2.72 2.72 Net Operating Cash Flow -2.38-1.95-4.33-1.28 0.29-0.99 2.21 3.61 5.82 6.26 7.52 13.79 9.06 10.54 19.60 Cash Balance at Period End 4.51 4.41 4.41 3.02 3.19 3.19 5.04 8.57 8.57 14.30 21.75 21.75 30.16 40.64 40.64
VALUATION AND RECOMMENDATION
KEY RISKS
SUMMARY FINANCIALS Stock Details Recommendation BUY 52 Week High $1.97 Shares on Issue 106.4m Valuation $0.39 52 Week Low $0.11 Market Capitalisation $11.7m Share price $0.11 Avg Mthly Value $0m Enterprise Value $7.3m Upside/downside 256% Financial Year End 30-June Free Float 50% Profit & Loss ($m) FY16F FY17F FY18F FY19F FY20F Ratio Analysis FY16F FY17F FY18F FY19F FY20F Operating Revenue 0.4 2.3 8.8 17.3 28.4 Revenue Growth 2046.8% 409.7% 284.5% 96.4% 64.4% Other Revenue 0.0 0.0 0.0 0.0 0.0 EBITDA Growth 601.5% 33.0% 190.4% 281.0% 98.5% Total Revenue 0.4 2.3 8.8 17.3 28.4 EBIT Growth 833.7% 27.8% 151.7% 389.9% 106.3% Operating Costs -5.1-5.4-6.0-6.6-7.2 NPAT Growth 1984.4% 28.3% 154.8% 339.1% 60.4% EBITDA -4.6-3.1 2.8 10.7 21.2 D&A -0.8-0.8-0.8-0.8-0.8 EBITDA Margin -1031.4% -135.7% 31.9% 61.9% 74.7% EBIT -5.4-3.9 2.0 9.9 20.5 EBIT Margin -1207.4% -171.1% 23.0% 57.4% 72.0% Net Interest Expense 0.1 0.1 0.1 0.2 0.5 Tax Rate 0.0% 0.0% 0.0% 8.8% 29.3% Pre-Tax Profit -5.4-3.8 2.1 10.2 21.0 NPAT Margin -1193.1% -167.8% 23.9% 53.5% 52.2% Tax Expense 0.0 0.0 0.0-0.9-6.1 Minority Interests 0.0 0.0 0.0 0.0 0.0 Basic EPS ( ) -5.0-3.6 2.0 8.7 14.0 NPAT Reported -5.4-3.8 2.1 9.3 14.9 Diluted EPS ( ) -4.5-3.2 1.8 7.7 12.3 One-Offs after tax 0.0 0.0 0.0 0.0 0.0 Diluted EPS growth 1996% -28% -155% 339% 60% NPAT Normalised -5.4-3.8 2.1 9.3 14.9 0.0 0.0 0.0 0.0 0.0 DPS ( ) 0.0 0.0 0.0 0.0 0.0 Balance Sheet ($m) FY16F FY17F FY18F FY19F FY20F DPS Growth 0.0% 0.0% 0.0% 0.0% 0.0% Cash 4.4 3.2 8.6 21.8 40.6 Franking 0.0 0.0 0.0 0.0 0.0 Inventory 0.0 0.0 0.0 0.0 0.0 Payout Ratio 0.0 0.0 0.0 0.0 0.0 Receivables 0.4 0.2 0.7 1.5 2.4 Other 0.0 0.0 0.0 0.0 0.0 ROE -68% -96% 34% 60% 49% Current Assets 4.9 3.4 9.3 23.2 43.1 ROA (NPAT) -47% -42% 14% 32% 31% PPE 0.1 0.3 0.5 0.8 1.1 ROIC -65% -86% 32% 58% 48% Intangible Assets 3.7 3.0 2.4 2.0 1.6 Other 2.6 2.6 2.6 2.6 2.6 Total Debt 0.0 0.0 0.0 0.0 0.0 Non-Current Assets 6.4 5.9 5.5 5.3 5.3 Net Debt (Cash) -4.4-3.2-8.6-21.8-40.6 Total Assets 11.3 9.2 14.8 28.6 48.3 Current Debt / Total Debt 0% 0% 0% 0% 0% 0.0 0.0 0.0 0.0 0.0 Net Debt / Equity 0% 0% 0% 0% 0% Payables 0.4 0.5 0.5 0.6 0.6 Net Debt/Net Debt + Equity 0% 0% 0% 0% 0% Interest Bearing Liabs 0.0 0.0 0.0 0.0 0.0 EBIT Interest Cover 0.0 0.0 0.0 0.0 0.0 Other 2.3 4.2 6.5 8.6 9.2 Total Debt / EBITDA 0.0 0.0 0.0 0.0 0.0 Current Liabilities 2.7 4.6 7.0 9.2 9.9 Interest Bearing Liabs 0.0 0.0 0.0 0.0 0.0 Capex / Sales 30% 10% 5% 4% 3% Other 0.8 0.8 0.8 0.8 0.8 Capex / Depreciation 50% -214% -206% -191% -177% Non-Current Liabilities 0.8 0.8 0.8 0.8 0.8 Total Liabilties 3.4 5.4 7.8 10.0 10.6 EBITDA -4.6-3.1 2.8 10.7 21.2 0.0 0.0 0.0 0.0 0.0 Change in W/C 0.0-0.3 0.5 0.7 0.9 Contributed Equity 10.7 10.7 10.7 10.7 10.7 Net Interest Expense 0.0 0.0 0.0 0.0 0.0 Reserves + Retained -4.9-8.7-6.6 2.7 17.5 Tax Paid 0.0 0.0 0.0-0.9-6.1 Option Reserve 0.8 0.8 0.8 0.8 0.8 Cash Flow -4.7-3.4 3.3 10.5 16.0 Deferred Consdieration 1.2 1.2 1.2 1.2 1.2 Maintenance Capex -0.1-0.2-0.4-0.6-0.7 Total Equity 7.9 4.0 6.1 15.4 30.2 Free Cash Flow -4.8-3.6 2.9 9.9 15.3 Cashflow Statement ($m) FY16F FY17F FY18F FY19F FY20F Valuation FY16F FY17F FY18F FY19F FY20F Gross Cash Flow -4.4-1.1 5.7 14.5 25.2 Shares on Issue (Million) 106.4 106.4 106.4 106.4 106.4 Net Interest 0.1 0.1 0.1 0.2 0.5 Normalised EPS ( ) -5.0-3.6 2.0 8.7 14.0 Tax Paid 0.0 0.0 0.0-0.9-6.1 PE -2.2x -3.0x 5.5x 1.3x 0.8x Other 0.0 0.0 0.0 0.0 0.0 CFPS ( ) -4.4-3.2 3.1 9.9 15.0 Net Operating Cash Flows -4.3-1.0 5.8 13.8 19.6 P/CFPS -2.5-3.4 3.5 1.1 0.7 0.0 0.0 0.0 0.0 0.0 FCFPS -4.5-3.4 2.7 9.3 14.4 Payments for PPE -0.1-0.2-0.4-0.6-0.7 P/FCF -2.4-3.2 4.1 1.2 0.8 Payments for Acquisitions 0.0 0.0 0.0 0.0 0.0 Other -0.4 0.0 0.0 0.0 0.0 DPS ( ) 0.0 0.0 0.0 0.0 0.0 Net Investing Cash Flows -0.4-0.2-0.4-0.6-0.7 Yield 0.0% 0.0% 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0 Net Share Issues 9.1 0.0 0.0 0.0 0.0 BVPS ($) Net Borrowings 0.0 0.0 0.0 0.0 0.0 P/BV Dividends Paid 0.0 0.0 0.0 0.0 0.0 NTAPS ($) Other 0.0 0.0 0.0 0.0 0.0 P/NTA Net Financing Cash Flows 9.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 EV/EBITDA -1.6x -2.3x 2.6x 0.7x 0.3x Change in Cash Held 4.4-1.2 5.4 13.2 18.9 EV/EBIT -1.3x -1.9x 3.6x 0.7x 0.4x Cash at Beginning of Period 0.0 4.4 3.2 8.6 21.8 Adjustments 0.0 0.0 0.0 0.0 0.0 PE Ratio (Valuation) -7.8x -10.8x 19.8x 4.5x 2.8x Cash at End of Period 4.4 3.2 8.6 21.8 40.6 EV/EBITDA (Valuation) -1.0x -1.0x 3.1x 2.0x 1.9x
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