Google Finance
Filing
July 14, 2017
Q2 2017, Year end Oct. 31
Current Price: $0.79, Cap: $24m
1.Basic Information
(1) History
The company previously was called CencoTech, was created at 1997 by Barry Spark as an acquisition vehicle. It was traded on Alberta Exchange from 1997 and moved to CVE at 1999. At 1998 it acquired the NamSys which is founded by John Siemens??. At the purchase time, Barry controls 32% and John control 24% of the total shares.
The company is main product is cash and deposit management software for banks. It has several products which works for different parts of the cash circle. It also sell some ATM like hardware. At the beginning, its revenue is on software license. Its revenue grew from $1m at 1998 to over $3.7m at 2002. Then fall down to $1m to 2007. After that, revenue stuck the same level for main years. Also the revenue is not much, the company was able to stay profitable since 2010.
Since 2008, it branded its service system as Device Dashbroad Service. The service revenue grew from $0.4m at 2008 to $0.8m at 2013.
At 2012, it discontinued its hardware related business.
Since 2013, it starts to offer its software as SaaS(software as a service). Late branded it as Cirreon. It seems doing quite well and be able to grow service revenue from $0.8m at 2013 to $1.7m at 2016.
(2) Business related:
Currency Controller: This is a software system that is used in cash circle. Still its main software revenue source, which might account 30%.
SaaS: This is the service it offered, it should include the Currency controller and some others together as a service. Currently around 70% of the revenue is from the SaaS part.
"ATM": The ATM style hardware to handle check or dispense coins etc. The margins are much lower than software. Discontinued at 2012.
Gross margin is above 70% and EBIDTA margin around 40%.
(3) Management.
Spark is the main person for this company. He was there since the beginning.
(4) Debt and Credit facility.
Currently no debt.
(5) Insider holding, options, Insider trading info, share buy back.
(7) Industry comparison.
(8) Major events
2. Financial data.
3. Valuation
(1) The company's margin is over 70% and EBITDA is over 40%. Current revenue stream is around $2.5m. That is close to $1m in real income since the company won't need to pay tax in the near future. Compare to $24m market cap. It is around 24 P/E.
(2) Based on the growth at its SaaS part. It has been quite consistent and doing very well since 2015. Current running rate is over $2m/year.
4. Risk
(1) The company has quite a long history. It is hard to tell what is the cause of revenue growth for last 3 years. Don't know whether the trend can be kept.
(2) For many years the company was just hanging there. The management wasn't that strong. However, it does maintain profitable even at very low revenue level during 2010 to 2012.
5. Conclusion
It could be a good one if trend continues. The price has gone up quite a lot during past 3 years. Current price is not really cheap. I wish the price could be cheaper.
6.Links
Oct. 03, 2017
Price $0.71. Cap $19.4m
(1) The company released Q3 2017 data, revenue and gross margin kind of flat compare to last year. Net income is lower than last year mainly caused by increase in compensation cost.
(2) However, the SaaS revenue now is around $640k which is much higher than last quarter. Cash now is around $1.5m with no debt.
(3) Assume $4m SaaS revenue at year 2019. Total revenue $4.5m. $2m net income. $4m in cash. Using 15 P/E. 27.3m shares. Remove the cash, it should worth around $1.25 at that time.
Jan. 31, 2018
Price $0.6. Cap $16m
(1) For full year 2017, revenue is $2.9m compare to $2.4m in 2016. Net income around $900k compare to $800k at 2016.
(2) SaaS revenue for 2017 is around $2.3m, cash $1.7m compare to $0.6m at 2016. Increased by $1.1m because there are some tax losses utilized.
(3) It might not be easy to achieve a $2m income at 2019. However, as over $1m cash/year been accumulated, it could utilize it in some way like a dividend or an acquisition etc.
Price $0.71. Cap $19.4m
(1) The company released Q3 2017 data, revenue and gross margin kind of flat compare to last year. Net income is lower than last year mainly caused by increase in compensation cost.
(2) However, the SaaS revenue now is around $640k which is much higher than last quarter. Cash now is around $1.5m with no debt.
(3) Assume $4m SaaS revenue at year 2019. Total revenue $4.5m. $2m net income. $4m in cash. Using 15 P/E. 27.3m shares. Remove the cash, it should worth around $1.25 at that time.
Jan. 31, 2018
Price $0.6. Cap $16m
(1) For full year 2017, revenue is $2.9m compare to $2.4m in 2016. Net income around $900k compare to $800k at 2016.
(2) SaaS revenue for 2017 is around $2.3m, cash $1.7m compare to $0.6m at 2016. Increased by $1.1m because there are some tax losses utilized.
(3) It might not be easy to achieve a $2m income at 2019. However, as over $1m cash/year been accumulated, it could utilize it in some way like a dividend or an acquisition etc.
