COMPLII FINTECH SOLUTIONS LTD (ASX:CF1) - Summary of all investor Seminars - The next chapter, page-13 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by 952i ↑

With all the threads its becoming difficult to find information so I thought I’d combine everything we recently learnt about IAM into one thread for organizations sake.
The Investor Seminars over and done with IAM begins its next chapter. Now for those unable to attend I’ll do my best to summarise in detail everything we have learnt from all 4 Seminars to give everyone a feeling what it was like to be there.
And refresh the thoughts of everyone that attended.
Used the posts/notes from to gather everything

Perth - @Pinkie38 and @forrestfield
Brisbane - @soalexx and @ffxssj
Sydney - Myself and @Odyssey360 and @Bodhi_Trader
Melbourne - @Divineinferno

Here’s what we learnt….no Ann can do this justice just a plethora of information into the business. From a top down approach analysis beginning with macro all the way to fine technical details.

The Industry

So BPO for Financial Services is the new industry IAM is currently creating. In conjunction to this industry IAM is also offering LiLY and KliP.
So recently we have seen the regulation breaches by Storm FP, Commonwealth FP, AMP. There has been $180million government funding into ASIC to monitor Authorised Representatives (A.R) and FPA’s.

Patrick Canion (P.C) explained it as; with these new regulations FP’s have to monitor and document a clients $10,000 rollover from their superannuation more than an anesthetist must document a patient before surgery. That there is your problem in the financial planning industry for IAM to solve, so there’s the demand/need for the product.

IAM’s (mainly Mark Fisher) plan is to create this new industry, and dominate it by controlling all the resources available in the industry, acquiring all possible competition. Control the resources you control the industry. Competition have already contacted IAM asking for them to be bought out but they’re waiting until time is right.

Furthermore P.C has contacted his people in the big 4 banks to ensure they have no competition there either. So they are the monopoly in this industry.

Management

We know plenty about management but the seminars gave an insight how they all met.

P.C was Mark Fisher’s (M.F) second ever client about 2years ago. P.C noticed his costs were going up, revenue also increasing but not at the same rate, margins decreasing and needed to outsource solution without compensating quality. Then he was introduced to M.F who gave him a very good (discounted) deal being the second client.

Now that these two are partnered M.F mentioned they have been cashflow positive between 2014-2015 and was approached with buyout offers/investment offers from China, London, Private Equity Houses in U.S, Southeast Asia, Venture Capitalists, and Investment Bankers every single quarter since after the first year of operation. M.F rejected them all.
M.F never looked for RTO, even when he was introduced to Matthew Walker (M.W) he rejected M.W for an entire year until finally giving in from M.W’s persistence. This probably explains all the delays lol.

Why did he give in? Firstly, M.F liked M.W’s track record and reputation. Secondly, M.F found M.W’s terms fit their investment and aggressive growth strategy.

Mark Rantall(M.R) and was mentioned to have a huge network and reach. He has large reaches in Professional Planner the article every FP reads. He can get IAM mentions there with the click of his fingers. I guess he’s like a power godfather we have lol.

Charles Blake will be beginning full time with them next Monday and/or within the next two weeks. IAM still plans on appointing a CTO.

The Business Structure

This is where things getting interesting/complicated and have a lot to say here.

So originally there were two options.

Option 1: IAM go for A.R’s

Option 2: IAM go for AFSL’s

The “13 month” waiting list is from A.R’s lining up wanting to use IAM’s service. However IAM does not do business with A.R’s anymore. They did mention that they would have significantly more revenue in the next 6-12months with the engaged with A.R’s but it would be inefficient and hinder the growth in the long term. They are going for the big fish and thats how they are going to dominate the industry. So short term (next 6months) revenue wont be to its potential, however towards Q2 2017 is when we will start seeing big revenue.

Problems with Option 1:

Each A.R wants their own unique solution and product 100% tailored to them which is resource inefficient.

One AFSL agreement can potentially lead to 100’s of A.R’s using much less resources rather than making 100 different agreements.

SENTRY has 400 A.R’s so with one agreement IAM can potentially roll out to 400 A.R’s. Far more efficient than option 1.

So IAM went for option 2. Where IAM charges the AFSL Licensee monthly and then the AFSL charges the A.R’s however they feel. Allowing both IAM and the AFSL to benefit.

What does the AFSL get out of using IAM’s service: Firstly they can get a profit margin if they charge A.R’s a higher price than what IAM chargers the AFSL.
Seondly A.R’s have huge compliance as mentioned in “1. Industry”, if A.R screws up the AFSL becomes liable to ASIC and that’s not pretty. So AFSL have huge drop in compliance risk while the A.R has huge cost savings. Win for everyone.

Marketing within the business is non-existent, both P.C and M.F mentioned they honestly don’t need it. The 13month waiting list of A.R’s are pestering the AFSL to take on IAM services as that’s the only way the A.R have access to it. So it’s self-fulfilling marketing services courtesy of a 13month long line of A.R’s the bottom up pressure is forcing discussion with big Licensee’s without IAM having to move a finger.

Everyone in the Industry already knows what they’re doing due to M.R and P.C anyways.
Further on the sales/marketing strategy. M.F mentioned he does not have a salesteam and isn’t interested in one, they are happy for clients to do the pulling rather than IAM do the pushing. M.F mentioned the only “salesteam” he is happy to have is IAM’s product reputation and quality which will naturally create a salesteam.

Stopping IAM services is also an option, but it’s very difficult to do so. Think of it as a heroin addiction, huge withdrawal symptoms for the AFSL. If a Licensee does decide to cut the services then they will face an immediate surge in cost, need to re-hire staff, need to bring BPO back into Australia, have to hire an extra team to do SOA’s manually and make up for the time deficiency. Basically doomed once you cut heroin.

As P.C mentioned the immediate challenge the business faces is not stimulating demand but managing the demand from A.R’s each time they sign an Licensee. The challenge then extends to executing this demand into a full scaled rollout.
When asked about possible takeover prices; M.F quoted “How do you put a price on a firm that created an industry, own all the resources within that industry, has a barrier [to entry] impossible to enter, providing its services to all possible competition”
This part I got goosebumps could feel the passion from M.F almost like he thought “how dare you even ask that”, he knows and is confident he is onto something big.

The future of the business wants to expand beyond FP’s. This is the steps they want in this order:
1. Dominate FPA BPO industry
2. M4 - $40mill revenue
3. Expand into U.S/U.K (who are looking to partner with the dominant player in Australia since we have the tightest regulations here) they too are expected to face a margin squeeze in coming years.
4. Expand into SMSF and SuperAnnuation as these sectors are facing a profit margin squeeze.

Agreements & Clients

This imo is the most exciting part. Currently 9clients.
The SENTRY AGREEMENT:
So it takes about 3months average to do a rollout and agreement, SENTRY has been given a 6month pilot program.

How likely is the agreement to happen? Well P.C and M.R has known the CEO of Sentry ($1B+ Funds, 400+ A.R’s) for over 20years. They have been quite relaxed since the relationship between CEO's have been that strong. Furthermore because of the recent compliance measures by ASIC, there are total of 19compliance steps IAM must succeed in with Sentry to go through with the agreement. 18 of these steps have been completed so 1 final step remains which is Sentry to do a site visit in India to ensure work place safety and regulation. Sentry has also invested as many resources into the Pilot just as IAM has. Sentry has hired a manager just to run the pilot program for them so cancelling the pilot is a lose/lose scenario for both parties.

Sentry Agreement and full rollout is enough to complete M4. With more to MOU’s to come, how many exactly? When P.C was asked about his marketing to other big players he said IAM doesn’t require any not even for big players they already have prospective MOU #6/#7 in talks.

Plan is to rollout Sentry by January…although Sentry wanted an exclusive agreement P.C said the price IAM would’ve given not even Sentry would afford, which shows the demand and confidence the team has. Sentry will also be paying significantly more than what iPAC is for IAM services.

On the second MOU, the terms for MOU #1 with Sentry meant they aren’t allowed to enter with another Mid-Tier MOU in the next 6months until Sentry has rolled out. P.C said he isn’t even looking below Mid-Tier. So MOU #2 is a top tier Licensee.
The timing of this is out of IAM hands it will either happen this quarter is the Licensee has their board meeting and signs off or in Q1 2017 but P.C is in the high 90%+ sure it will happen.
AMP will contractually own iPAC by 2018. Make of that what you will. Technically AMP is a therefore a client.

Technicality of IAM

Most of the technical stuff comes from LiLY and KliP.

LiLY:
There is no revenue yet from LiLY but they will roll it out as part of the package in the coming months, the final touche are being added now. Its algorithm was proprietary and written by M.F himself. They are working out a pricing for LiLY and considering to charge a percentile fee each month. LiLY is also completely adjustable for each licensee and the barriers to entry is impossible to penetrate.
Its one of its kind and the code has been secured by M.F. He sat next to the programmer assisting him in writing the code in Perth and had complete restrictions put on the computer so no part of the code could be copied or sent. The code is not shared anywhere and not hackable either pretty much remains completely secret and almost every licensee/A.R have tried replicate it and have failed in the last decade. Same applies to KLiP.

COIN has been the closest to mimicking LiLY but still requires 6-7hours of human intervention, while we were given a live demonstration of LiLY took about 20seconds. But they are still not a competitor rather a partner/compliment to IAM.

The best thing about LiLY and KLiP is if ASIC randomly out of the blue says “hey no more regulations everyone can do anything illegal” the business can still run just on LiLY and KLiP regardless of change in industry against us. So it’s a great insurance policy for IAM.
KLiP doen’t require integration into XPlan/COIN but clients are happy to provide the data and allow KLiP to work its magic. KLiP is a 10% added fee which is compulsory part of the package, it shows IAM have contractually delivered its 40% savings, shows where the business’s costs/time are going, where it requires more resources input, allows pricing adjustments to the business’s products, measures an individual Financial Planners performance and conversion rate - all this in real-time data.

We were also given a live demonstration of the video link that IAM will use to deliver their personal team to contact Australian FP's. The video link "Visy" was extremely clear in audio, zero lag in video and ranging between 360-480p definition.

Financials:

Intiger was profitable in 2014/15 before scaling. They can be profitable now if they cut back on growth but as quoted by M.F “I want to see IAM to most successful startup Australia has seen in the last decade”
and see IAM “push the limit and dominate the industry” hence aggressive expansion is the plan .

Revenue this quarter was $205k but if they stripped the RTO costs they would’ve been breakeven…cash flow neutral.
They were self-funding from their own revenue for quite a while from A.R's hence they rejected plenty of buyout offers (details above in “3. The Business Structure”)
They don’t plan on dilution and credit raise either and happy to fund growth through revenue’s from clients.

M4 is the very tip of the iceberg and M.W has a much greater target in his head for IAM. M4 can be achieved just from a rollout of Sentry. M1 is planned to be achieved in the next quarter.

Resources:

This is Sharon Wright’s (S.W) field and where she spoke on.

When looking for a country to BPO into they ensure they have the right time-zone, educated labour, fast and reliable net.
S.W is training/recruiting 10-20 staff per month (on top of our 70) and wants an office the size of a football field. Although they aren’t falling behind in managing demand they are training this many staff because they know the wave of demand about to come and want to prepare well for it so they don’t fall short.

When asked if IAM is providing high quality jobs both M.F and S.W nodded simultaneously and quoted “200% sure we are”.
H.R and recruitment employment companies in Manilla report staff are lining up to work for IAM. Current employees turn up on public holidays and reject other jobs because of IAM’s working environment, they claim IAM has the best environment in the country. They pay good wages, good atmosphere, team bonding, team outings/lunch, IAM even go as far as paying for the funerals of employees family members…incredible.
Because of the employment they are providing and skillset they have to pay 0 tax for 6years. Amazing what they are accomplishing overseas. This is all part of their PEZA grant which provides a number of other advantages such as better office locations, priority for resources + skilled employees.

Memorable quotes:

Before we get into the quotes just a side note on brokers/instos support. Right now P.C mentioned they aren’t big enough for international fund managers and they have had insto buyout offers but the plan is build something big and make the instos really pay up for a piece. Management felt it’s too early for that now.
Regarding broker reports, they’ve also have been approached for broker reports, now that P.C and C.B are full time M.F said he has more time on his hands now to follow up these broker reports.
Now for the quotes; these are all word by word quotes I was writing literally as the words came out of their mouth.

When Asked about Marketing:
“Board is note here to pump the share price for the next 6months. We want to build the share price within the company to last generations…so god bless the daytraders” – P.C

When asked about a takeover price:
“How do you put a price on a firm that created an industry, own all the resources within that industry, has a barrier [to entry] impossible to enter, providing its services to all possible competition” – M.F

When asked about why we should buy today and hold for 3years
"You are witnessing an awakening and the creation of an industry Australia is sleeping on until now. In 3years it will be completely awake in its full form and you will have missed the boat" – M.F

When asked about scaling the company:
“I want to see IAM as the most successful startup Australia has seen in the last decade” – M.F

When asked about growth:
“I want to see IAM push the limit and dominate the industry” – M.F

When asked about why not buy more shares:
“I would if I could, but the Financial Planner in me says it’s not liquefiable which means once I buy I won’t sell the shares” – P.C

---------------------------------------------

That sums it up, alot to digest I assume but makes for a good weekend read, was definitely worth attending. Thankyou to P.C who was completely open to his limits and answered some very tough questions brilliantly. Also thanks to M.F to taking time out and answering his questions with incredible passion.

I do believe we are onto something very big, haven't been this bullish on a stock or IAM itself for a while.

Expand

Hello IAM community:

I'd like invite the team to make use of info below to estimate the progressive MC of IAM.

Best example of future valuation, is Paycom Software, imo.

(Class1, asx, CL1 , in financial planning business , is a close second)

Payc is classified as a Financial SaaS ,by Raymond James , USA.

Here are a some vital background info:

1) Raymond James

premier Fintech Investment house in US

a) Who is RJ
http://www.raymondjames.com/corpora...banking/pdfs/financial_sponsors_quarterly.pdf
b) ‘Financial SaaS’

“Fintech Monthly’, Sept2016, pg 27 ,
includes Paycom Software - PAYC and Xero ,

https://www.raymondjames.com/corporations_institutions/investment_banking/pdfs/fin_tech_monthly.pdf

2) PAYC , Paycom Software:

A) PE ratio

PE = 102 , based on actual Npat, latest Fin. Year

PE = 78, based on forward f/c Npat in 12 months

(EPY, YoY growth has been >70%, for last 3 years.
Hence analysts are prepare to adopt a higher PE)

PE = 48, based on forward f/c Npat in 24 months

http://www.nasdaq.com/symbol/payc/pe-ratio
http://www.nasdaq.com/symbol/payc/pe-growth-rates
http://www.nasdaq.com/symbol/payc/earnings-growth

B) NPATs (Net Incomes in USA) ,

actual, last 3 years

US$0.6m, US$6m, $20m

http://www.nasdaq.com/symbol/payc/financials?query=income-statement

C) Market Cap

MC is based on forward looking NPATs , 12-24 months
PE 78 x US$40m = >$3 Billion

3) PEG Ratio & PE
Look at the PEG Ratio - CFA Institute Blogs

Aug 16, 2012 - In his book One Up on Wall Street, Peter Lynch (2000) wrote,
“The p/e ratio of any company that’s fairly priced will equal its growth rate” (p. 199).

4) Profits Growth Rates

NPAT growth or more specifically EPS growth:

They are usually highest in the first 3-5 years of a start up.

100%, 200%,300% - Year on Year (YoY) growth is common .

http://www.netmba.com/marketing/product/lifecycle/

4) IAM

EPS growth, YoY, for next 3 years is expected to be >100%
That means it deserve a high PEs

5) Market Cap and Share Price

Can I invite

@9521 ,

Perth - @Pinkie38 and @forrestfield
Brisbane - @soalexx and @ffxssj
Sydney - Myself and @Odyssey360 and @Bodhi_Trader
Melbourne - @Divineinferno

and any other IAMer interested,

to recalculate possible MC and SP, based on your Revenues, NPATs estimates and a more appropriate PE ratios.

Thank you all in advance.

Cheers
G
-------

PS

1 @SeeThru

Can you please scan page 27 , "Financial SaaS" and highlight
Paycom Software
the whole row, with yellow highlight

https://www.raymondjames.com/corporations_institutions/investment_banking/pdfs/fin_tech_monthly.pdf

2 . Share Register
If we have half a dozen funds or high profile investors as SHHs, plus tighter register, IAM sp will be higher than what it is today.
Mr P.Canion, can you please note this point ( raised by more than one shh) and talk to the directors.

Thank you
G

(20min delay)
Last 2.4¢		Change 0.000(0.00%)		Mkt cap ! $13.71M

Open	High	Low	Value	Volume
2.4¢	2.7¢	2.4¢	$13.86K	573.5K

No.	Vol.	Price($)
1	200000	0.022
1	250000	0.021
2	73125	0.020
3	912562	0.015
1	70000	0.014

Price($)	Vol.	No.
0.026	500000	1
0.028	506514	2
0.029	113723	1
0.030	500000	1
0.039	110820	1

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