An in-depth look at iSentia

16 Comments

1. 

   CHI KIN
   November 17, 2016 at 6:18 pm:

   I read this article few months ago. I like what you’d written Scott. But, I guess at the end of the day the market never lies, the trend of this stock is broke and this stock is destined to fail after today announcement. Is Montgomery fund still holding any shares in Isentia?

   • 

     Scott Shuttleworth
     November 18, 2016 at 12:33 pm:

     Hi Chi, thanks for your comment.

     Yes the Montgomery Fund does still hold a position in ISD. Our analysis incorporates lesser a focus on the general direction of the share price at any particular point in time and more so on the underlying business units.

     Notably, the announcement was in relation to a business unit which only comprised 7% of the firms FY16 EBITDA. We hadn’t had high hopes for this part of the business for several reasons.

     Management did confirm that the SaaS/VAS business segments were on track and that’s where we believe the firms intrinsic value lies.

     All the best

     • 

       Kelvin Ng
       November 18, 2016 at 12:37 pm:

       Hi Scott, yes I agree. I think ISD is a screaming buy at these prices.
       Kelvin

2. 

   MOhsen Haji
   July 26, 2016 at 2:16 pm:

   Hi Scott,

   Thank you for your depth in-look article. I was wondering if you could tell me when and how much Montgomery fund bought this share?
   Regards

3. 

   Graeme
   July 19, 2016 at 11:50 am:

   Great work Scott ISD is bouncing hard of the 3.05 low

   It would surely have to be one of the highest quality companies listed on the ASX .

   Any other countries on the radar for ISD to expand into ?

   • 

     Scott Shuttleworth
     July 19, 2016 at 11:54 am:

     Cheers Graeme,

     Anything’s a possibility, however ex-APAC I’d wonder if they’d run into some strong moats setup by the local incumbents in those regions.

4. 

   Arthur
   July 19, 2016 at 9:41 am:

   Thank you for the article, very informative and a great read.

5. 

   Nervous
   July 18, 2016 at 7:21 pm:

   Hi,

   Those arguments sound reasonable, however in terms of us coming up with a valuation, I take it we ought to revert to Skaffold. Can you explain why Skaffold values ISD at $1.88, $2.20 and $2.56 for 2016, 2017 and 2018 respectively?

   Thanks, Nervous.

   • 

     Scott Shuttleworth
     July 19, 2016 at 10:40 am:

     Hi Nervous,

     Skaffold is using market consensus analyst estimates of return on equity/growth whereas we’ve formed our own internally. These won’t show up in Skaffold.

     To come up with a valuation, break the business down into it’s segments (ANZ & Asia, then by product type, you can find these splits in the financial statement/investor presentations), then break those down into client numbers and derive the average revenue per client.

     If you can dedicate ample time to the task, you can then research the company and derive some reasonable estimates as to how those numbers will move in the future.

     Now that’s just revenue, you’d then need to break down operating expenditures and apply a similar thought process.

     And of course, consider what might happen if your forecast is wrong/why it could be wrong.

6. 

   rob barnett
   July 18, 2016 at 10:43 am:

   Scott,
   Congratulations on an excellent piece. In your opinion what is your estimate for the compound growth rate in sales from the Asian division during the high growth phase? What levels of capital do you expect will be reinvested to achieve these numbers?
   Many thanks & best regards. Rob

   • 

     Scott Shuttleworth
     July 18, 2016 at 12:14 pm:

     Thanks Rob appreciate it.

     Probably best for us not to release revenue CAGR’s & capex numbers. Some investors might get anchored to those numbers and we’re not in a position to provide updates as new information comes in.

     Also, you may do better forming your own estimate :)

     All the best.

7. 

   Andrew
   July 18, 2016 at 9:07 am:

   Great work thanks Scott. If this depth of analysis is what underpins all of TMF’s positions, then that vindicates my own decision to double my position with TMF & leave this stuff to you guys rather than trying to be the world’s expert on everything. Keep up the good work!

8. 

   Graeme
   July 17, 2016 at 5:25 pm:

   This is a great business which seems to be too cheap to be true

9. 

   Nathan Arnold
   July 16, 2016 at 7:32 pm:

   Great article Scott. These condensed investment theses are a fantastic resource for those learning to invest.

10. 

    Greg Scott
    July 15, 2016 at 5:34 pm:

    Excellent article, thanks Scott.
    However, I am wondering whether ISentia’s labour based data collection system can be replaced with a ” robot”? It seems to me that all the content is available electronically, and that it would not be too hard for a competitor to develop a smart/artificially intelligent computer program to sift the data and produce reports at a significantly cheaper operating cost.
    Do you have any thoughts on this issue?
    Thanks, Greg

    • 

      Scott Shuttleworth
      July 15, 2016 at 5:46 pm:

      Hi Greg, excellent question.

      It’s been tried, but it’s very hard to do. Keeping in mind that a lot of ISD’s processed are executed by robots/algorithms currently. The robots do a lot of the initial sifting works whilst the human element confirms the relevance/prepares executives summaries of the information.