Let’s take again a quick look at $UMDK, first from a valuation / pricing perspective, then from a different point of view… 1/9

$UMDK earned 12.7m (EUR) during H1 2020, +120% yoy and roughly equal to fy2019. Ebitda was 4.5m, +168% yoy and roughly the same as fy2019. Marginal ebitda is ~41% which pushed overall ebitda margin up to ~35% for H1. This is impressive for such as small company… 2/9

The co is investing in growth, with much higher personnel expenses yoy. $UMDK capitalized some software costs (mainly Loyal), but intangibles are down. This makes sense as they now license out or let the customer pay up for development… 3/9

The net working capital looks much better than during fy2019. $UMDK collected receivables and with cash earned paid trade payables and some provisions. The rest went to the bank and ‘other assets’ which I assume are mostly financial instruments (remember, neg interest rates). 4/9

So very strong growth and a much cleaner b/s. If H2 yoy growth is the same, H2 ebitda might be ~8.5m, leading to 2020e ebitda of 13m! Let’s assume 10m ebitda, ye net cash 4m (conservative) and a MC of 20m; $UMDK is trading at 1.6x 2020e ev/ebitda, growing >100%. Dirt cheap! 5/9

Now why is $UMDK still so cheap?
1.“It’s a scam”. That could (still) be the case, though looks increasingly less so. And at 1.6x your margin of safety is pretty wide.
2.“Its trading on an unregulated market”. $UMDK is looking to uplist to a regulated market. 6/9

3.“Auditor is small and $UMDK has German gaap”. They are planning to introduce IFRS and change auditor.
4.“Communication is really bad”. Fair point. Let’s call that ‘room for improvement’. Then again, it’s a 20m market cap company. 7/9

5.“I don’t get their ‘strategic repositioning’ “. Now that figures are released, we might get more info soon. Let’s have some patience.
http://6.It ’s a really small German company! Who’s looking at this? Many can’t even buy it. 8/9

Bottom line: It’s all about asymmetry. At ~1.6x ev/ebitda you’re paying very little for >100% yoy growth to find out whether it's real or not.

If it’s not, its zero.
But if it’s real.. what is the right multiple for >10m ebitda growing >100%...?

Full disc: long $UMDK. DYODD!