Google Finance
Filing
Apr. 07, 2017
Q3 2017, year end Mar. 31
Current Price: $15.82
1.Basic Information
(1) History
This is a Quebec company founded by Jacques Grenier and 2 other people at 1996. At 2008, he was ousted and replaced by Claude Roy who borrowed $11m and put close to $30m in this company overtime. Since Roy's took over, the company improved quite well and recovered from below $2 to $20. He made several acquisitions and integrated them. The company continue to improve financially with close to $30m in EBITDA and $16m real income compared to $11m & $6.5m at 2007 before his take over.
(2) Business related:
The company owns more than 18 websites. Each is niche by size. Most of them are concentrated in Quebec and major in French. However, together they are quite profitable with 80% gross margin. It includes the following:
1) e-procurement websites: Total 7 websites. I think those might be its most profitable website. Really niche but worked well. Also some of them might be in constant decline.
2) B2B websites: Total 7 websites. Some supply chain, auto parts, wine, Jewelry etc. These probably are also very profitable.
3) Consumer: 3 websites. LesPac: kijiji in Quebec; jobboom: Monster in Quebec; reseau contact: Dating website. I feel although these are popular but generally should be much less profitable.
(3) Management.
Claude Roy is the key person. Previously he found Logibec at 1982 and grow the company through acquisition etc. It is a IT company specialized in health care. At 2010 he sold the company at over $200m. He has very good ability to made sound acquisition of IT companies and did great integration work.
As a major share holder at 2008, he intervened into the company and made quite a good turn around for the company.
(4) Debt and Credit facility.
Currently net debt $25m. Historically the company didn't carry much debt. Only use it when making acquisitions.
(5) Insider holding, options, Insider trading info, share buy back.
(7) Industry comparison.
(8) Major events
2. Financial data.
3. Valuation
(1)Current Cap is $236m. Current EV is around $260m, EBITDA is close to $29. So EV/EBITDA is around 9. Not really cheap. The company CapX includes $2m hardware + $2m software + $1m software purchase. Using $1m interest expense. Its real income is around ($29-$5-$1)*0.75= $18m. Current P/E is 13.
4. Risk
(1) It seems some of its platforms is in declining mode. Its major growth is coming from acquisition. It is hard to tell if without acquisition whether it can be profitable as it was.
(2) The 2013 acquisitions don't seem working well. The 3 consumer websites seem to face competition and Ad price has been reduced.
5. Conclusion
Overall the company was managed quite well and most the acquisition seems worked. However, the current price is not really that cheap. Hope it could be cheaper.
Claude Roy is the key person. Previously he found Logibec at 1982 and grow the company through acquisition etc. It is a IT company specialized in health care. At 2010 he sold the company at over $200m. He has very good ability to made sound acquisition of IT companies and did great integration work.
As a major share holder at 2008, he intervened into the company and made quite a good turn around for the company.
(4) Debt and Credit facility.
Currently net debt $25m. Historically the company didn't carry much debt. Only use it when making acquisitions.
(5) Insider holding, options, Insider trading info, share buy back.
Claude Roy owns over 23% of the company and keep buying the shares.
(6) Employee numbers
Currently it has 450 employees, almost the same number as 2007 which is the result of Roy's great effect to streamline the business at 2009-2010. Sales/employee is constantly improved.(6) Employee numbers
(7) Industry comparison.
(8) Major events
1) In 2010, it bought InterTrade for $8m.
2) In 2011, it bought LesPac from Yellow page for $72.5m. If compare fiscal year 2011 and year 2013, revenue increased by $14m and EBITDA increased by $10m. Although some of these might came from internal growth. Overall it seems the acquisition worked well.
3) In 2013, it bought jobboom and reseau contact for $65m in total. If compare fiscal year 2013 and 2015, revenue increased by $9m while EBITDA only increased by $2m. It seems the acquisition not working.
4) In 2016, it bought ASC(Advance Software Concept) for $18.5m. It is yet to see whether this will work out.
2) In 2011, it bought LesPac from Yellow page for $72.5m. If compare fiscal year 2011 and year 2013, revenue increased by $14m and EBITDA increased by $10m. Although some of these might came from internal growth. Overall it seems the acquisition worked well.
3) In 2013, it bought jobboom and reseau contact for $65m in total. If compare fiscal year 2013 and 2015, revenue increased by $9m while EBITDA only increased by $2m. It seems the acquisition not working.
4) In 2016, it bought ASC(Advance Software Concept) for $18.5m. It is yet to see whether this will work out.
3. Valuation
(1)Current Cap is $236m. Current EV is around $260m, EBITDA is close to $29. So EV/EBITDA is around 9. Not really cheap. The company CapX includes $2m hardware + $2m software + $1m software purchase. Using $1m interest expense. Its real income is around ($29-$5-$1)*0.75= $18m. Current P/E is 13.
4. Risk
(1) It seems some of its platforms is in declining mode. Its major growth is coming from acquisition. It is hard to tell if without acquisition whether it can be profitable as it was.
(2) The 2013 acquisitions don't seem working well. The 3 consumer websites seem to face competition and Ad price has been reduced.
5. Conclusion
Overall the company was managed quite well and most the acquisition seems worked. However, the current price is not really that cheap. Hope it could be cheaper.
6.Links
Feb. 14, 2018
Q3 2018
Price: $10.55, Cap: $157m
(1)After almost 1 year, the company turned out not doing very well. Mainly because in June 2017, it acquired a company called Orckestra for $2.2m. It generates around $1.2m/quarter revenue while incurs close $2m in expense. Added other softness, its EBITDA was down from $7.5m/quarter level to $6m/quarter level.
(2) Besides the Orckestra, it seems other businesses weren't doing great as well. However, the company still pretty stable with the new EBITDA level.
(3) Using the $6m/quarter EBITDA, its new income level is around ($24-$5-$1)*0.75= $13.5m. Current P/E is around 11 which is actually lower. However, since the income is trending down. It is very reasonable.
Aug. 21, 2018
Q1 2019
Price: $9.16, shares: 14.8m. Cap: $136.
(1) Full-year 2018 EBITDA decreased to $24.3m including $2m retention and termination fee. EBITDA for Q1 2019 further decreased to $5.3m. CapX in 2018 is around $4m. Interest expense $1m.
(2) It is hard to tell whether its EBITDA will be stable at over $5m level. It seems that it could achieve that. Based on the $20m EBITDA/year level. $4m CapX, $1m interest, 25% tax rate. It could generate ($24-$4-$1)*0.75=$11m level income. The current cap is around 12 P/E.
(3) Its book value is close to $9/share. However, mostly it is just goodwill.
Feb. 14, 2018
Q3 2018
Price: $10.55, Cap: $157m
(1)After almost 1 year, the company turned out not doing very well. Mainly because in June 2017, it acquired a company called Orckestra for $2.2m. It generates around $1.2m/quarter revenue while incurs close $2m in expense. Added other softness, its EBITDA was down from $7.5m/quarter level to $6m/quarter level.
(2) Besides the Orckestra, it seems other businesses weren't doing great as well. However, the company still pretty stable with the new EBITDA level.
(3) Using the $6m/quarter EBITDA, its new income level is around ($24-$5-$1)*0.75= $13.5m. Current P/E is around 11 which is actually lower. However, since the income is trending down. It is very reasonable.
Aug. 21, 2018
Q1 2019
Price: $9.16, shares: 14.8m. Cap: $136.
(1) Full-year 2018 EBITDA decreased to $24.3m including $2m retention and termination fee. EBITDA for Q1 2019 further decreased to $5.3m. CapX in 2018 is around $4m. Interest expense $1m.
(2) It is hard to tell whether its EBITDA will be stable at over $5m level. It seems that it could achieve that. Based on the $20m EBITDA/year level. $4m CapX, $1m interest, 25% tax rate. It could generate ($24-$4-$1)*0.75=$11m level income. The current cap is around 12 P/E.
(3) Its book value is close to $9/share. However, mostly it is just goodwill.
