Ann: Praemium's Australian SMA surpasses $3 billion-PPS.AX, page-23

depends how you look at it Sharks. The point has been made many times that mammoth stocks like Amazon are still unprofitable and have put everything back into growth. The other stock I referred to yesterday was VPC. In Ballieu's initial report they discussed the fact that SaaS stocks are still a relatively new and unproven phenomenon. They note the lack of profitability of even the bigger ones and hence they reason that revenue rather than NPAT or EBIT should be considered.

So they took a pile of SaaS companies which you can find on page 11 of this report . You will note that EV/revenue varies between 1x and 15.4x. By their own admission this is a rough and ready valuation method but by their reckoning the best at their disposal this early in the life of the SaaS sector. So the bottom line is they come to an average of 6.8x revenue should equal EV.

PPS's last HY report states revenue of 14.7 mill for the HY. Assuming zero growth (despite PPS's constantly demonstrated growth) that is 29.4mill for the full year.

6.8 x 29.4 = 199.92 mill EV. Adding in the cash you have an MC around 211 mill

value per share = 211/405 = 52c per share

There are three things that may provide further upside based on the fact PPS has demonstrated good constant growth

1. Their cash may now be more than 11 mill
2. This HY revenue may be more than last hence the yearly revenue > 29.4 mill
3. EV/rev valuations ranged from 1x to 15.4 x. 6.8x is just a mean number. The market may decide on a higher multiple, more towards the 15.4x if it becomes convinced that growth will continue to snowball into the future.