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OVT - Ovanti Limited

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On September 25th, 2014, OMI Holdings Limited (OMI) changed its name and ASX code to iSentric Limited (ICU).


More: http://www.proactiveinvestors.com.a...ts-and-banking-technology-business-53184.html

Previous discussion of OMI Holdings can be found in the OMI thread: https://www.aussiestockforums.com/forums/showthread.php?t=300
 
ICU came to my attention recently and after initially dismissing it as a basket case based on its historical financials, I then did some more research and realised its a new company and it was more interesting than I first thought.

They operate in SE Asia,


While they are a tiny company, they do look to have fantastic growth and with no debt, cash in hand and a niche market they may just be onto something.

Its definitely a speculative play and my position size reflects that, but if they can deliver anywhere near their expectations in the next 12 months they will be basically trading with an equity valuation that is only 6-8 times earnings.
 

If you exclude the costs incurred as a result of Indonesian growth within the core iSentric business, the company trades at about 5-6 times earnings (assumes the 2.2m NPAT given for Arte Mobile is correct); and this does not take into account the ~$3m in net cash ($20m market cap currently).

Also worth noting the participation of insiders when it was spun-off from DNA and the subsequent capital raising.

Seems like a typical spin-off mispricing to me - I may be wrong though.
 

Thats similar to my calculations, I looked at a range of NPAT to try to understand worst/best case scenarios. I did subtract the cash to get EV.

I failed to mention the skin in the game of management - something I like to see.

Will be interesting to see its next financial statement, it should start to become clear whether it is a mis-pricing as we suspect, or just fluff and air!
 
Should get a quarterly statement at the end of this month. Might give a hint as to how the acquisition is progressing.
 
Klogg said:
Should get a quarterly statement at the end of this month. Might give a hint as to how the acquisition is progressing.
Click to expand...

Hard to really assess based on the statement, its not enough time to see the impacts. The accompanying notice to investors mentions Arte Mobile contributed 18% to revenue in the period, and that EBITDA was up to nearly $1/2m for the quarter.

Seems they have burnt through about half the cash reserves but that appears to be directly attibutable to the acquisition and wasnt apparent from the previous statements.

Just picked up too, there has been a payment for services via a share issue @25c, without having a chance to digest it in full, if a service provider is willing to take shares @25c when they are trading at 15c then that appears to be largely good for shareholders.

Nothing to scare the horses, full half yearly results will be the ones to check progress.
 
This reminds me a little of Smart Trans (SMA) doing something more specific with the big telcos and some game developers in China. Been doing it for a while and yet to take off albeit has shown a bit of promise lately.

Without ploughing through the prospectus I couldn't see how ICU intend to make money and what there target markets are. I will be patient and watch but will hold off on investing on this one for now. It may have a long way to go.
 
jbocker said:
Without ploughing through the prospectus I couldn't see how ICU intend to make money and what there target markets are.
Click to expand...

Having gone through all the documentation myself, I can say that the prospectus and subsequent CR documentation is really where a lot of the key information resides. Without it, you won't be able to get a full picture.
 
jbocker said:
I couldn't see how ICU intend to make money and what there target markets are.
Click to expand...

As Klogg says, also I thought the same when I first started researching it, i thought it was an absolute basket case/train wreck - typically of these spin off/reverse listing setups its easy to get distracted by the financial history of the company, which typically has nothing to do with the spin off.

It was only because the person who raised my interest into looking deeper into the company is a respected fund manager that I went back and dug deeper.

All that said its a highly speculative punt and I have not allocated much capital to it on that basis, i have seen plenty of these promise lots, burn through cash at a prodigious rate and then disappear in a puff of blue smoke!
 
The story is starting to play out with ICU, I suspect that if they can get a bit of stability in their earnings and cashflow over a few quarters then there will be a significant re-rating.

I have had a parcel in my SMSF for a while and took a small position in it as a trade in my personal portfolio. Its only the second time I have tried to make a short term trade as opposed as investing - and both took several months to get to a price where I could exit with a small profit!! I have learn my lesson and will leave trading to those better suited to it!

I will probably just hold on to both parcels as I actually see them transitioning into an investible business.
 
Current chart starting to look interesting

 
Bit more volume yesterday, but less than on previous upward legs, I entered long at 0.033

 
long time between drinks.

Are they still doing the same thing?


5 year chart:
 
Yes, nothing! I finally sold today at a significant loss. Maybe one day the business comes good, but I have better quality companies I would rather have the remaining capital invested in.
 
Padowan, if you can manage the illiquidity, it looks like something that could definitely be traded - it jumps all over the place with big daily moves.

My buy price was just so far out of reach, so no point continuing to hold when I found a new home for the capital. I should have exited as soon as it was obvious that the business had lost direction, a lesson learnt!
 
That's it for me now in ICU, sell triggered and exit taken, I will keep watching with interest and see how my alerts continue to perform in these small cap stocks such as ICU

 
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