I've reviewed the numbers and bought a few today - not fully...

I've reviewed the numbers and bought a few today - not fully convinced yet (looking at the CFO's track record with small caps especially) but its a far better bet than a lot of the other recent IPOs.

Here's what I like.

Market cap is currently ~$15M.


SW1 currently service 29,000 rooms, generating ~$450 per room per annum, with an EBITDA margin of 20%. So steady state EBITDA is in the realm of $2.6M. Every room essentially creates $90 for the bottom line EBITDA.


SW1 have just announced an uptake of 19,000 extra rooms, boosting bottom line EBITDA by $1.7M by 2018 with this one contract alone. So this demonstrates to me that they're ready and capable to grow.

SW1 are pushing for international growth of 44,000 rooms this year, more than doubling the current room quota. If they can sustain current margins and can deliver on this growth, EBITDA could easily grow to >$6M within 12 months.


Fair value for this should be approximately 6x EBITDA, implying the following valuations...

$2.6M EBITDA (position at IPO) - 19c per share
$4.3M EBITDA (position as of now) - 31c per share
$6.0M EBITDA (based on calendar year target) - 44c per share
$10M EBITDA - 73c per share

If we really want to simplify it, I believe its worth 1c per share for every 1,500 rooms on the books.

So right now its priced for no growth whatsoever. This is a punt, sure, but its a cheap punt. If they keep on announcing contracts this will fly.