Management seem fine, their cash payments over 3 people are 600k, which isnt astronomical. Hard to tell with these businesses.
I dont like that they arent using variances in their reports but 71% increase in revenue, but a 84% increase in COS. That said the accounting treatment with FIFO could make this variance a bit hard.
If you look down the line, the costs dont really increase substantially. I have done a very quick EBITDA Margin here, its improved significantly. I dropped out the impairments and forex adjustments too. Normally companies keep the forex in, but I think leaving it like this gives a better idea.
Aged care is looking hard at cost cutting, while growing heavily, and this 3G shutdown might help too. This is a low risk play to go to zero, if you are buying small, if you are buying big then you will have trouble getting out if things go poorly. I think the upside is significant, if they become the major player in this tech, and with their client base reach its possible, it could easily have 10x on it.
The one thing I do like about this mob is they are expensing a lot of employee costs and not just shoving it all onto the balance sheet so their cashflow isnt getting hammered while they pretend they are breakeven. If you see payments for intangibles in the cashflow, its very minimal, but they got a decent R&D refund.
TAL Price at posting:
0.9¢ Sentiment: Buy Disclosure: Held
