IMS (ASX) MBE Oversold

Originally posted by Rokewa ↑

DollarDan

We are on the same page in terms of the way forward, in order to get the business back on track.
You mention the CBA loan not being current. I think we are dealing with a facility (revolving) opposed to a loan, where there would be start and end date. If this is the case, it begs the question whether CBA, who recently departed from their register at significant cost, will review the extent of the facility. Rightly or wrongly, I believe the red flags will be waving in the corridors of CBA.

Come financials release time (I think week after next), the challenge will be to accurately assess their 'free cash' situation. An update on the litigation is equally important. Many people seem to dismiss this because the Company have said there are no grounds for the claim. The counter is 'well what do you expect them to say'. My red flag on this stems from the CR back in June 2016. After lot's of comment on the placement excluding the little retail investors, they then advise about the SPP, with a limit of $3.5 m. Coincidence that this is the exact extent of the litigation claim ?

Agree expenses should reduce with reduced activity, but suspect there may be a timelag. Also need to consider costs associated with downsizing and of course any impairments will hurt the bottom line.

Hard to believe that this Company, which appeared to be breeding 'success', is now firmly on the back foot with it all to do in terms of a recovery.

Have a great weekend
Rokewa

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Hi mate,

Agree with a lot of your points.

CBA facility- my comments regarding this were to address short term WC concerns. I guessed it was a standard line of credit and related to the receivables due, past 90 days (standard telco practice). I can't see how it's an issue - they are first in line and it simply bridges a gap. No change here.

The update is bad, it's even worse for holders pre feb 7th.

But for someone that actually wants a part of the business, and exposure to the mobile trend, 7c or sub $30m is attractive for the core business regardless of the FY17 result.

There's a few things to tidy up. But they are not deal breakers.

Employee costs were 21% of sales FY16 and marketing 30%.
Marketing as a % of sales has obviously blown out and has been addressed, hopefully they address staff costs etc before looking to the market to cover any speed bumps, otherwise the aggressive way that they entered the new markets starts to look a bit irresponsible.

Collect subscription monies, push growth in responsive areas and manage that cash like there's no more, pretty much as flagged in the update.

Anyway, I feel for long termers. Good luck