Questions, page-3

Thanks Trumpy,

I did read the below posts however to me i'm still not convinced that the revenue stream (short duration (2-3 years) / not passive / relationship based) of asset brokers is a good one for a roll-up strategy.  So when WAM says "The asset finance brokerage industry is similar to the mortgage brokerage industry which has grown substantially over the last 10 years."   I agree the industry might have grown but I dont think the revenue stream is that similar at all.  I think I read on another thread that the major shareholder NAOAS (who is still buying) said the same thing i.e. they like the roll-up side of the business because they think its similar to the mortgage broking industry and has commissions inbuilt. Perhaps I am misquoting them.

Regarding the NAOS comments below re: that the purchase of the broking businesses will contribute to substantially higher leasing volumes do you have any insight into this?  I can see how this investment thesis would work as the profitability on the leasing book is very high and the growth appears strong (however I still dont know how sustainable the growth is which is a function of me not understanding what our product is and why volumes have increased a lot into it recently).


Largest finance broker in the market at half intrinsic value
Ben Rundle, Portfolio Manager, NAOS Asset Management
Armidale Investment Corp, which is building a major asset finance business, represents compelling value at current levels. Over the past 2.5 years it has grown the equipment rental-leasing book from $30m to $85m. Recently the company announced 2 acquisitions in the finance broking space, which will make AIK the largest broker in the market by a considerable margin. We think this will result in more of the $3 billion that AIK writes in leases will flow through to their rental-leasing book. If we use book value of the leases and then apply an average multiple of competitors on the earnings from the broking business we arrive at a valuation of $0.35 versus the last traded price of $0.14.