US Insight, page-65

Hi reg,

Thanks for the feedback.

I'll use your figures to make a less "optimistic" calculation model & then try to use it to project a possible target price.

Let's assume the amount of a county's Nearmap annualised spending is proportional to the population size of that county. That is:

Counties with over 1 million people spends $60k
Counties with over 500,000 spends $30k
Counties with over 250,000 spends $15k
Counties with over 100,000 spends $10k
Counties with over 50,000 spends $5k

Therefore:
40 * 60% * $60k = $1,440,000
130 * 60% * $30k = $2,340,000
260 * 60% * $15k = $2,340,000
580 * 60% * $10k = $3,480,000
980 * 60% * $5k = $2,940,000

Totalling the above will give us a Total Revenue of $12,540,000 USD (or around $16M AUD assuming $1 AUD to $0.79 USD exchange rate)

Now, if I used nachode's method of valuation (as quoted in post #31752664)

Assuming a Group revenue of around $50M if we add the potential extra US "county" revenues of $16M we will get a new group total revenue of $66M.

$66M x 8.6 = $567.6M or $1.45 per share (assuming around 391M shares outstanding)

But base on the above calculation, I believe this is actually very conservative for the following reasons:

1) nachode's NEA historical 8.6 multiplier is very conservative, because with a demonstration of continuous rapid growth, an increased premium will no doubt be placed into the stock. And if we cater for some of this premium value, then a multiplier of 10 is not unreasonable which then gives us $660M or $1.69 per share.

2) We've only catered for 1990 out of a total of 3142 counties in the above calculation, and again we have not included any US Enterprise Business revenue growth in our potential US Revenue estimate at all.

3) We've not catered for any Panorama, Oblique, or 3D product revenue impacts at all (& we all know that these products have launched already), this is a pure projection of Nearmap's existing 2D product revenue.

4) We've also assume that AUS Revenue is stable (which it is NOT, as AUS is also growing rapidly).

The conclusion from all these assumptions, calculations, & projections are to show that even at $1.07, there could still be a lot of potential left in the current share price to appreciate up & up.

Of course regardless of how the extra $16M is going to be achieved (new product sells, or new customer sells) as investors do not really care, but consider this, if we do get another 30% organic growth on the group's total revenue of $50M then NEA will already be at $65M !


So is the current NEA sp of $1.07 too expensive?
Again, I think NOT.