esn & mkb - a comparative analysis, page-165

Hi Massey,

Good to see you wondering over at ESN - hopefully see you as a holder soon enough. There seems to be a lot of investors/traders waiting on the sidelines to jump into ESN. My guess is that most will jump in at .5c/.6c after the revenue announcement (just my guess).

In relation to your post re; MBE's PE, etc:

"MBE i hold and a correction if i may of the 100 plus PE ratio.

MBE are currently doing about 6.5m revenue/ quarter and growing. I would say 25 annualised - with NPAT to be a minimum of 6m"

Incorrect - MBE are currently doing $6.2M revenue per FOUR months, not quarter/three months, per the 26/11/13 trading update announcement.

MBE's revenue for the last quarter was $4.5M, per the 14/10/13 trading update announcement.

This equates to $18M revenue on an annualised future/forward basis, not the $25M that you indicated.

It's a bit hard to accurately calculate a forward PE as we don't know what the share price will be tomorrow or especially in 6 months - particularly with stocks like MBE (just look at today's trading).

To calculate the current PE, the best we can do is to take actual existing earnings which we can do by taking the earnings from the last 4 quarters, including the last quarter which included the $4.5M revenue.

The below calc's assume that the expenses will remain the same proportion/percentage of revenue as per the 2013 FY audited numbers (might not be 100% accurate but won't be materially off either - calc's just for illustration purposes only anyway):

MBE won't trade at the sector PE of 19.36 for a while yet as it still has lots of potential/growth to achieve and therefore until then the big PE will exist until the growth/potential is mostly achieved and comes down to normal rates/stabilises. This will occur when the earnings increase relative to the market cap. The PE will trade at/closer to the sector PE once MBE gets to the maturity stage of its lifecycle (out of the current growth stage) where it will be making a lot more revenue and profits and when its growth slows down to single digits.

ESN will follow a similar path and trade at a similarly high PE once it starts making profits. Until then, there's no telling how high the speculators could/will take it - one thing's for sure, the downside from here is very low, especially compared to the upside potential.

I like MBE and I like MKB and I like ESN and I think that all three have a massive year in front of them.

You can tell which one is my pick of the bunch. I think that MBE & MKB should keep powering on after a huge 2013 calendar year and ESN should have a breakout year and repeat next year what MBE & MKB did this year. I think that ESN is more likely to get to .6c/.9c than MBE is to get to 55c/82c or MKB to 60c/90c, hence my position in ESN rather than the other two. Of course ESN is more riskier and as always it's risk vs reward.

Ps. MBE's PE increased by 14 over the calc's used above, just on today's trading.

Cheers.

GLTA & DYOR.

Just my crazy ramblings.