Hi team TSN,
Have been watching your commentary from afar and enjoy reading everyone's posts. Thank you all for the informative nature of them, brilliant work by the key team, you know who you are.
Ok, very interesting find there Marty, and obviously Tony raised this point yesterday (
http://hotcopper.com.au/threads/wha...694885/page-126?post_id=20801663#.WDVME_l97RY) but it doesn't appear to have had much traction, so let me go into a bit of detail now, before I put the kids to bed.
You may be interested to note that the acquisition also came with about $53M of debt, so add that to the total amount (on an enterprise basis) and you're looking at $510M USD full value (or $685M AUD) - and for 25,000 ATM's. Correct me if i am wrong on the debt and if it is already included in the $460M.
Here's a link to one of the articles -
http://www.reuters.com/article/us-directcashpayments-m-a-cardtronics-idUSKCN1231GO
Also, it is worth noting that Cardtronics is listed on the NYSE and is currently at $50 per share or $2.26 billion market cap ($3.04 billion AUD). So they are clearly a large player who have just opened up another international market in Asiapac - get where I am going here?
Onto TSN/TSi:
1. TSi currently owns/operates/manages roughly 15,000 ATM's
2. TSi is currently in discussions for another 10,000+ ATM's (2,000 public sector and 8,000+ potenial management buy out) as per recent operations update -
http://www.asx.com.au/asxpdf/20161111/pdf/43ctfkyw4qsvtl.pdf
3. TSi is also in the process of potentially rolling out another 8,950 ATM's as part of the SREI deal and if that deal is successful, TSi will no doubt have the opportunity to be an exclusive WLA operator for SREI inside their rural centres (of which SREI currently own 50,000+). Has anyone even thought about the potential of there being more than 1 ATM in each centre? Maybe Tony has touched on this point previously.
4. TSN is currently capitalised at $58.35M at 3.1 cents per share, with 1940M shares on issue.
5. TSN is in the process of acquiring the balance of TSi from CX for $47.7M - we aren't yet sure of where the funding will be coming from - mostly equity? Mostly debt? I can't answer that.
6. Therefore total valuation of TSN = $106M (minus any cash sitting in TSN and TSi)
7. Gary Foster owns just under 10% of TSN, Paul Boyatzis owns around 7% of TSN; and if the acquisition of TSi is completed successfully, Mohnish (CEO) and Deepak (CFO) of TSi will have roughly 7% of straight equity and 8% of performance equity in TSN, based on meeting and exceeding key KPI's. Therefore, you will end up with key management owning 20%+ of this beast.
Now based on above information on Cardtronics paying $685M for DirectCash Payments for 25,000 ATM's, if this particular transaction is to now set the benchmark (previously Hitachi buying Prism for $250M USD back in 2013 with 8,000 ATM's), then that is pretty much valuing TSi with a current fleet of owned and managed ATM's of 15,000 in the vicinity of $547M AUD.
Where does $547M put us share price wise? Around 28 cents! Pretty crazy stuff right? But is it?
That is just on current our current fleet of 15,000 ATM's. Don't forget that the Mphasis platform can support 50,000+ ATM's currently. I understand that this figure may potentially grow to 200,000 -
http://www.asx.com.au/asxpdf/20160808/pdf/4394wpqqhsjt1y.pdf (page 5).
That 28 cent figure doesn't even include the pipeline of 10,000+, nor does it include the 8,950 "cost plus" roll-out with SREI, nor does it include any extra ATM roll-outs with SREI in their rural centres - just check out how many centres these guys have, all of which may require multiple ATM's on site -
https://www.srei.com/companies/srei-initiative/sahaj-e-village-limited
Nor does this valuation include any upside from other business lines including e-surveillance, power management, maintenance.
Nor does it include the potential first mover advantage opportunity for UPI, which may lead to replication across 26+ banking clients nor the RAAS (reconciliation as a service), which may also be replicated with same baniing clients nor the BBP (Bharat Bill Pay) -
http://www.asx.com.au/asxpdf/20160808/pdf/4394wpqqhsjt1y.pdf (page 13).
And as Marty has touched on, we only need SREI to go ahead with the balance of the 9,000 WLA deal and we will be at 25,000 ATM's. Pretty impressive isn't it?
Don't forget, SREI has the money not only to assist with the 8,950 WLA roll-out, but to assist with further roll-outs at their centres. And that is just one JV partner. Who knows who else is knocking on TSi's door.
As TenX says - HOLD ONTO YOUR SHARES.
FTTT.
