I was impressed with the professionalism, intelligence and application of Mark and Kenneth. They appear to be dedicated to building a successful company, from creating unique, easy-to-use, competitively-priced products, to keeping QVT on side, to knocking down doors and pestering CEOs in order to win custom. They appear to be taking great pains to get things right, and set the company on a path to growth.
PAD: our competitve advantage is the locking and the software. The other guys just build 'dumb' cold climate boxes which need to be large and operated from a central console. Our lockers can be opened from one's phone, helping to reduce queueing, and can operate in the extreme humidity and heat and rain of tropical S.E. Asia. The other guys will compete their margins away, while our offering, with its operating advantages and data aggregation ability, offers logistics providers unique advantages. This, together with openness to all carriers, will enable us to compete with Aussie Post's dumb boxes when we roll out our network. The AP experience may be a blessing: we gained valuable experience, and knowledge about logistics and setting up locker systems, which helped win us a hearing with SingPost, but avoided being locked in with a clumsy govt monopoly, giving us the freedom to set up our own locker network in Australia. SingPost was a huge win for us: initially they didn't want to know us, but Ken broke down the door, won a hearing, sold the PAD concept to a v. tough audience of ex-McKinsey types, we won the contract and seriously big things are ahead of us. Coles loves our lockers, and will be rolling them out [personally I think these grocery fridge lockers have the most massive worldwide potential]. Other sales of PAD to corporations and apartments are 'slow and steady', but will provide solid if unspectacular revenue growth. Not much about OurPAD this year!
IXP: Another huge opportunity - nobody else comes near our products in this field. But may be a slow grind as data centres expand their use of our locks. The new slidehandle, developed over the course of a year, has been purposely designed to fit easily onto existing mass produced 'dumb' locks, minimizing the costs to users of installing TZ products in order to network their cabinets. [I can see this product having huge potential, it is so simple]. The process of developing and testing systems, building sales channels, and winning market acceptance, has taken a long time, but this is now well advanced.
Sundry observations: the AP experience was rather scarifying, for all of us, but the company has made great leaps since then. The first question potential customers ask is 'Where will you find the working capital for this project?', so having access to means of capital raising is important. We are still in the game, we are making progress, out products are super competitive (if a bit advanced for the market!), and we are setting ourselves up as a provider of solutions, especially in e-commerce.
Share price - my conclusions: Seems to be an attitude of resignation. 'It is what it is'. Mark and Ken are focussed on building the company, not on targeting a particular short term share price. Current levels make it expensive to raise capital, but if we need to raise money to fund working capital then we will. QVT appear to see the company's potential and Mark and Ken have won their confidence.
TZL Price at posting:
9.0¢ Sentiment: None Disclosure: Held
