30% up one day, 20% down the next. Never a dull moment with Intiger and the folks on the HC thread.
Now that the day has passed and speculation on what the price was going to do today has been answered, here are some more musings, based on my opinion and experience in the industry.
Make of this what you will, but I have applied commonsense, reasoning, dot-joining and dash of speculation to explain a few things which we have all probably been asking ourselves.
I hope that this helps holders and non-holders make a more informed decision on their investments by considering different factors.
1. CBA Deal.
I suspect that the CBA deal has been ongoing and work in progress in the background for some time. Contract negotiations and due diligence and signs off take a very long time in these organisations and I would go so far as to say perhaps 12 months back, IAM and CBA were probably in early discussions to pilot/trial the technology and process. It might even make sense that CBA is MOU2 on this basis. We know that NAB wasn't MOU2 because that happened too quickly after MOU2 was initially mentioned by Patrick and would have since been disclosed at the time. I also recall that MOU2 was described as a fairly big deal...and so that matches the CBA description to me...not to mention that CBA take a fair while to get through the process and conduct Due Diligence, so it makes sense this time delay aligns to MOU2.
2. CBA named and Announced
This is a complex issue with many facets. Firstly, IAM have managed to get past the ASX hurdle (somehow...not even sure what the ASX issue was). Secondly, both CBA and IAM would have to agree on being named (which they obviously did). Thirdly, CBA might not of
had to be named (or could have asked IAM not to be named), but decided to agree to the announcement with CBA being named...I find this interesting, especially given all the talk about bad publicity, losing jobs to overseas and to artificial intelligence etc. My conclusion is...CBA wanted/agreed to be named and are willing to put some weight and conviction behind IAM and their decision to use their technology. If the announcement was light on wording, I suspect that this is not because of IAM, but because CBA have requested this...logically, it would only serve IAM better having more details announced to the general public and logically. You only have to put yourselves in CBA's shoes and say to yourself "well, yeah, I suppose IAM have to announce something to the market...we are probably obligated to be named, but we don't want to go into details" rather than IAM saying "lets announce that we've got the biggest company in Australia on a pilot, but we'll keep the details intentionally light on because we don't want the public to know stuff". Which one sounds more likely?
3. Sentry and NAB
As I mentioned before, we haven't heard anything from NAB/Sentry (directly in name) from Intiger recently. However, I will refer you all to IAMs announcement on 27 October which stated "The Company also completed the initial pilot program that was announced to the market on March 1 2017. The Company was unable to reach acceptable terms to continue to provide its services, and commercial discussions were not continued." Whilst there are no names mentioned, it would be obvious that this is NAB (since they were announced on 1 March 2017. Sentry on the other hand doesn't appear to be using IAMs services since no agreement or announcement has been made on this and the revenues don't reflect it. In short, people looking to invest should do so on the basis that there is no NAB/Sentry uptake. Not a deal breaker for many with CBA now on board, but might be for others.
4. Trial vs Pilot
I get there are technical differences in these definitions. My sense is that the differences are immaterial in the context of the CBA announcement. In IT and project development and deployment, trials are smaller and Pilots are more significant, but on this occasion, I would guess that this is more of a pilot activity since I don't believe CBA would agree to make a formal announcement to the market for simply trialling a piece of software...only if it was being rolled out to a sizeable number of their workforce would they deem an announcement worthwhile, hence my leaning towards a pilot.
5. How big is the Pilot and Revenue?
This is the $40 million dollar question. Generally pilots are sizeable in their impact, scale and scope to ensure it replicates a real life situation if the solution were eventually rolled out to the entire network. Rest assured, this is not a $800 commercial arrangement. I would hazard a guess and say approx. 5% of the network would be included in the pilot, so approximately 80 planners sending in work every day for the duration of the pilot period. The whole 12 month thing is something I've taken with a grain of salt (rightly or wrongly)...simply on the basis that each party can shorten or lengthen it whenever. This effectively says that 12 months is an arbitrary number for the sake of legalities. In reality, pilots would run for 3-6 months max to identify whether the solution works and for both parties to either agree to continue or terminate. I think we'll hear the outcome between June-Sep this year, so watch out.
6. Letter of Intent Vs Deed of Agreement
Whilst the announcement specifically separates these documents, there is a good chance that there is no real difference between them. I doubt LOI would mean less than DOA. Sure in legal terms, they are technically different, but in reality, the effect is the same...i.e. all licensees will be piloting IAMs services. The way in which the big banks work, with sub licensees is effectively as 3 completely separate entities...they don't talk to each other (except at conferences and PD days probably), they have different management teams, risk teams, policies etc. The chances of getting one single paper document that covers all 3 is not something I have ever seen in my time working at a head office with multiple dealer groups.
7. 4C and Cash Flow and Quarterly Activities
Let me be clear...There is no way in my opinion that IAM delivered the 4C deliberately during the trading halt so they could announce the CBA pilot to soften the impact of the 4C results. Firstly, IAM have no control over when CBA would precisely sign the deal (x 3) and therefore announce to the market. Secondly, the 4C wasn't actually that bad...they generated their second highest quarterly revenue (from memory), so no need to hide anything. Thirdly, IAM will probably still provide a market update on their operations separately so they can incorporate any CBA commentary...again, makes sense to me.
8. Ahhh, the share price....Cos that's why we're all here, right?
So how is it that the share price ran to nearly 10c with speculation of Sentry and MOU2, then slide down to 1 c over the course of 12 months? A few theories...Firstly, 10c was probably hype, excitement, new shell turning into Unicorn feelings (and a good pump and dump from The Architect). This was never sustainable nor reflective of IAMs true MC. Secondly, the share price fell to a reasonable level (3-5 cents) after shareholders lost faith and trust in management due to the NAB debacle. Fair enough I say. However, the third potential reason (which explains the drop to 1c) is simply due to active trading by those that held large positions. In particular, many on here have discussed Matt Walker selling down from 110 to 85 m shares. Matt was a director (but no longer) of IAM but he is also the Chairman of the Company Secretary (Cicero) to which that organisation would have been privy to IAMs progress and position (but obviously unable to trade with that knowledge). However, with NAB and Sentry not providing the much needed boost and the 4Cs coming in below expectations for the last 6-9 months, the timing of the sell down vs the lack of positive news coming out from IAM are highly correlated (make of this what you will). The converse is also true, with Euroz buying up big over the last month just ahead of the CBA announcement. My point being is that the share price IS NOT always correlated to the business itself. So there are those who think the share price is low and hence conclude the business is "no good". And in many cases, this is true...but you need to decide if its true in this case. Especially when that case includes a company that has a good chance of succeeding with CBA.
Now admittedly, I am not always a fundamental investor and actually prefer to trade the technicals (
30603688) on alot of my other stocks, but this company is one I've researched more than any other. Whilst I may graciously be proven wrong at some point, until that day, I choose to invest for the long term with IAM based on the fundamentals, which apparently have become stronger over the last week.
Hope this helps everyone and look forward to constructive discussion.
Bodhi_Trader.
