Questor Technology Inc. (QST.V)

Website
Yahoo Finance
Filing

Sept. 20, 2018
Q2 2018 Data
Price: $2.45, Shares: 26.5m, Cap: $65m
1.Basic Information
(1) History 
The company was founded in 1994. Daniel Motyka joined the company in 1995 and led the IPO in 1997. It developed waste gas combustion equipment that can be used in the gas and oil industry to control methane flaring and emission.

In 1999, Audrey Mascarenhas joined the company to help improve the product. She was an engineer for 17 years and retired at that time. Later in 2005, Audrey replaced Daniel as CEO of the company and led the company up to now. She has an incredible story as a female working in the oil and gas industry.

The company's revenue was quite low at the beginning and reached $2m in 2005, then over $3m in 2006. In 2007, it had a one-time revenue boost of $6m from a China sale. Revenue continue to grow to over 12m in 2014. In 2015 and 2016, revenue dropped to $7-8m level but recovered to over $19m in 2017.

(2) Business-related.
Methane Incinerator: This is its main product. The incinerator has an efficiency of 99.9% compared to just a 60% level if just flaring methane. It has no visible flare as well. Also significantly improves air quality and smells.  Previously it sells its incinerator to its customer.  Now it relies more on rental revenue which provides more flexibility for its customers.

Currently, rental revenue counts for over 60% of its revenue. Rental seems to have a higher gross margin.

The company was actually very profitable. Its gross margin has improved to over 50% which is very impressive. Also, its SG&A ratio is getting down to just 15% right now.

The company's business is heavily concentrated in Colorado. Mainly because the state has a strict methane emission regulation. In Sept. 2018, the US government signed a rollback on federal methane regulation signed at Obama time. Thus causing the stock to fall from over $4 to the $2 level.


(3) Management.
Audrey Mascarenhas: She is a very talented engineer and seems to manage the company very conservatively. The company's shares since 2002 were 23.4m and now are 26.4m. It was profitable since then.

(4) Debt and Credit Facility.
$5m cash and no debt.

(5) Insider holding, options, Insider trading info, share buyback.

Audrey Mascarenhas: 4.3m, 16%.

(6) Employee numbers


(7) Industry comparison.


(8) Major events


2. Financial data.


3. Valuation
(1) Currently, the company generates over $2m/quarter in income. It is traded at just around 8 P/E which is very cheap. Obviously, people are expecting the company's revenue will shrink significantly because of the regulation change. If the revenue shrinks by half, it still could get around $4m/year of income, the current price is still acceptable.

4. Risk
(1) The regulation change is obviously the biggest risk the company is facing right now. However, Colorado has indicated that it will not changes its regulation. Also, just from a cultural point of view, I don't think its customers will suddenly end those rentals and start burning methane. But for new projects, the oil and gas company may choose not to use the company's product. It is possible that its revenue will shrink for quite a while. But I believe it will be a slow process.

(2) Its revenue is concentrated in Colorado which is quite a risk.

5. Conclusion
Overall the company was very well managed and has good growth potential. Although there are some risks, I think the current price is very attractive.


6.Links
http://www.investorfile.com/blog/blogcat.asp?catid=341

https://www.youtube.com/watch?v=DGOLcI6ga0k

Update: July 31, 2022

Price: 0.98. Shares: 27.8m. Cap: $27m.

1. It has been quite a hard time for the company during the last two years as its major rental customer filed for bankruptcy in early 2020. Now its rental revenue is around $0.5/quarter vs $4m/quarter at the highest point. Equipment sale was also down a lot with only $4.1m in 2020 and $2.6 in 2021 vs $12m in 2019.  The company's 2020 cash flow is positive while in 2021 it burned around $2.5m. 

2. So far in Q1 2022, its equipment sale is $1.6m. In Q2 2022. It is expected to have similar equipment sales as in Q1.  It also has $4.9m committed equipment sales in total. 

3. In late 2021, Sustainable Development Technology Canada (“SDTC”) signed a Waste Heat to Power generation product development project with the company with $4.5m funding. The first $0.75m was received in Q1 2022. 

4. Currently, it has around $15.8m in cash which is actually $2m higher than at the end of 2019. The main reason for this is a $1m interest-free loan from the government and the $0.75m received recently, plus some working capital changes.

5. With higher equipment sales and the $4.5m funding from SDTC, it is more than likely that the company will achieve a cash flow positive in the near future. 

6. Generally speaking, the outlook of the company is going up. Although it is hard to tell when it will really turn around. It would be very positive if we can see its rental revenue going up as well.  

7. Removing the cash, the company is trading around just $12m. It is much less than its hard asset. The price is very acceptable as long as it can maintain cash positive. 

8. On the negative side, the company seems not doing so great in marketing and capital allocation. It might not need to be so conservative. 

Centric Health Corporation (CHH.TO)

Website
Yahoo Finance
Filing

Sept. 04, 2018
Q2 2018 Data
Price: $0.25, Shares: 208m, Cap: $52m
1.Basic Information
(1) History 
The company was found by Brenda Rasmussen at around 2001 and originally was called Alegro Health Corp. It acquires private clinics in 2003. In 2007, it started to partner with Global Healthcare Investments Solutions (GHIS), a company found by South African entrepreneur Jack Shevel. Previously Jack Shevel created a healthcare company in South Africa called Net Care and grew it into a billion-dollar business. With the fund injected by GHIS, Alegro acquires more clinics and pharmacies. In 2009, after GHIS gain controlling stack of Alegro, it changed its name to Centric Health and Jack Shevel replaced Brenda Rasmussen as CEO. Brenda later left the company and created a new healthcare venture called Premier Health. Jack Shevel managed the company briefly and hired several new CEOs from outside. Mainly David Cutler from 2012 to 2017, then David Murphy starting in 2018.

At the time of IPO around 2003, the company had a revenue of around just $6m. Since 2009, its revenue starts to shoot up mainly by acquisition. By 2013, it reached the highest annual revenue of $456m. Since 2014, the company started to divest its business segments. Mainly the Physiotherapy, Rehabilitation and Assessments segment at 2015 for over $200m to pay down its debt. Its revenue rolls back to $160m level since 2015.

(2) Business-related.
Specialty Pharmacy: Fulfillment center for nursery home etc. Serving around 28,700 patients. Accounts around 3/4 of revenue and 3/4 of adjusted EBITDA. However, since 2018, there is a significant reduction in EBITDA for this segment because of government policy changes. At Q2 2018, EBITDA form this segment is only $2.7m compared to $2.2m in the other segment.

Surgical and Medical Centres: Currently it operates 5 surgery centers across Canada for some specialty surgeries. It counts for 1/4 of revenue but EBITDA has been growing pretty well. Utility ratio currently is around 41%.

The company also has a small equity interest in a device called Karie which dispense medical for older people automatically at home. It could generate around $50 monthly revenue. Currently the device still in the marketing stage.

(3) Management.
Jack Shevel: He was very successful in his previous Netcare business. However, as for Centric Health, it hard to tell how he did it. The company obviously was too aggressive from 2010 to 2013.  It was a right decision to deleverage the business. Overall he seems to care about the business.

(4) Debt and Credit Facility.
Currently, it has around $81m in debt.

(5) Insider holding, options, Insider trading info, share buyback.

Jack Shevel and two others from GHIS own around 85m shares. around 40%.

(6) Employee numbers


(7) Industry comparison.


(8) Major events

2. Financial data.


3. Valuation
(1) Currently, the company has around $16m in annual EBITDA, EV around $130m. Seems not very expensive. However, in cash bases, it operates just even which means no profit left for pay down debt.

(2) The company indicates that it will divest more business to pay down debt to around 3.5 times of the EBITDA. Currently, it is around 5 times.

(3) Today as Sept. 5, 2018, the company released a news of having a supply agreement with Spectrum Cannabis for supply Medical Cannabis to seniors. As a result, the share price jumped to $0.34 now. I view it as unreasonable but it had made the company no more attractive.

(4) As stated in the Q2 2018 conference, Q3 2018 financial might be even worse than Q2.

4. Risk
(1) The governments in Canada tend to be unfriendly towards private healthcare provider. Recent changes in pharmacy pricing hit the company pretty hard. The surgical center business might also be affected by government policies.

(2) Its debt is still too high and should go down to $50m level at least.

5. Conclusion
Overall I think the company has a large chance to turn around. However, the current price is no more attractive. Wait to see what will happen after Q3.

6.Links

iFabric Corp. (IFA.TO)

Website
https://www.coconutgroveintimates.com/
Yahoo Finance
Filing

Sept. 02, 2018
Year end: Sept. 30th
Q3 2018 Data
Price: $1.85, Shares: 26.2m, Cap: $48m
1.Basic Information
(1) History 
The company was founded by Hylton Karon in 1985. Originally it was called Coconut Grove Textiles. Its main business was women's intimate apparel likes bra and underwear etc. In 2008, it also formed an Intelligent Fabrics Division("IFTNA") which aimed to create the fabric with a special characteristic that could be used in medical or sports etc.

It was IPOed at 2012 through a reverse merger and Coconut Grove became a subsidiary of iFrabric Corp. In 2012, it has revenue of around 6m and a just break-even profit. The revenue is mainly from intimate apparel division.  In 2013, its revenue increased to $8.2m. In 2014 revenue grew to $13m mainly because it signed new sleepwear license with the existing customer. The company was uplisted to TSE in 2015.  In the next 3 years, the intimate apparel slows down but the IFTNA division has picked up revenue to over $6m in 2017. The share price was up to over $5 in early 2014 and stay over $3 for a long time.

Since Q2 2018, especially in Q3 2018, both divisions were down. First, the company decided to phase out the sleepwear line which caused the intimate apparel division revenue down by 25%. Also, its IFTNA division was down by 50% because of one customer changed factory from China to another country. As a result, shares price droped to below $2 lately.

(2) Business-related.
Intimate apparel division: Bra, underwear, sleepwear etc. The company signed a contract with Maidenform at 2012. Later renewed for 4 years at 2014. Then in 2018, renewed for another 2 years. Recent revenue from this division was around $12m/year.  The company discontinued the sleepwear business lately. The reason for this is that the sleepwear carries lower margin and facing tough competition lately. Without the sleepwear business, it might be down to less than $10m/year.

IFTNA division: It carries several branded fabric techniques and was doing very well during the past several years. It seems to carry better margin than the intimate apparel division. Overall this has very more growth potential than the intimate apparel business.

(3) Management.
Hylton Karon: He is the original founder and has a textile background. Overall the business was staying profitable and rarely issued any new shares.

(4) Debt and Credit Facility.
$4.7m in cash and $1.4m in the bank loan.

(5) Insider holding, options, Insider trading info, share buyback.

Hylton Karon and his wife each own around 9.5m shares which counts over 73% of total shares.
Hilton Price: CFO, 400k shares, 1.5%.

(6) Employee numbers
It has 29 employees in 2014, reduced to 28 in 2015,  further reduced to 24 in 2016 and 2017.

(7) Industry comparison.


(8) Major events

2. Financial data.


3. Valuation
(1) The company generated around 1.6m income in 2017. $1.4m for the first 2 quarters of 2018. Besides those, it never made any serious money. However, it should mention that all the R&D in the IFTNA division are buried in the expense of those years. Still, it is very likely that the company won't be very profitable in the new future. So based on profit, it is not a cheap stock.

(2) Generally, I believe the company will be profitable and may make $1m to $2m income again. If the IFTNA division is growing again, then it might be able to achieve a higher profit in the future.

(3) I did view the decision to discontinue the sleepwear business is a right decision. Although it created temporary revenue down pressure.

(4) The company outsource its product in Asia and only has 24 employees. The SG&A was actually down in 2017 while the revenue was up. With the elimination of the sleepwear business, it might reduce the number even further.

4. Risk
(1) It is business is contract based. Lose of its major customer will affect the business significantly.

(2) It revenue might shrink even further in the near future. Even make it unprofitable although not very likely.

(3) The CEO family owns way too many shares which make the shares unattractive to the institutional investors.

5. Conclusion
The company seems very managed and does has some potential do very well. It is likely to remain profitable. However, the current price is not very cheap and there is some risk that the business might go bad.

6.Links
http://www.cbc.ca/player/play/2500386027