ITD - ITL Health Group

hahaha guess what my wish come true, founder release some share to a fund manager
ASX announcement just release then

now to bring on some good people to juice up this business and we all set

 

must be your xmas present ROE!

 

ROE did you average down during this period?

 

Yes I did I enter in 20s some years ago and still holding, as a long term investor I average down and up depending how I see the business fairing.

 

Alright time to show its magic, debt down profit double

ITL Limited (“ITL”), an innovative diversified healthcare company, is pleased to announce excellent results for the half year ended 31 December 2016 compared with the previous corresponding period. Highlights
● Profit after tax of $2.12m (Dec 2015: $1.04m; up 104%);
● Earnings per share of 2.2 cents (Dec 2015: 1.2 cents; up 83%);
● Revenue of $17.5m (Dec 2015: $15.7m; up 11%);
● Profit before tax of $2.12m (Dec 2015: $1.01m; up 110%);
● EBITDA was $2.7m (Dec 2015: $1.6m; up 69%);
● Net Debt $5.0m (Jun 2016: $5.5m; down 9%);

 

Looks great Roe, I havent had time to look through the details but I have continued to have confidence in ITL management to turn the ship around and its good to see the results paying off. I spent a while in the red with ITL, nicely in profit these days!

 

This is all you need to know
Margin improvement and growing revenue a mother of all combo

 

Mr Market appears to agree!

 

Had a brief look at the report.

I'm not an owner, but I would be keeping a close eye on the accounting treatment of the R & D and depreciable assets.

It's only minor at this stage, but intangible assets and depreciable assets have both increased, but there's only a slight increased in D & A.

Cash flow and accounting earnings will always be different here.

Earnings also look a bit cyclical to me.

 

To be fair, you probably have to look a bit deeper than that to understand the story and see where ITL have been going the last few years. As I said I havent had time to go through the report in detail, but this payoff for management is not unexpected.

 

Well, it's a company that develops and designs medical products. As far as I know they are nearing 100 patents now.

My comment reflects the fact that these patents and the underlying products or devices that they cover have life-cycles. The nature of the industry is that there is always something better coming along so the earnings streams of a product are unpredictable. There's a constant need for R & D and earnings will fluctuate as the underlying products grow, stall, decline (etc.) throughout their own product life cycles. That's just the nature of medical innovation companies IMO.

I'm not saying it's a bad thing - it doesn't have to be - it just makes it harder to value the company. It also increases the Key Person risk because you need good management at all times.

Also refer above comments re D & A. There's an argument that they should all be expensed due to the future uncertainty that is inherent in medical product innovation.

 

Feel like I missed the boat on this one. Was looking around when I first posted but it's jumped a bit since then. On to the next!

 

Very much appreciate your expanding on your initial comments - this sort of feedback and discussion is one of the things that makes ASF stand out from the rest.

I agree that a higher margin of safety comes into play for the reasons you postulate -and probably sensible to keep a close watch on these sort of businesses to ensure there isnt material change that gets overlooked in the longer term.

Interesting point on the R&D & D&A.

 

I don't think so, I think the business has been dormant for a while with sourcing and building new products and infrastructure but now it start to pay off, I can see many years of growth ahead

The market didn't appreciate when it building and moving new plants in Malaysia for future capacity, now it starts to pay the dividend.

 

https://boardroom.media/broadcast/?refid=&eid=58a656ae196ffa2970ec87c9

Good run down on the business for new investor

 

Interesting write up popped into my feed today,

https://www.livewiremarkets.com/wires/35324

 

SP dropped quite a bit on the release of the HY report, its not easy to work out what is going on because of the effects of the sale of it Australia Customer Pack division and the soft half for the continuing operations. Net cash position has improved and 13% of shares have been bought back.

I am considering adding to my current position at these prices, but I just have to find a bit more confidence in what the continuing business is going to perform like.

 

Read the report in more detail and this is a disaster unfolding. No one predicted such a massive fall in profit. Basically having divested the Australia Customer Pack division, the remaining business is no longer profitable. This was not the outcome I or others expected, I had calculated a fall in EPS of around 30% with the divestment and expected the profit from the sale to be used to payoff the remaining debt and leave a strong cash position. I went from considering averaging down yesterday to changing my mind last night and selling out this morning. I basically broke even plus the dividends.

I will continue to watch in case they can make a profitable business from the remains, but I expect the SP to drift down into the 20c range in the mean time.

 

ITD wants to delist. It was 15 cents before opening. I do not hold. I never had the intention to hold. Does anyone think they have valid reasons to delist? They will still operate as normal. Liquidity of their shares is very low to them and it is way under valued. Well, that’s they said in their announcement. I don’t know ITD well enough to make a serious comment. Sorry.