Friday, 27 September 2019

Breaking Down PKK's Revenue For Q2 and Estimating Revenue for Q3 and Q4


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This is an estimate of PKK's revenue by subsidiary based on information in Q2 MD&A and news release:

ASFC:
  • Revenue grew 20.8% from Q1 to Q2
  • Accounted for over 75% of total revenue for Q1
  • 45.8% of revenue for Q2
  • Assumption: 0.75% growth rate per month going forward
ASCS:
  •  Plug for Q1 to reconcile back to total
  • Accounted for 22% of total revenue for Q2
  • 5% growth rate per month going forward

ASDS:
  •  Plug for Q2 to reconcile back to total
  • Accounted for 5% of total revenue for Q1
  • 5% growth rate per month going forward
ASSC:
  • Accounted for nearly 20% of total revenue for Q2, I use 19.5%
  • Still trying to figure out the exact date for ASSC to go live
  • 25% growth rate from June to July to account for partial month of operations, 5% growth rate going forward

These are the numbers I come up with based on the MD&A hints and the assumptions I made above on growth rates:



I think PKK's revenue could be much higher for Q3 and Q4, but this is what I think is a reasonable minimum for the rest of 2019. The only way PKK misses these numbers is if ASSC numbers for June were due to an initial backlog of demand, like the pattern of Kickstarter sales, and pulls back for the rest of the year. This is not a new business, but a transformation of an existing business into a joint venture, so I think this is unlikely. Keep in mind that ASFC and ASSC are 51% owned by PKK. Per IFRS standards, topline revenue will be shown from the full business perspective and minority interest is backed out at the net income level on all financial statements. For anyone who wishes to calculate revenue from a PKK only standpoint, multiply both ASFC and ASSC revenue line items by 51%.




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