As always @blueballs , thanks for sharing... had a real interest in this so did my own review. Quite like it and this is a solid business with significant revenue already. If OMBB offer this, then I will be asking for an allocation:
Stock: Go2 People Lead Brokers: JB Advisory (Zoono, Wattle Health) Offer Dates: Open 15th August – 8th Sept Shares on offer: 50m – 60m @ $0.2 ($10m – 12m) Underwritten: No Total Shares: 127.83m (on full subscription) Escrow: 65.3m for 24 months (about 84%) Market Cap: 25.56m Enterprise Value: 17.5m P/E: N/A Options: 15mil ranging from 22.5, 30c, 40c (majority at the higher levels) Seed/Pre-IPO: 15c (500k) Dividend: N/A
Business Overview: Incorporated in 2016, the company provides labour and building hire services to clients in Australia. The labour hire division is by far the largest proportion of the business at this stage. To boost the building division, they will acquire 2 more companies once listed on the ASX. It needs to be noted that the top 10 clients bring in a majority of the business.
Competition: Major competitors to the Labour Hire Division include Programmed, Workforce International, Workpac, Protech, AWX and Final Trim Operators.
Major competitors in the building area are the builders specialising in the rapid, light weight and prefabricated building sector, other smaller traditional builders of affordable homes, and the mining contractors specialising in accommodation and mine site buildings.
Finances: Still trying to get my head around page 70, but revenue is choppy due to the industries they are serving. I would be thinking that we may be on an upside here. I was worried about a drop for the financial year finished but this was stated in their notes “Although revenue for the 10-month period to 30 April 2017 has decreased by 19.09%, as compared to 30 April 2016, there has been a large increase in the 4-month period 1 January 2017 to 30 April
2017, where $12.36 million of revenue was reported, as compared to $7.9 million of revenue for the corresponding period (+56%). This increase is due to the increased works in the construction sectors in both Western Australia and Queensland and a refocus in Western Australia on business development. Two new roles were created to focus on business development which has provided immediate results.”
Will most likely generate a loss this year but would not be surprised if they turn it around within a year and possibly make a profit again. Plenty of cash on the runway if they get maximum funds.
Management: Not too many of them which keeps costs down and certainly seem to have reasonable industry experience. Managing director will hold like 20% of the company and on a salary of around 300k which is very reasonable.
Other matters of interest: While the
How will capital be used: Reduce ATO debt 29%, Working Capital 36%, Labour Hire 17%, Offer 9%, Bus Dev & Marketing 9%
Thoughts on the business: Overall it is a very solid business with strong revenues. Would have expected a better profit and margin for such a mature business. The labour hire industry is massive (~$20B) in revenue but growth year on year is low, so Go2 will have to work out how to be the provider of choice, especially in states where they do not have a significant share (eg. WA). Massive opportunity to grow into areas other than their current industries (eg. IT, healthcare)
One thing I do not like is that Go2 pays their employees/contractors before receiving the cash from the hirer (up to 45 days). Hence if a customer does go broke, they will not only lose the future business but will be out of pocket potentially for the time their staff were hired out. 290k has already been written off due to once business going into receivership.
Overall this is a solid business where if they are able to grow the business where they have little saturation or into new areas it could do very well. OMBB will hopefully be offering this so I will be putting in an offer.
