Stock covered in Under the Radar Report

For those of you that go through Etrade and got the 3 month free trial of under the radar... they have covered TZL for the first time. They reckon another capital raise :-O
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TZ LIMITED Smart locker technology TZ’s technology produces “smart features” inside electronic locks which enables them to be used as security in data centres around the world, and for the online purchasing market. In any year about 150 million parcels are delivered in Australia, but TZ has gained access to much bigger markets in Asia, Europe and the US. We interviewed the company’s chairman, Mark Bouris, who is best known for his success in financial services, having sold his business Wizard Home Loans to General Electric for $500 million in 2004. We asked him why he is involved in TZ: “I’m in financial services, but the chance to take a technology, commercialise it and then turn it into an industrial company which takes multiple orders from multiple customers around the world is a once in a lifetime opportunity.” The company’s competitive edge is its “smart” locker, which was invented by Dikory Ruddock, who was a friend of Bouris and passed away from cancer. The company’s lock is used throughout the world because unlike other locks, it puts a miniature computer inside each locker. As Bouris says: “Unlike other locks it doesn’t use an electromagnetic field, it puts a circuit board right at the lock. There is intelligence right at the lock, which no one else in the world can do. It can tell the administrator if there’s gun powder in the locker; if there’s moisture; or if it’s too hot for pharmaceutical products.”

TZ’s smart locker technology is being used by government agencies, technology giants, data centre providers and big pharmaceutical companies, according to Bouris. However, as we have pointed out, it is a capital intensive business because of the working capital required and the long trial periods. Only 10% of hardware sales value support revenues and the business needs two to three years of solid sales growth before this recurring revenue can make a meaningful contribution. The company’s net cash of about $2m leads us to believe that there will be another capital raising. The big positive is the validation of its technology by Singapore Post, with which it has commenced a three year contract. n RADAR RATING: We still like the company and the story, albeit with reservations, and on the basis that the stock is only suitable for a small, speculative position, we continue to recommend it as a speculative buy. SPEC BUY