Ann: Becoming a substantial holder , page-12

Look guys and girls, you're all barking up the wrong tree and need to understand how this works. Schroders clearly runs Telstra's superannuation fund (this is provable if you simply do a Google search for "Telstra Pty Ltd" and "superannuation" and also find that Schroders has filed other substantials that include Telstra Pty Ltd -- for example, I found one that included Fletcher Building and I doubt TLS has any interest in expansion into the construction sector!). So it's absolutely nothing to do with Telstra buying into JIN, just the farmed out staff superannuation fund managed by Schroders that has taken a position.

As far as valuation of JIN goes, there are three things to focus on IMHO.

1. How much cash will it be holding by mid next year (I'll explain why that time frame in point 2) which by my calcs should be at least 35c/share (net of any customer balances). This is my low case valuation.

2. Will the contract with Tatts be renewed? It expires mid 2013 and without a renewal -- to be blunt -- I do not think JIN has a viable business left in Australia. Dick McIlwain (boss of Tatts) looks like he has been trying to progressively disintermediate the channels to market (eg newagents) and claim as much of the distribution channel for Tatts as possible. At some point my suspicion is that Tatts will try to take full control of the online distribution channel for itself (Tatts should just buy out JIN to get the customer base and websites and be done with it IMO) so even if the contract is renewed next year, at some point I think it will cease. Consequently, given the potentially short duration nature of the business, a very low multiple of earnings (net cash adjusted) is probably correct. If you think it'll be renewed and continue to be for the medium to longer term (I obviously don't think so), then you'd apply closer to a market multiple.

3. What's the US potentially worth? This depends on whether JIN can firstly do a deal and secondly on what terms. I doubt they could structure an arrangement similar in profitability to the Australian position but I'll freely admit that I don't know. For the time being I think of the US as an option. One with a potentially high payoff but also one that probably has fairly long odds, so I'd want it for free or at minimal cost (but then I'm a greedy bast*rd :-) when investing).

Disclosure: bought in at 25-30c and sold out totally around 60c.

As usual, do your own research, treat the above with extreme skepticism and under no circumstances take any of my ramblings as investment advice.