If we refer back to the May 2015 Corporate Presentation, you will note that on page 4 the company highlighted $30 million replacement value for 200 Bill Payment Kiosks. We've discussed this here previously but we now know this is incorrect.
Quick calculation....
$30 million / 200 Bill Payment Kiosks = $150,000 cost per Bill Payment Machine. As we know that's grossly incorrect.
Why?
Well, if you refer to page 4 of the March 2014 Independent Research Report you will note that the research team estimate that each ATM would cost between $15k to $20k and that break even point would be between 6 and 12 months. And that's for a capital intensive ATM. E-Kiosks would be no where near that expense, in fact it would most likely be closer to 50% the cost of an ATM. I believe the $30 million replacement value is referring to entire ATM/Bill Payment Kiosk network.
What's also worth highlighting is that the $30M replacement value does not include the new 200 e-kiosk contract which was awarded 2 months post the May 2015 Corporate Presentation. Note, that contract
doubled what the company had previously achieved
over a 10 year period, so that's a tremendous increase in replacement value with just ONE contract. That last e-kiosk contract was VERY significant imo and I don't think the market has factored in its significance. What also hasn't been factored in is the value of the entire technology platform. That's where the REAL value lies. It's this platform that makes all those potential 'immense growth opportunities' (refer to Page 14 of the Corporate Presentation) that the company are actively working on & towards even remotely possible.
This is what is currently in place & ready for market...
* ATM deployment for 3 large Indian bank clients - soon 2300 ATMs.
* Bill Payment/Kiosks for 7 high profile clients - 400 machines.
Company highlighted in the May 2015 Corporate Presentation that they're rapidly approaching 100 million transactions in total per year now at an approximate average transaction fee of anywhere between $0.15c to $0.20c!
That was almost one year ago!!
Products that TSI have ready for the market:
* E-surveillance
* Power Management
* Pre-paid cards & Card Management
* POS Terminals
* Loyalty & Reward Programs
* Automated Electronic Journal (Refer to case study in the May 2015 Corporate Presentation)
* EJ pulling & Remote Screen Management (Refer to case study in the May 2015 Corporate Presentation)
* So what value can we place on the technology platform that enables bill payments?
* What value can we place on a proprietary electronic surveillance system?
* What value can we place on their proprietary solution for on site remote electricity monitoring?
* What value can we place on their card solutions, POS Terminals, Loyalty & Reward Programs, Automated Electronic Journal, EJ pulling & Remote Screen Management which apprear to be ready for market, otherwise why would they list them as 'solutions' on their website?
Ok, so now that we have that sorted what valuation can we place on TSI India's current technology platform? $30M, $50M, $100M or perhaps more?
This is the reason why I'm holding on tight to my shares. Patience is already paying off big time and remember dinner hasn't even started yet.
Tony
References:
http://www.asx.com.au/asxpdf/20150515/pdf/42yl8x4cqbsnp7.pdf
http://tsnltd.com.au/wp-content/uploads/2011/08/TSN-Research-Report-March-2014.pdf
http://www.tsiplc.com/
