SRT (ASX) As simple as this?

Originally posted by ChrisWR ↑

@shift @forrestfield @3500 @heraclitus and other interested parties.

There is not surprisingly a lot of opposing views, but having read key posts and the asx announcements it seems it could as simple as this?

Intiger has been going just ok the past few years with a (2.5%) growth rate, but they think they are onto something, they need help though. They have recently turned profitable, just. However they only have $120k cash reserves and have approx.$880k of payables, a bit dicey. They link up with mw and importantly pc, who is not only from w.a but is well connected in financial planning and can provide an instant pipeline of sales through his existing business.

While the terms from the outside might seem incredibly one sided, mark simply sees it as the following. He delivers combined npat of $40m in 3.5 years and he's likely to have a significant stake in a business that is worth $100m++. He also gets instant access to $4m+ of cash (which would probably help him sleep at night compared to his relatively skinny balance right now) meaning he can really ramp up sales and marketing efforts and importantly he gets the business networks that come with Matt and Patrick. Currently he has a business that's worth a questionable amount, but probably <$2m based on cash reserves etc. pretty easy decision. Struggle under his own steam or turbo charges right now and is in a retirement position in 3-5 years time. For Matt it's pretty simple, get an idea he believes can be massively scalable, a smart highly motivated CEO on board with a co-director who is plugged into the industry and can provide instant revenue. His $2m investment could easily Disallowed from here.

As @forrestfield pointed put it costs money to set up and run offshore resources. Our average per month cost, per person is about $2.8k. So multiply that by 58, you easily get a sense of what he had to bring in each month to cover costs. So the thought of cash reserves, well connected directors, a potential massive prize at the end, isn't that a fairly simple choice?

Doesn't mean to say the sp will go up or down, but the sheer volume suggests plenty of interest. If we get an announcement tomorrow that minority shareholders have sold to srt as per the outlined terms that will be a step in the right direction.

Cheers

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A logical post in many ways... the way I see things is different... it's more based on observations of the sector, the performance of MW, the way he does things, the way shells perform after acquisition, the market cap of SRT right now, the potential news flow and the possibilities of this news flow...

So IMO, I would like see things happening step by step... Have to admit that I liked the way VTX did things... even liked it more the way RYG did stuff...

So here is what RYG did...
1. A presentation after the acquisition...
2. A capital raise at 2c which was small in scale but it provided the certainty to the market that RYG can raise at 2c... the saga related to Gal and Duo and many other shells who failed to raise at minimum 2c...
3. The follow up news flow...

IMO SRT once successfully raises his capital at 2c, certainly will move higher... or will stay around these levels until we see further news flow...
Buy on rumour and sell on news has been a biggest reality of share market... In this end of town, mostly selling on news has been a good strategy even with shells... but the shells who strike good commercial terms along with good business acquisition made larger gains in similar pattern with rare exceptions... SRT might follow the same pattern? Who knows... so far it looks promising...
Now people who would have sold between 2.2-2.5c would believe that they have done well... On the other hand people like myself who have bought at these levels would think they will well in short to medium term... again we don't know the end result... we made our decision based on how we see things...

Now Intiger... 2.5% growth per year and that's for a new start up... minimum resources, offshore staff (costing at least 2 times lesser than what a staff member would cost here) small management team which must also be managing HR, complaints, sales, new clients and most importantly advertising and growth of the business... Surely a small management team managing all this would only be able to do so much... Perhaps that's the reason growth is 2.5%...
The second possible reason... the sector is relatively new... the growth is extremely slow and only innovative and forward looking people normally are the first movers... the business also need to prove it's worth, establish clients trust, manage hick ups, prove accuracy and then move on to next stage which is generating growth... at this stage, business needs expansion and you can't manage expansion with out resources... resources that include human and other resources....

Now the growth of investment in this sector is enormously rising... In 2014 it quadrupled... just in 1 year... now going back a bit earlier, the growth started with 980m in 2008 which remained steady till 2010 and then some growth in 2011, 20 and 2013 before it spiked in 2014... Interesting to note, most analysts were forecasting 8 billion by 2018 which was beaten in 2014... the growth rate however even jumped higher in 2015... so it's not stopping... In other words, in 2014 the growth in investment saw 12000% increase...

Keeping in mind Intiger started 3 years ago, this means they should be a head of the pack or pretty close to most start ups...

Now the terms... have to admit it shocked most of the punters and asx shells... what we saw in December was completely opposite... shells issuing 300-400% script of existing shares means existing holders were end up getting 20% etc... as a result market caps of those companies do became 60m plus on the day of the announcement being made and that is without performance shares... I have to admit that I was scared of holding shells by myself and decided to only hold MW shells along with shells with proven track record but still very low market caps plus good cash... as many has pointed out that deal looks too good for SRT holders including our largest holder MW... however, thinking twice and it looks pretty good for both parties... particularly the first two mile stones are looking really decent and might be achieved... now 500m shares would be worth 10m even at 2c... however, if they achieve those milestones, sp might be triple from today's price so even better return... however if they reach 40m NPAT sp will be multi folded... so I would say, both MW and Intiger done really cleverly to struck this deal which is a fresh breeze for asx shells... yeah, you got a product who got a blue sky potential, let's show us that you believe it...

MEANS ONE OFF A KIND SHELL STRIKING ONE OFF A KIND DEAL...

Lastly, what I am expecting from SRT... continuous news flow including presentation... also may be a deal or two... Capital raising done asap as they have already received response... and it should not be tough for MW to raise anyway as he raised almost 20m in last few months so raising 2.4m won't be hard... DD completed and once the transfer is complete further announcements re Intiger financial reports and revenue figures or as claimed by Intiger the profitable figures...

Based on this, I also expect short to medium term gains... minimum of 3-4+ cents... how high will it go, now clue again...

P.s I am not considering the sp to go lower.. simply I am a holder and no one with their right mind would ever hold a stock which in their opinion would go down...

Also as always buy sell or hold based on your risk appetite...

Cheers