Energy Action Limited (EAX) is Australia's leading energy auction procurement business and a major player in the broader energy management services market.
http://www.energyaction.com.au
Wow... almost doubled in price since I bought it. Only one post so far!
One of the best small caps on the market, in my opinion. Predicting EPS for 2013 to be about 20-21c. Plenty of recurring revenue (in fact it's an absolute beast in this respect). Very high ROC at the moment as you would expect from a growing small cap.
Solid player in a niche area with favourable tailwinds and potential long-term competitive advantages. Expect them to keep consolidating and buying out the smaller players.
I think it is worth less than the current market price, but it is not crazily over-valued (yet). Intrinsic value should increase at a pretty good clip. As McLovin said they have lots of FCF that they can definitely re-invest at high rates of return.What do you think it's worth then. The market loves them and correctly so.
I started buying this back in April and just under $2. Been a real pain trying to get my fill on such a small volume stock!
I think it's still cheap. No debt, growing cashflow, relatively fixed capex (software). Customer retention is 95%, and consists of many large corporates.
Great FCF.
Some of these small liquidity stocks seem to be gathering large followings quickly - makes life tricky sometimes.
I noticed that too. There also seems to be a new micro-cap fund launching every week!
Next stop market efficiencyI noticed that too. There also seems to be a new micro-cap fund launching every week!
Can you point me to some of these? I am looking for a lazy micro exposure.
The only one I know of is from http://microequities.com.au/
Cost control looked heaps better to me in this half. Still looks like a money spinner to me - amazing ROIC. If they can keep re-investing half of the free cash flow generated by the core business for any length of time at even half of the current rate then this isn't as over-valued as it looks (I would probably argue it's close to fair value though).I was little disappointed that they didn't even mention the rising staffing costs. They're still aiming for double digit growth, still looks good but I'll be watching the cost control very closely. Wouldn't buy at these levels but happy to hold.
Cost control looked heaps better to me in this half. Still looks like a money spinner to me - amazing ROIC. If they can keep re-investing half of the free cash flow generated by the core business for any length of time at even half of the current rate then this isn't as over-valued as it looks (I would probably argue it's close to fair value though).
Interesting to see how hard the competition starts pursuing their excess profitability.
I still can't believe they floated this business at less than a third of the current price. It's not as if it was a start-up or highly cyclical business.
Discounting is applied as no claw back provisions are in place to recover commission paid should the
employee leave or the energy supply/monitoring contract terminate before the end of the original energy
supply/monitoring contract term.
What do you guys think of some contract acquisition costs being capitalised?
If they paid a straight salary instead of base + commission I doubt they could capitalise the employment costs.
Just an expense recognition timing issue and probably no big deal – but any unnecessary accounting complexity tends to make me go hmmm.
I think you make a good point and my biggest problem, and why I haven't looked at buying any more since $2 is that futures returns and ability to protect the franchise are still fairly unpredictable at this stage.The forward revenue looks good, but an unknown question to me that is also relevant to the capitalisation question is how tight is the future contracted revenue especially if stress tested by an eager competitor. current returns are going to need pretty good protection I would think.
What do you guys think of some contract acquisition costs being capitalised?
If they paid a straight salary instead of base + commission I doubt they could capitalise the employment costs.
Just an expense recognition timing issue and probably no big deal – but any unnecessary accounting complexity tends to make me go hmmm.
The forward revenue looks good, but an unknown question to me that is also relevant to the capitalisation question is how tight is the future contracted revenue especially if stress tested by an eager competitor. current returns are going to need pretty good protection I would think.
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