Searching for the next ICS, page-5

Hi smallbear
I agree with those characteristics but don't find candidate businesses.! I also like financial strength - plenty of cash flow and not too much debt.

There aren't too many ICSs out there - but I keep looking..
Perhaps give some consideration to CMP - but don't expect ICS like performance/ quality.

CMP's EBITDA has growth just less than 30% pa over last 2 years and mgmt is forecasting 40% growth in 2017. Revenue growth rates are much slower, however. They have some good IP, strong balance sheet (with no net debt - and that was before last week's capital raising).

They don't have a high degree of recurring revenues (~15% IIRC), but do have some longstanding customers and impressive reference customers. They claim to be # 1, 2, or 3 in a number of large markets. That gives some surety of future revenues. It is also quite impressive for a firm most would not have heard of.

Note that their underlying numbers are better than the reported numbers suggest IMHO. This is because they have a medical innovations division which is incurring costs but producing no revs (so far). (See the business update published with the 2016 results.) If one adjust for that division - which must have option value - then on my numbers their forecast PE would be 16-19x 2017 earnings (but I have not yet adjusted my numbers for the recent equity raising, which dilutes, but hopefully enables faster growth).

On the negative side they have been listed a long time, and don't have much too show for all that time profits wise, but maybe they've finally got the model sorted now.!! On the other hand, the long track record vouches for mgmt's conduct morals wise, and their commitment to the venture. Also, The technology is a little hard for the layperson, like me, to fully fathom. Working capital mgmt is an issue worth watching.

CMP is not the next ICS, but it ticked enough boxes for me to deem them worth an investment.