Hello all, I haven't posted my thoughts on this one for some time, but thought now is better time than any given the recent high volumes, price action in share price, Utilico share sale and recent news.
TSN. Currently worth $12.5M at 0.7c per share.
$2m cash.
Cash burn sub-$100,000 per qtr.
Seeking value add opportunities with advanced due diligence being conducted - as per operations update yesterday - http://www.asx.com.au/asxpdf/20151023/pdf/4329zc2b77gtlw.pdf - page 1.
Currently holds a 25% interest in TSi.
TSi. Currently worth $101.85M (as a private business).
Evaluating growth opportunites given its strong cash position - let's say circa $10M USD ($13.850M).
200 Mobile Kiosks with replacement value of $30M - TSN May, 2015 presentation - http://www.asx.com.au/asxpdf/20150515/pdf/42yl8x4cqbsnp7.pdf - page 4.
As per April operations update TSi had 1,800 ATM's and taking into account yesterday's operations update - with a focus on "re-positioning under-performing assets" (let's say that reducing the fleet by circa 200) - as Tony has previously suggested TSi put on roughly 100 per month which would be 600 (since April) minus 200 for the under-performing assets, we could safely say that TSi is sitting around 2,000 ATM's - base case.
Based on Hitachi purchase of Prizm in 2013 - http://timesofindia.indiatimes.com/...vider-Prizm-Payments/articleshow/26418420.cms - (which had 8,000 ATM's at time of purchase): $170M USD was the suggested figure - page 4 TSN annual report -http://www.asx.com.au/asxpdf/20150731/pdf/4306zrxry6xmb1.pdf - divide by 8,000 - $21,250 USD per ATM.
Now let's convert to AUD = $29,431 per ATM.
TSi current fleet of 2,000 ATM's * $29,431 = $58M.
$58M (ATM's) + $30M (Mobile Kiosks) + $13.85M (Cash) =
$101.85M.
TSN share of TSi (25%) = $25.5M.
TSN + $2M cash.
Valuation as is = $27.5M (or 1.5c per share) just on TSi as is + existing cash in TSN.
Let's say "hypothetically" TSi use existing cash to tender for a large ATM deal in the circa 1,000-2,000 range,
you would get instant valuation uplift as existing cash reserves can be deployed straight into commissioning the new machines. $13.85M - 1,000 machines can be deployed instantly at a cost of $13,000-$14,000 per machine - 1,000 * $29,431 = $29.5M.
I believe TSi also has access to $18M AUD in draw down facility, which could add a further 1,285 machines.
That's a further 2,285 machines that can be deployed almost instantly.
That's a further $67.25M valuation uplift minus debt draw down of $18M = $49.25M.
Valuation instantly changes to $155.25M for TSi.
TSN share of TSi = $38.8125M + $2m cash = $40.8125M or 2.3c per share.
Pure valuation metrics on cash/debt being deployed only.
Therefore it is in my view:
1 - current valuation of TSN = 1.5c.
2 - valuation based on existing cash and draw down facility being used = 2.5c.
Also, THERE IS NO "BLUE-SKY" priced into my valuation, be that in TSN (with any value add opportunities) nor is there anything priced in with potential IPO of TSi which would probably see much more than the $170M/$29,431 - Prizim figures I used before.
I feel very comfortable holding this stock, even more now than ever given Utilico has exited and stopped suppressing the price - you could see even recently when the company announced a further 200 Mobile Kiosks were won 1/07/2015 that Utilico put a lid on the stock price at 0.5/0.6c.
I believe that when a major announcement is made on either TSi selective growth opportunities or TSN value add opportunity for Australian/Asian expansion, we will see a significant lift in the share price, as Tony says ït's only a matter of time".
GLTALTH - Good Luck To All Long Term Holders.
FTTT.
TSN Price at posting:
0.7¢ Sentiment: None Disclosure: Held
