Thread by @talkcentss

Purple Group $PPE

Everyone’s’ favorite overvalued share.

Let’s look behind the curtain.

(Educational Thread)👇🏽

•Introduction

Purple group is a financial service company.

Operates and runs:

-@GT_247
-@EmperorAsset
-@EasyEquities

We’ll look at their TTM earnings and point out some key things that may be of interest to investors. #DYOR

•Revenue

Total Revenue = R207 208 000
(207 million 208 thousand )

•Net income

NI= R 21 861 000
(21 million 861 thousand)

Remember this is for the Trailing 12 month period. Data from Yahoo finance. ⬇️

finance.yahoo.com/quote/PPE.JO/b…

•Gross profit margin

Gross profit ÷ Total revenue

= R141 837 000 ÷ R207 208 000

= 68.45%

A measure of profitability. Telling us how well the company makes money from their products and services.

•Net profit margin

Net income ÷ Total Revenue

= R21 861 000 ÷ R207 208 000

= 10.55%

Purple Group is profitable, after all their costs are deducted.

But we need to determined valuation.

•Operating Margin

Works out the profit on sales it makes, after paying for variable costs. i.e wages ect.
Does not include tax.

R50 519 000 ÷ R207 208 000

= 24.38%

•Shareholders equity

All assets - all liabilities

R625 463 000 - R 299 954 000

= R325 509 000 - ( minority interest)

= R297 974 000
( 298million)

Remember this,
goodwill is an asset too.

•Goodwill

- Brand name
- Customer base
- Proprietary Tech

It’s sort of an arbitrary price companies place on themselves.

-EE has about 1million users, so you are their asset, giving the brand value in essence.

P/G’s Goodwill price tag =
R281 287 000

Yip, R281 million

-Why’s this important?

Well, these are intangible assets, you can’t really sell these assets to release cash flow.
Goodwill is reported in the assets section on a balance sheet.

P/G’s shareholder equity is R298million
(R281mill is goodwill)

Don’t fear, all companies do this.

•Current Ratio

Current assets ÷ Current liabilities

R256 164 000 ÷ R255 981 000

= 1.0007.

Purple group has just enough cash to cover short term liabilities. Not much liquidity.

In fact, only about R184 000 in working capital. It’s improving, prior years were negative.

•Earnings Per Share

Net income ÷ outstanding shares

R21 861 000 ÷ 982 569 000

= 0.02

They are making 2c a share for us shareholders.

- Purple group has been increasing their shares year on year, and have increased their shares by 5% since 2017.

Yip, you guessed it. They are diluting shareholders to expand. Which is normal for a business like this.

Debt or dilution is needed, or a combination of both.

•Price Earnings Ratio

Share price ÷EPS

(Worked with a share price of R1.56)

P/E = 78%

They’ll need to grow into their earnings to justify current valuations. Growth stock. More risk = more reward.

Do you have conviction?

•Return on Equity

Net income ÷ shareholders equity (remember goodwill)

R21 861 000 ÷ R297 974 000

= 7.3%

•Return on Assets

Net Income ÷ Total assets

R21 861 000 ÷ R 625 463 000

(remember goodwill, considered an asset)

= 3.49%

•Key takeaways

- R184k in working capital
- Diluting shareholders by issuing more stock

- Total assets are ⬆️ but so are total liabilities.
(Remember goodwill) more customers = more goodwill.

- Physical assets are worth only R16 687 000 (16mill)
- Goodwill = R281 million

Decisions, decisions, decisions,

Are you IN or are you OUT?

Comment below and let me know.

• YouTube

For the full breakdown, check out the video below ⬇️

Consider thanking me by hitting that subscribe button. 🙂

This right here is #DYOR ⬆️