Nice idea. Price has spiked by 25% or so in the couple of hours after you published. Still a decent upside to your FV calculation but not quite as compelling.
Since I started typing this comment, I looked at Twitter and noticed puppyeh is long WCG as well. Big respect to Jeremy but his followers tend to panic bid any microcap he writes up.
Thanks for the write-up. What do you think are the likely near-term catalysts for a re-rate? Is it most likely to be the closing of the deal in late-November (noting per your comment that the re-rating is not likely to occur all at once, and this may only partially re-rate in the first instance)?
Yeah, that would be my guess at well: the closing of the transaction is likely one. I think investors would like to see some sort of earnings bridge to see the underlying profitability of the remainco; there seem to be some questions around that A$5m NPAT number and whether that includes interest income and how much. So some clarity/more disclosure, would likely go a long way.
Yeah, December 20 is the expected close date. I think as we get more incremental info on the profitability of the remainco + what they will spend the cash on, this could start to more accurately reflect the value.
Oct 27, 2023·edited Oct 27, 2023Liked by Clark Square Capital
Good write up thanks. On remaining business fibre network cost to build $8m, $8m in ip address space, cloud compute assets plus infrastructure in 4 data centres, Brisbane, 2*syd and Melbourne. Infrastructure utilization at about 50% so new acquisitions or customer growth is at greater than 60% margin.
Nice idea. Price has spiked by 25% or so in the couple of hours after you published. Still a decent upside to your FV calculation but not quite as compelling.
Since I started typing this comment, I looked at Twitter and noticed puppyeh is long WCG as well. Big respect to Jeremy but his followers tend to panic bid any microcap he writes up.
No ROI on building Twitter followers shall be wasted. ;)
Very timely and great write up! I may not get a fill for my order but your effort of getting this out so quickly is seriously appreciated!
I know sometimes these write-ups are very basic (and can miss a lot of nuance, etc) so I appreciate that!
Safe to assume a detailed update is coming after earnings release?
Yes sir. Working on updates for a few positions.
Any update on this / are you still invested (noting it has traded consistently downward since the initial announcement)
Still invested in it. I am waiting for more data points to publish an update. At the current price, it's likely sitting below net cash
Thanks for the write-up. What do you think are the likely near-term catalysts for a re-rate? Is it most likely to be the closing of the deal in late-November (noting per your comment that the re-rating is not likely to occur all at once, and this may only partially re-rate in the first instance)?
Hi, Elliot, thanks for the comments.
Yeah, that would be my guess at well: the closing of the transaction is likely one. I think investors would like to see some sort of earnings bridge to see the underlying profitability of the remainco; there seem to be some questions around that A$5m NPAT number and whether that includes interest income and how much. So some clarity/more disclosure, would likely go a long way.
Just checking back in on this - do you have any update on timing of the transaction closing? still at ~$0.24
Yeah, December 20 is the expected close date. I think as we get more incremental info on the profitability of the remainco + what they will spend the cash on, this could start to more accurately reflect the value.
Great, thanks!
Good write up thanks. On remaining business fibre network cost to build $8m, $8m in ip address space, cloud compute assets plus infrastructure in 4 data centres, Brisbane, 2*syd and Melbourne. Infrastructure utilization at about 50% so new acquisitions or customer growth is at greater than 60% margin.
Thanks for the thoughts, Joe! Any idea what the remainco should be worth?
Somewhere between 5 and 15 times EBITDA. We believe we can offset cap gains on deal from existing cap losses