Financials12 Oct 2018 16:27
Afternoon all
Topic for discussion should any wish to partake, I have been looking at bit more at the recent financials, I may be wrong so will add a disclaimer and please cross check
2017 hardware sales came in at 3,715,000, cost of sales was 3,166,000 leaving a net profit of 549,000 or 14.77%
2017 SAS was 1725, cost 194 and profit 1531 (we can see where the margins go! but we all knew that anyway) margin 88.75% = total net profit $2,080,000 (this should all be in the interims)
If we take a quick look at H1 2018, we see that hardware sales was $2,202,000 and cost was $1,730,000 which leaves a profit of $472,000 (21.43% up nearly 50% from 2017 hardware)
SAS was 890, cost 134 profit $756,0000 (Slightly 84.94% down from 2017)
At current cost of SAS sales we would make a slightly less return on SAS margin this year (1531K 2017: 1512K 2018) very small difference however H2 is generally stronger so if history repeats this number should again, exceed that of 2017
The big difference is the cost of hardware sales, as MR stated that the first four months still included a lot of the low margin products in the sales mix - so one would think H2 could show an even better return on hardware sales
If we increase the sales mix and improve on our H1 numbers, then the bottom line at the end of 2018 could be quite considerably better than 2017 due to the consistent high margins from SAS and, evidently, an increase in hardware margins and revenue from 14.77% to 21.43%
IF, and thats the question IF STAR can as stated start selling more of the higher margin hardware products (all add SAS of course too) then this 21% figure could rise (as stated, first 4 months was low margin, now higher margin coming into the mix) considerably
So in summary if we can match or better H1 then we are in a very strong position
It also means that one contract of considerable size and of a high margin product (wouldn't even have to be that much, 500K+) could seriously swing us into a healthy EBITDA+
Risks attached, do your own research and please dont take this as advice without doing your own due diligence, but I am feeling a lot more confident knowing that H2 isn't exactly a high pressure situation and as long as business continues to deliver as it is, we should be looking good come year end - any extra deals or contracts then confidence has to increase considerably as per above
DYOR, all investments carry risks not mentioned above
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