RE: New Edison research update - P/E only 7.510 Oct 2022 12:01
Agree that CentralNic looks exceptional cheap on conventional metrics (sub 6x run-rate EBITDA), it’s certainly not without risk. It’s main fragility is that over 50% of its turnover, and 2/3rds of its Gross profit, and 100% of its EBITDA comes from one customer in its monetisation division (see the revenue note in its annual report). Clearly their is ‘better mouse trap’ risk here and is also why CNIC only pays 4-5x for its monetisation acquisitions… However, given momentum in the business, increasing scale and cash generation available for reinvestment in new products as well as the market opportunity in monetisation, chances are it will grow and the concentration risk might reduce over time