Article from David Haselhurst who writes a column in the Bulletin
A US market listing and interest from top engineering companies is set to boost by 10 times the share price of our industrial fastener punt.
Of all the stocks held in our portfolio, the one destined to be the biggest winner in the coming new year will be TZ, developer of smart fasteners with a wide range of applications in 21st-century industry.
Sources close to the company suggest its share price could be as much as 10 times greater than the present price of around $2.50 when the company meets its targeted NASDAQ listing in the US by the second quarter of calendar 2008. Credit Suisse of New York will underwrite a new issue based on a multiple of 15 times estimated 2008-09 earnings.
Although no such estimate has been released as yet, informed sources are confident about the future share price projection. In March of this year, TZ estimated the fasteners market had the potential to generate more than $US250m in revenue over the aviation, automotive, industrial and security sectors in the next few years. In September, this estimate was boosted to $US370m by 2011, with the industrial sector estimate split to add defence and ground transportation applications.
The Speculator first bought into TZ in mid-2004 ( B, 25/5) after it raised $US12m to move from Australia to Chicago. The company then held patents for technology aimed at eliminating manual tools such as screwdrivers, spanners and even robotic welders used to fasten together components on assembly lines or building sites. Instead, fasteners embedded with microprocessors enable remote locking and unlocking of components.
TZ then formed a technology partnership with Textron Fastening Systems, whereby the Australian company would receive a royalty stream from the US partners as it commercialised the technology under the brand name Intevia. But in late 2005, Acument Global Technologies acquired Textron Fastening. After many months of negotiations, TZ was able to buy back the world licensing rights to its Intevia technology for $US20m in shares issued at $1.27, or twice their sale price on the ASX at the end of January 2007.
In March, the shares were consolidated five-to-one in preparation for the future NASDAQ listing. TZ now has 38.7 million issued shares, of which Acument holds nearly 9%.
The reorganisation of the past 18 months affected the company, with revenue in the 12 months to June 30 totalling $15.8m (down from $20.8m) and a year's loss of $10.8m (previously $592,000). Now, however, the company will benefit 100% from future sales to emerge in the current year instead of a mere royalty stream. Of 37 potential customers identified in March, eight have signed up as "early adopter customers" and another four are about to do so. They include BAE Systems, Boeing, Airbus and leading auto component makers