I have just started researching Tribeca and I believe it has...

I have just started researching Tribeca and I believe it has very good potential and one that the market has not fully appreciate the value of its business. Tribeca use to be an internet company, some king of online education to schools, however the company has moved away from that last year. And rightly so as that was a business like any othe tech business and was eating away cash like anything. That was the past and fortunately for Tribeca the company purchased another business more than a year ago and it is this business that I think has the potential to be a company maker. This new busines in the financial planning industry.

The financial planning

Firstly this is a growth industry with some $500billion dollars of superannuation and investment- and this will grow significantly as superannuation continues to grow. The industry is supported by financial planners who need to be educated on technical and investment matters. The planners are reliant on technical training and technical manuals/materials to keep themselves up to date to be able to service the public. It is an industry with a lot of complexities and continuous changes. Planners really must keep up to date with the technical changes. Recently the financial reform changes were brought in the planners were required to be trained to a certain standard and maintain the standard to be able to continue to deal with the public- hence more training required.

Tribeca

This company provides , and there are 3 areas of the business:

1) Technical materials, a technical software called Integratec- this is the technical bible of planners and is used on a daily basis as the fundamental research tool of planners. Tribeca has indicated that many blue chip companies use this product. There is one other product that I know of, frm CCH that might compete with this. But I have checked with planners and they prefer Integratec. The company receives a fee for the licensing of Integratec to the planners, and fee is based on per head. The software needs constant update so it means that you can just buy it once as you will need update on a monthly basis- that’s how often it can change. So this is a nice earner for the company

2) Compliance and training operation- as I mention the new law requires planners (new and old) to be trained to comply., Tribeca provides dedicated training in this area and in the first quarter as expected it has been earning substantial income. This part of operation will continue to grow and it is expected that over the next few years it will continue to be a big earner. The compliance is a big issue at the moment in the industry and a lot of money will be poured in by the industry to meet the requirements. Therefore there is a big pool of money that Tribeca can earn from here. Tribeca has online training and assessment, and also authorised courses for planners to satisfy the requirements. That includes ongoing training and from my experience training in this industry can generate significant amount of revenues.

3) Paraplanning service- this provides planners with a support service in assisting them with preparing financial plans. This I presume will be on fee for service basis. With the growth in this industry there will be more demanad for the paraplannind service.

Both 1 and 2 are definitely positive cashflows. 3 will depend how well they market the service.

Cashflow

The Sep and Dec quarters were ordinary as they were still costs from the previoyus business. The last quarte, Mar was simply great with net $1m available from operations. Company is expecting an even better June quarter, another more than a $1m positive cashflow. Company has indicated that they will excedd forecasts. I can see that trend improving over the next few years. Therefore for the next finncial year, it is then possible that compnay can generate at least $4m clear of income. If we do the numbers and based on just over 100 (I think 110million) shares in the market then potential earning per share based on $4m would be about 3.6cents per share. If we take a conservative 10times earnings, the shares should be worth about 36cents (say 40 cents ). At the moment it is only 20cents so I think the market has not appreciate this company and value.

Cash position

Currently it has some $8m in the kitty. Not many company has that. Tribeca has indicated that it is looking at potential acqusitions that may be a synergy to its businesss- so good potential on this front.

Other issues

There was an instituitional placement at 14cents recently and company has couple of institutions as major shareholders- so this is good sign. Plus I beilieve there was article in the Melb Age last week that some know individuals are in as well. And the institution will I believe soon be promoting the company.

So all in all I have summarised the main factors supporting Tribeca at about 40cents. It looks good on a short, medium and long term basis until the market realises the potential value at about 40cents. It is rare that one can find a company with cash of $8m and can generate $1m per quarter, in an industry with such great potential and products that are already working. Research yourself and have a look.

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