Stargroup adds $1.7 million annually without EPS dilution
Published 02-DEC-2016 14:57 P.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Financial technology and ATM machine company, StarGroup (ASX: STL) has executed the asset sale agreement for the acquisition of the Indue Automatic Teller Machine switching, settlement, processing, telecommunications and reseller business.
While a Memorandum of Understanding (MoU) in relation to the acquisition was signed in September, final terms have only just been announced. These appear extremely favourable from a number of perspectives.
Firstly, the acquisition is being fully funded by debt which implies zero earnings per share dilution. Also, the acquisition multiple appears attractive at less than four relative to projected annualised EBITDA of $1.7 million.
However, potential investors should note that STL is still an early stage play and earnings projections may not be met and as such should not provide the basis for an investment decision. Those considering STL should seek independent financial advice.
As a backdrop, Indue provides ATM switching, settlement and processing services (ATM Switch), telecommunications services (ATM Telco) and also resells ATMs (ATM Sales) to approximately 70 ATM deployers, 1700 ATMs, 1350 modems, and it also processes 12 million transactions per annum.
Combined revenues from the Switch, Telco and Sales businesses will increase STL’s current annualised revenue from its ATM division from $8 million to $12.1 million with management expecting that figure to increase to $18 million by fiscal 2018 as a result of organic growth.
STL’s Managing Director, Todd Zani, highlighted the strategic benefits of the acquisition in saying that it strengthens the company’s vertically integrated model.
To a large extent, this is facilitated by its direct ownership interest in the manufacturer of its ATM technologies, namely NeolCP, a South Korean private company.
This development builds on what has been a transformational year for STL as highlighted below.
In August 2015 STL became the exclusive distributor of the cashPod ATM range, including the recycler ATM, back-office and payment technologies in Australia for the next five years.
Other affiliations include the group’s wholly-owned subsidiaries, StarPOS and StarApps, which embed STL’s position as a provider of EFTPOS and payWave technologies and developer of the source code in its terminals via its five-year distribution agreement with West International AB, a Swedish NASDAQ listed company. This enables STL to distribute next generation EFTPOS payment terminals and solutions in Australia and New Zealand.
Zani said STL was on the lookout for further merger and acquisition opportunities, noting the $15 million debt facility leaves considerable head room for such initiatives.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
