Ann: Substantial Holding in ITL Notice - TBF, page-7

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peterdoobes

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21/02/17

12:14

Post #: 22776206
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Originally posted by BlueKimba ↑

The Boat Fund's January report talks about ITD... I suspect they were the fund manager that (cough) jumped on board in December. This was written before the fantastic 1H17 result. I'd have to agree with them that ITD seems to be undiscovered by the market. How many other stocks are on a (forward) PE of ~12 with a growth profile like this? They write as follows:

ITL Limited (ITL) is a healthcare and equipment services business involved in the development, manufacture, distribution and sale of innovative medical devices, procedure packs and the development of direct to consumer testing products in Australia and across the globe. It has three operating segments:

ITL Biomedical: involved in the design, manufacture, marketing and distribution of a range of biological safety sampling devices for the global healthcare market. This division is the highest margin division and expected to contribute to strong earnings growth in the coming years.

Healthcare Australia: involved in the provision of medical and surgical solutions to suit the needs of public and private hospitals throughout Australia. Selling a more commoditised product, this division doesn’t enjoy the same level of margin as ITL Biomedical and has suffered some margin compression in recent years albeit it still contributes materially to group revenue and profitability. Recent transition of production into its Malaysian facility has seen an increase in profitability. We view this division as non core and anticipate a potential sale down the track as a big catalyst.

MyHealthTest Pty Ltd: a medical biotech division which aims to commercialise its portfolio of direct to consumer pathology testing products. Presently this division does not contribute materially to revenue and is loss making.

We were drawn to ITL given the strong growth outlook of the ITL Biomedical division. We think it remains undiscovered by the market with no broker coverage, trades on an undemanding (particularly given the growth outlook) valuation of circa 12 X FY17 forecast after tax profits, and is managed by a founder with a large amount of skin in the game (The Executive Chairman owns circa 40% of the company). We look forward to writing in further detail about the company following release of its half year results.

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TBF's notice says they only started buying from 27 Jan at prices from 37.5c. The unnamed fund that came on board in Dec purchases off Bill Mobbs for 26c
ITD Price at posting: 50.0¢ Sentiment: None Disclosure: Held
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Ann: Substantial Holding in ITL Notice - TBF, page-7

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