NET (ASX) Ann: EGM Management Presentation

Originally posted by Petey: ↑

You are quite correct in saying that there are many many companies operating in the 'data management' ( call it what you like) market place. I will confine my response to Enterprise-level servicing - not retail level products here.

The primary drivers of managing data used to be managing networks originally LAN then WAN - and this market was basically connecting workers in HO then connecting workers in various offices to centralised data management systems ( via networks). This is still big business. The largest market by profit in providing these services is the US. It is also for the time being the largest market housing data centers - China will outgrow data center provision within the next 3-4 years based on exiting unused space capacity and new DC being built and new DC in planning. The provision of DC space / capacity is all about the move to the so called 'Cloud' and many different variations of this move - for most Enterprises some data and some services are accessed and stored in the Cloud but other data and other services are still kept in proprietary company owned and maintained DC's and or smaller closer DC's which they use for their own purposes by renting specific capacity rather than sharing it.

Netlinkz's product / Service offer now running in China for this Calendar year enables companies to use whatever data management strategy they wish to employ and still manage it efficiently - this is where SDWAN tech comes in and NET provides both software based network management tools ( Platform) and hardware based routing and network management tools - used separately or in combination to solve for client need. Again., yes - there are many many companies in this space - all purporting to have 'special' capabilities and 'superior' products.

However ALL companies need to be able to solve for company problems each network is different and requires differential solutions to different structures and use cases and needs etc etc

This is why when you read financial reports from established players like CISCO or JUNIPER you will note that revenue usually is split between service provision ( ie the engineered network solution) and ongoing service provisioning - what you refer to as repeat business revenue, which will include things like software/hardware upgrades, consulting adding changing 'things'.

That is the business which NET is involved in today. This forum still refers to some previous business model using a product called VIN to sell SME type businesses. The VIN technology was not scaleable. The new technologies - developed over the last 18 months are scaleable - therefore the size of the Entrpsises able to be dealt with are large. So NET has solutions and applications for all types of networks and all types of clients - for the first time ever.

The technology is also more advanced in some ways - specifically, it is already 4G and 5G enabled and therefore the whole IOT market is open. the water treatment plant contract announced will no doubt incorporate both network management AND IOT ( which is a form of EDGE market) capability.

Once a network system is in place - the larget the client the more complex the task - ongoing revenue (as described above) starts to kick in.

Because NET is a new player starting to roll out product - revenues will be predominantly first phase types- ie engineering solutions and actually transitioning clients into CLoud/Hybrid/Edge or whatever the case may be.

Now the reason why I am interested in NET is precisely the reason why some who post on here are skeptical and dubious - China. Whilst the US is the most profitable market it isnt the fastest growing market anymore and won't be the most profitable market in the future - simply based on population and user cases. NET is very well positioned to benefit from this growth and growth in this market will only be limited by the capital the company has to invest in growth - which is the perfect place to be - better positioned than most companies in fact - except for possibly incumbents like Huwawei - however the market is too large and too diversified and too fragmented for any one player to dominate - hence the opportunity.

The lessons learned in China sees the company able to now roll out (basically) the same business model into other regions - and as stated in teh company presentation the chosen other regions are in APAC including India and Singapore- once again with a partner with on-ground distribution capability and existing client bases.

That is where the revenue growth then cashflow generation then the profit will come from - NOT highly competitive and very crowded markets in the US and most of Europe.

Netlinkz' ambitions can be quite small in terms of size of revenue for the foreseeable future - in order to be able to generate massive shareholder return - growing from zero revenue to 10 -15-20-25-35- 45 and so on is a lot easier than growing billions to more billions.

Hope this helps.

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Wow! I literally just took my hat off to you, Petey. I'm sure everyone else feels the same way. Thank you so, so much for taking the time to explain things to me. I truly appreciate it.

So, it is the China angle...the growth potential and the relative LACK OF COMPETITION (notwithstanding local talent), compared to the more mature markets like the US and Europe, that attracts you. See, I didn't know that about China's IT market, it has always painted an image in my head of a vibrant and highly competitive IT industry with lots of players. Great! Room to grow into!

You mentioned that this forumn is still referrencing the old SME business model, using VIN, but that it wasn't scalable, and so we had to move on from VIN in the last 18 months, and that we're now targeting large enterprise-level clients with newer scalable, 4G/5G enabled tech. Ok, so I love the new business model, I like it! Is this where our VSN comes into the picture? Is this the scalable new technology that you were referring to. If so, what are your thoughts on it, in relation to what the chinese incumbent SDWAN providers have to offer? But, perhaps it's not as important anymore? given what you said about level of competition in China? Not sure. I mean, ultimately, our tech still has to compete, no? Anyway what do you know about our VSN...or have they moved on from this too, to something newer, as they did VIN?

Lastly, I agree totally, that with the changed business plan of now targeting large enterprise-level clients, as you said, the work becomes a lot more complex. Question: how do you feel about our team competence...that is, the level of our technical expertise to undertake these larger, more complex jobs (is it us who will be doing the engineering/designing and implementation or our partners?).

Cheers mate, you've put a smile on my dial. I love discussing the s$@t that matters.