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ITD - ITL Health Group

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ITD - another VSL? What do you think guys? This minnow has had many buy recommendations (on their website). IMO has been run well by the mgmt.
 
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Im surprised no one has yet to write anything about this little stock. Maybe theres something I dont know thats going on?

I brought in today at 0.50 I think I got jipped considering it went to 0.475 and an ask of 0.48, but I had to rush and I didnt want to miss today's opportunity. I think I had an okay buy at 0.50 and my stop loss is at 0.45

A little information about the company.

ITD - ITL Limited

GICS Industry Group:
Health Care Equipment & Services

Principal Activity
Development and commercialisation of intellectual property relating to innovative medical devices; manufacture, distribution and sale of medical devices; manufacture, distribution and sale of procedure packs; and sale and service of medical equipment and instruments.

SHARE MARKET DATA:
as at 22/05/2007
Market Cap $60m
Last Close 0.49
Total Shares Quoted 123.2m

OTHER

06 Operating Cashflow: 5 million
06 NI: 3 million

Red flags -

Capital Raising (I dont like capital raisings, it means then ran out of money);
MD William Mobbs sells ~1 million shares (reducing voting power by 3% to 19%)
 
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anyone still in this stock. this has turned out to be a real shooting star for me - down more than 30% in less than 2 months. Maybe it is oversold as IMO they still have a strong business case with very good products and good customers.
 
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i was on a handsome profit until 3 months back when the sp went pear shaped and has been downhills since. the company's plain unluckyor is it bad mgmt. seems from the latest ann the this year will be difficult :banghead:
wish i had known about stop loss then...am feeling really sh1t :banghead:
 

ROE

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ITL Limited (ITD) is involved in development, manufacture, distribution and sale of innovative medical devices, medical procedure packs and medical instruments for the human and animal global healthcare markets. ITD’s core strategic business units are Innovative Products Group and Healthcare Australia.
http://www.itl-limited.com/

Disc: Holding
 
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It is small, obscure, doesn't talk much, and used to be very ugly. Love at first sight for me.

After listing in 2000, it implemented a "Growth by Diversification" strategy that was supposed to lead to great profits and revenue stability. As much as they hoped for the best, the strategy worked as it usually does - some evidence of success at first, followed by years of massive write downs and restructuring charges.

By last year, they've written down all of goodwill and sold off all of their poor performing business and are now left with something I really like. They spend money on R&D to create innovative healthcare products, then manufacture them in Malaysia and sell them. Mostly in Australia and US.

They now have ROC of over 20%, original owners in place with substantial share holdings, little debt. So it ticks all my boxes.

They've recently become an approved supplier to NSW public hospitals, although it is difficult to predict what kind of contracts they may get out of it. They are certainly preparing for an increase in volumes however, buying a bigger manufacturing facility in Malaysia and organising funding for an expected increase in working capital.

They have two main segments:
1. Healthcare Australia which manufactures procedure packs and various kits.
2. Innovative products group which invents, manufactures and sells a range of biological safety sampling devices.

A share buyback has been of great benefit to shareholders, they already bought back almost 30% of shares and are planning to buy back 10% more next year. This year, EPS has improved despite lower profit, as a result of the buy back. Their dividend payout is a healthy 4.2% at the current price. Obviously without the buyback, this could be substantially higher.

My main concern at this time was two founding directors selling rather large parcels of shares. They've been doing it on market, at the time that on market buy back was happening. I imagine there woldn't have been enough liquidity otherwise to sell off 2 million+ shares. But the optimist in me says that:
a) they might want to partially cash out not that the share price has started to recover. Their salaries are not excessive.
b) they have a choice of taking some of their renumeration either in cash or shares. Provided that they think share price will go up, it is better to get shares and sell them later. Looking at the annual report, they have, in fact, taken up the shares option. William Mobbs has taken up about 2 million shares, roughly the number that he subsequently sold.

Innovative Products generate 38% of sales, but are responsible for 66% of profits. It is also where growth potential would be, aside from the population getting older argument. Being R&D reliant, it may well fluctuate greatly in the future.

Price looks very attractive at the moment, especially when looking at the cash flow. A discount must be made, however, due to the fact that their profit was boosted by $0.7m this year, as they didn't need to pay tax (due to prior losses).

I am very tempted, but at the current price, there isn't quite enough margin of safety for me.
 

galumay

learner
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I bought in this week, I agree with KTP's research, its definitely on the riskier end of my investment portfolio but within the boundaries I have set myself.
 

ROE

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I am very tempted, but at the current price, there isn't quite enough margin of safety for me.
If you like a business but think it isn't cheap enough or think it wont drop or whatever reason
you can always take say 30% allocated position in case the upside turns and average down the 70% if it drop to

your buying price..you covered with the upside but the down side you buying average down so it be fairly close to your target price :)

- - - Updated - - -

I bought in this week, I agree with KTP's research, its definitely on the riskier end of my investment portfolio but within the boundaries I have set myself.
I always play down this end as long as they has little debt, reasonable cash flow, the risk adjusted return if spread out to say 10-15 stocks will be probably better than higher cap stocks...

So far most of the debt free small caps business I got in, none fall over most went up a lot :) and the sweetener will be the future dividend based on initial purchase price ... far far more than any banks or high risk bond paying you
 
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Innovative Products generate 38% of sales, but are responsible for 66% of profits. It is also where growth potential would be, aside from the population getting older argument. Being R&D reliant, it may well fluctuate greatly in the future.
Hey KYP

You said this division that invents stuff is where the growth is coming from. I'm trying to see where the R&D spend is?:confused:

I love free growth, don't get me wrong!:)
 
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If you like a business but think it isn't cheap enough or think it wont drop or whatever reason
you can always take say 30% allocated position in case the upside turns and average down the 70% if it drop to

your buying price..you covered with the upside but the down side you buying average down so it be fairly close to your target price :)
An excellent suggestion, thank you. My position is quite small, but I think this will be a $30 brokerage well spent in many cases.


I always play down this end as long as they has little debt, reasonable cash flow, the risk adjusted return if spread out to say 10-15 stocks will be probably better than higher cap stocks...

So far most of the debt free small caps business I got in, none fall over most went up a lot :) and the sweetener will be the future dividend based on initial purchase price ... far far more than any banks or high risk bond paying you
Same here. It's not just the better averaged out return that attracts me either. Every now and then there's a small cap that will appreciate 100 fold or more. There's no way to predict which one it is, but by owning a few, you may eventually get lucky, if you stay in the game long enough.

Hey KYP

You said this division that invents stuff is where the growth is coming from. I'm trying to see where the R&D spend is?:confused:

I love free growth, don't get me wrong!:)
Hi McLovin,

They are expensing their R&D, until, quoting from report: "technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably." I couldn't find how much they spent on R&D either.

My comment, was, however a general observation, not anything specific the company is currently working on. I am not pricing them for above average growth at the moment.
 
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Anyone in this one? It's trading at barely 12x P/E. Fundamentally it looks like a solid company though. Thoughts?
 

galumay

learner
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Read the thread, there is some pretty good and recent analysis above. I currently hold ITD.
 

galumay

learner
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A very solid result for the half year, revenue up 9%, profit up 34%, some caution around 2nd half results due to impact of high inventory levels and the effect of the move to the new premises. I like the cautious, understated manner of management in this company. It contiues to perform steadily and hopefully the market will start to show a little more interest!
 
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Anyone still holding these guys? Really lightly traded stock, but I do like the story and their recent AGM seemed pretty upbeat.
 

ROE

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I still do and actually increase a fair bit more when it trades around 18c
 

galumay

learner
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Yep, still holding. In hindsight I got in a bit early a few years ago, but the story continues, divvies add up, and the price is now heading in the right direction as it gets rerated. Happy to continue to hold.
 

ROE

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I post on hotcopper, this business has good product mix it just a bit boring and they need some new blood to market it and get the investment community noticing it, also the founder hold a lot of shares
he could help the liquidity by courting some institution to take some of his hand.

but hopefully growth phase will start next year and beyond and the market will get to know more of it soon enough.
 
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Well it's jumped twice in the last 2 days so maybe you did the trick ROE
 
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