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Ann: Updated Investor Presentation, page-70

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NotthatWarren

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31/08/19

03:51

Post #: 40256440
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Originally posted by savvyinvestor: ↑

I’ve been watching this for a few years and think it’s a good business.

i lost interest a little when they were heading too much in the direction of pets etc but now they seem to be well diversified across dental, optical, vet/ pet, psychology, and moving into the medical specialist arena.

They clearly have a good product but i dont think they have quite crossed the ‘valley of death’ yet for a microcap, because their cash reserves are low at only 2.8m at June 30, probably lesss than 2.5m by now and they are losing several million per year with limited drawing facilities left from the primary cornerstone investor.

I see they are forecasting an imminent achievement of being cashflow positive, but I suspect that with the 3 large new projects this will require further investments and thus cash outflows may continue for another year or more before the business is cashflow positive.

all this means a further cap raise will be on the cards , likely within 6 months and I would be suspicious if they declared they were cashflow positive and this would likely lead to a sp spike followed by a cap raise.

i am also a little concerned that they are charging a $550 set up fee, $80/month management fee and $50/ month for surgery analytics. This seems very expensive and may be a disincentive to doctors, who may seek alternative online booking forms eg health engine:

on the the bright side, they have clearly invested heavily in IT to be able to integrate with most doctors software systems eg medical director, shexie, genie etc. this is a big task and a barrier to entry for any new appt bookings provider.

the digital bookings revolution is coming and 1st is well positioned for it, but i also wonder whether given the relatively low barriers to entry into this space and the fact that health engine has been the first mover (for medical go/ specialist appts) whether 1st group can win this one. These things tend to end up with a monopoly / duopoly eg google for search in the long term and probably afterpay / zip pay in online retail. There is room for perhaps 2 companies, but if overseas tech/ bookings giants come to Australia then we could see fierce margin compression in future.

i would expect they they will double their revenue in the next 3 years with the 3 new projects if they execute well.

long term, this is a promising investment if they can ‘win’ market leadership in most of their products/ business lines.

i am thinking of dipping my toe in the water at 5c, not sure if it will test those lows again but I have time and patience in my side. At a market cap of 20m it’s fairly cheap too.

good luck to all.

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great comments. I have very similar views. time on my side and patience. business is looking less risky so I'm up for an investment at the right price.

I don't think Aus has a large enough market for an overseas competitor unless they buy out an incumbent.

there has been large IT investment and this underpins their market cap.

1ST Price at posting: 6.1¢ Sentiment: Hold Disclosure: Not Held
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