From the LHC Nov newsletter..... Rubik Financial (RFL) fell 9.3%...

From the LHC Nov newsletter.....

Rubik Financial (RFL) fell 9.3% during the month after providing FY15 revenue
and EBITDA guidance at its AGM. Whilst revenues met (revised)
expectations, and the recent acquisition in mortgages is being well integrated
into the business, a higher level of costs resulted in a lower than anticipated
EBITDA number. We have held long discussions with management regarding
the quantum and nature of this additional investment into the cost base and
are comfortable with management’s decision to now reduce this investment.
This will result in an earnings skew into 2H15 as costs will reduce throughout
the year. The exit FY15 profit run rate will be strong. RFL is a good business
with a high degree of “sticky” recurring revenues, not having lost a customer
in their core software business since 2007, is recording good organic
growth, earns high profit margins and has net cash on the balance sheet.
RFL has lost favour with the investment community, and will need to meet or
beat its forecasts before the equity can be re-rated. This is reflected in its
current valuation, with a market cap of A$70m, net cash on the balance
sheet, an investment in FIN.NZ worth NZ$8m and EBITDA of likely A$7.5m
resulting in c.8x trough EV/EBITDA. We see considerable scope for profit
growth beyond FY15 and are encouraged by considerable insider buying at
current prices.