On 140,000 watches, recurring revenue from the Spacetalk...

On 140,000 watches, recurring revenue from the Spacetalk division would be around $6 million per year and could be growing at around 20-50% per year for the first few years depending on how many European countries are added each year and how much organic growth we see in each country. I used $3.60 per month per watch for app revenue as that was the latest figure provided by the company as the average net app fee per watch sold - remembering that some families own 2-3 watches and only pay one app fee of $5.99/m.
It's not just about recurring revenues though. On my numbers, sales of 120,000 watches (minimum end of guidance) should generate a NPAT of around $13.5 million and after tax cash flow of around $15 mill. That's with advertising and overheads at around $3.5 million higher than for 2018 actual. If I allow a further $2 million again for a total $5.5mill above 2018 actual advertising and overheads, NPAT drops to around $12 million and after tax cash flow is around $14 million. A cash flow multiple of a very conservative 12 could see a mc target of $168 mill which would be around $13 per share. My previous $13 target was based on lower volumes but a higher multiple based on the expectation of strong growth overseas. The stronger the growth expected by the market, the higher the multiple will be. A multiple of 20 could see more like $20 per share on 120,000 watches sold in one year.
Our nearest comparable ASX listed stock is NUH. It has a mc of over $70 million. It was over $100 million earlier in 2018 and that is despite it running at a loss. We are below $40 mill but still in our infancy. In December NUH raised a further $5 mill and that was oversubscribed. We would undoubtedly be at a strong profit with even half of the companies guidance. Is a multiple of 12 or 20 (or higher) more likely once sales numbers are more significant and distribution channels more widespread?