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Growth Portfolio: XTD Limited (ASX: XTD)


Published 03-MAR-2016 00:00 A.M.


2 minute read

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Overview: XTD Limited ("XTD", "the Company") is an Australian technology company focused on digital advertising. XTD owns a digital media and information system suitable for transit networks in major global cities. XTD has currently 32 XTD screens operating in the Melbourne metro network and 13 installed in Brisbane, which is fully functional. XTD Limited, formerly Lunalite International Pty Ltd, listed on the ASX via a reverse takeover of White Eagle Resources Ltd in December 2014.

Catalysts: XTD is witnessing strong revenue growth. The partnership with APN Outdoor has resulted in seven-year contracts with domestic railway networks, which provide the Company with stable, recurring revenue streams. Along with horizontal growth in the domestic market, management also targets expansion into south-east Asian and US rail networks. The Company has undrawn debt facilities of $4m in place.

Hurdles: Despite strong revenue growth, XTD is not yet profitable and its reliance on external capital has not been entirely eliminated. The capital structure is relatively fragmented and may leave the Company exposed to takeovers below fair value. XTD is currently a pioneer in the industry, but as entry barriers are limited to ‘know-how’, the Company could become subject to increasing competition.

Investment View: XTD offers transitional exposure to the digital media and transport advertising market. Historic revenue growth and existing contracts are attractive qualities, while undrawn debt facilities provide financial flexibility. Working capital requirements to fund growth initiatives is a principal risk. Securing new domestic contracts and successfully expanding internationally are potential value drivers. Recognising XTD’s growth potential we are initiating coverage with a ‘speculative buy’ recommendation.


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.

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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.

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