My reason for holding is the fact they increased revenue by 32% while increasing expenses by 8%. This puts us in a strong position in FY 19 & going forward, and bring us close to positive net profits. I remind you that we are already making a positive operating cash flows, which will only go in one direction due to revenue is growing faster than expenses and at a good rate. These are my calcs for FY 19 & FY 20, D&A, taxes ignored.
H1 FY19, revenue grew 24% faster than expenses, I am assuming H2 to be 15% as per the table above.
FY19 is already showing a massive turnaround in EBIDTA and FY 20 is likely to be a year of ultimate success with possible dividends given the revenue growth is sustained to these levels and expenses growth is constrained up to 50% of revenue growth.
FY 20 is also projected at 25% revenue growth and 10% expenses growth.
I also think the share is trading at a massive discount based on discounted free cash flows, these are my calculations:
If we continue to grow & keep our expenses growth up to 50% of the revenue growth, CAT should have the intrinsic value of $3.01. Even if I got it wrong by 20%, the fundamental value comes to $2.40.
I wouldn't sell if the CEO / CFO has or both have resigned. It simply means the job is up for grabs, and the change is always interesting.
DYOR !!
