Bull case

Now that I have a bit more time than earlier to look at today's 4C more closely, I can see a bull case emerging.

I took the number in the middle of the previous two quarters and got $4.5m for SHP's assumed revenue excluding eStore. This means that eStore contributed around $1.5m in the last quarter. A tad lower than the $7m annual run-rate in my books.

However:
- Now that all of the eStore/Warcom integrations are "largely complete" according to today's announcement, I'd expect that there won't be any more fit-out costs (consolidated office now in Alphington, just a stone-throw away from my hood in leafy Ivanhoe). More importantly, given that the $253k was the last remaining payment for eStore asset transfer, once again I won't expect any more costs in that bracket in the current September quarter.
- Gross margins have vastly improved from 11% in the April quarter ($4.22/$4.738m), to now 19% ($4.822/$5.959m). Whilst I can't say that this is effectively COGS (something else might get lump into this cost bucket), but it is reflective on eStore being a higher-margin business than YHD as a homeware business. I've been saying that the company needs to provide more transparency to demonstrate organic growth (there are still some risks there), at least bottom-line margins have improved.

So:
- Assuming that we're tracking to the same top-line ($6m) and operating margins, minus say $40k of website maintenance under intellectual property, and zero costs around physical or non-current assets, you get around $170k positive cashflow. This is unless we have a decline on the top-line, which if you believe in what Simon says (sorry I had to haha) can't be possible when they're targeting $25m in FY16.

It's a buy for me.