rajen,
as indicated by others and myself, certainly and depreciation adjustment is suitable here as an atm can be claimed over 5 years, where in fact they can physically last up to 15 years or so... so the depreciation over 5 years far exceeds the practical, effective life of the machine... i think from memory this year was around $1.7m or so for depreciation...
the share price definitely isn't great at the minute... i absolutely know that, and my average is in the 3's... but, the reason i'm content is the business revenue and profits growth that is happening and is forecast...
i have always wanted to own a passive, side business, so i can get out of the stressful business i am a part owner of should i wish, and still make a nice lick in semi retirement... a lick of say 30% yield per annum, as opposed to a 5% dividend......
i think STL for me is starting to replace that idea of a business.... the numbers i posted a few weeks back are below... just to provide an illustration on the free cashflow:
The conservative forecast for 2018 said an EBITDA of 5.75m..... and there total debt is $8m.... so pretty hard to think that all of that $5.75m is going to be soaked up in a 12 month period by debt repayment....
Even if the full $8m was on really bad terms of 15% over a ridiculously short 5 years this would mean repayments of $2.28m annually..... that would still leave $3.47m free cashflow....
My forecasting for STL is that in five years or so this thing can be making $20m+ of EBITDA... hell, maybe even profits of $20m.
When I asked a while back, it was estimated that revenues from our atm's would be roughly 30% of our overall revenue in 5 years.... that tells me significant growth in non atm revenue, and in areas such as eftpos etc that don't have massive cost of goods sold...Considering we have forecast EBITDA of $5.75m (which i think is conservative, per STL's previous forecasts track record) this thing could easily achieve $20m.
At $20m, on the current 725m of shares (ignoring the $50m odd of oppies), this could easily deliver $0.0275 per share of EBITDA/profits (of course, rough valuation).
So effectively, you could make over today's share price/your STL holding value each year in earnings....So, in my mind, by investing today, I can make a simple equivalent of a 100% yielding dividend after allowing 5 years of growth... far better than me investing in a dividend yielding asset in five years at 5%.
I am setting my sights long term... I see there is a considerable revenue stream to be derived from this... with what i would consider minimal risk... The risk people will talk about is "cash is dead".... Well, I don't believe it, and well, STL is aiming towards areas for their machines where it wont be dead.... If that fails, which i highly doubt, well, that will only be 30% of their revenues....
Should they hit those EBOTDA / profit forecasts.... well then, the share price will be pretty damn nice at that time anyway...
I don't provide the above as an exhaustive forecast or gospel, and people may argue against the numbers.... i just thought i'd provide the concept behind my long term vision for my investment in STL...
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