KME looks pretty cheap given strong growth and earnings outlook...

KME looks pretty cheap given strong growth and earnings outlook on the back of successful restructuring initiatives, business expansion and positive commentary from Directors:
“The company is budgeting an increased profit in FY 2014 with increased revenue from the major initiatives”.

$6.6m m/c + $1.2m net debt = $8.2m EV ; so with FY13 EBITDA at $1.2m = 6.5x FY13 EBITDA. [compare to RDH trading at 14 x FY13 EBITDA]

Balance sheet is not a worry as they are paying down bank debt from their strong surplus cash
All convertible notes now converted, so only $2.2m in bank debt remains (annual saving of $150k in interest).
Net debt of $1.2m now represents approx 1x EBITDA.

Given the royalty model, KME just need to sit back and collect the $’s for the bulk of their revenues….will benefit from a declining AUD

Management expect the high margin on-line tutoring services to scale up to contribute 15% of total revenues over the next 3 years and 50% over 5 years

http://www.dailytelegraph.com.au/newslocal/parramatta/kip-mcgrath-education-centres-teaming-up-with-google-to-give-education-help-through-helpouts-by-google/story-fngr8il0-1226758113220

http://www.theaustralian.com.au/technology/google-helpouts-personal-helpdesk-works-via-video-streaming/story-e6frgakx-1226754533535