Your thorough research and diligence on all fronts never ceases to amaze me. I sit here thinking about everything you've written, everything you have referenced and look at my figures of base case 1.5c valuation and 2.3c valuation for cash/debt being deployed and have to agree that I am being far too conservative. I really try to find the base case valuation when I invest as I know Mr. Market can end up taking that "base case"valuation much, much, much higher.
Now, I stand corrected on a number of points, thank you for calling these out:
1 - Yes, Mobile Kiosks are now at 400 (replacement value of minimum $60M).
2 - Yes, the figure was stated to be north of $175M USD as per TSN annual report and there are several articles that had valued Prizm at between $225-250M (USD I assume) before acquisition - http://timesofindia.indiatimes.com/...vider-Prizm-Payments/articleshow/26418420.cms - second paragraph, so who knows what the real figure could be, maybe in excess of $250M USD? $300M USD? Will we ever know?
Hitachi has a market capitlisation of 3.348Trillion YEN which is $27Billion USD or $38Billion AUD. Come to think of it, for a foothold in the LARGEST emerging growing economy in the world, anywhere in upwards of $250M USD for such a tech giant would be a drop in the ocean.
3 - My wholesale cost was based on 500 ATM's also at $10M - I seem to have converted $20,000 AUD back to USD - which is circa $14,500 USD.
I agree with all of your points:
1- Winning existing bank's ATM fleets and optimizing their performance.
2 - Bill Payment Kiosk transaction revenue is increasing year on year and these are preferred products to deploy over ATM's, now that TSi has quite a solid ATM base, it really should be focused on point (1 & 3) however point 4 also has merits with existing clients.
3 - Buying existing fleets (that are potentially loss making) could be very lucrative for TSi given these fleets will probably be sold at below market rates.
4- I really would like to see contracts in excess of 500 ATM's now much like the last ATM contract we had September, 2014 - http://www.asx.com.au/asxpdf/20140911/pdf/42s4gj7hzq1nc2.pdf - 800 ATM's - 500 with TMB and 300 with PNB.
The level of comfort I have holding and gradually accumulating more TSN has increased significantly over the past 2 years. Your posts and thorough research only reinforces how conservative my own valuations of TSN are. Just on this, if you see how this stock has been sold down in the past 3 years, it was due to major shareholders - TAP Investments (2012-2013) - http://www.asx.com.au/asxpdf/20130418/pdf/42fb30p78fdvjj.pdf - , Utilico (2013-2015) - http://www.asx.com.au/asxpdf/20131114/pdf/42kv5mq9rgbkc1.pdf - who had been original shareholders when TSi was reverse merged into QED back in 2010/2011. Every time the stock rallied to 1.5c, you would have another substantial shareholder start selling - my view is they saw liquidity and felt they needed to exit their under performing investment in TSN given they had probably come into the stock initially with management at 2.25c per share and much higher at the 3c placement.
Now, if I have this right, all 3 original management should be the only top shareholders in TSN (as we've had no substantial increase since Utilico was taken out) with a total of 32.7% (1/3rd of TSN).
As I said in previous post - 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".
Tony, given how the register looks going forward, your 8c-10c valuations are fairly reasonable in my view based on your justifications and my base case valuations admittedly being very conservative.
Thank you and GLTALTH.
FTTT.
TSN Price at posting:
0.7¢ Sentiment: None Disclosure: Held
