# ITD - ITL Health Group



## ekman (29 December 2006)

ITD - another VSL? What do you think guys? This minnow has had many buy recommendations (on their website). IMO has been run well by the mgmt.


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## chennyleeeee (22 May 2007)

Im surprised no one has yet to write anything about this little stock. Maybe theres something I dont know thats going on?

I brought in today at 0.50 I think I got jipped considering it went to 0.475 and an ask of 0.48, but I had to rush and I didnt want to miss today's opportunity. I think I had an okay buy at 0.50 and my stop loss is at 0.45

A little information about the company.

*ITD - ITL Limited*

*GICS Industry Group:*
Health Care Equipment & Services 

*Principal Activity*
Development and commercialisation of intellectual property relating to innovative medical devices; manufacture, distribution and sale of medical devices; manufacture, distribution and sale of procedure packs; and sale and service of medical equipment and instruments.

*SHARE MARKET DATA:*
as at 22/05/2007
Market Cap 	            $60m
Last Close                   0.49
Total Shares Quoted 	123.2m

*OTHER*

06 Operating Cashflow: 5 million
06 NI: 3 million

Red flags - 

Capital Raising (I dont like capital raisings, it means then ran out of money); 
MD William Mobbs sells ~1 million shares (reducing voting power by 3% to 19%)


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## ekman (15 June 2007)

anyone still in this stock. this has turned out to be a real shooting star for me - down more than 30% in less than 2 months. Maybe it is oversold as IMO they still have a strong business case with very good products and good customers.


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## ekman (23 October 2007)

i was on a handsome profit until 3 months back when the sp went pear shaped and has been downhills since.  the company's plain unluckyor is it bad mgmt. seems from the latest ann the this year will be difficult 
wish i had known about stop loss then...am feeling really ****


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## ROE (1 October 2013)

ITL Limited (ITD) is involved in development, manufacture, distribution and sale of innovative medical devices, medical procedure packs and medical instruments for the human and animal global healthcare markets. ITD’s core strategic business units are Innovative Products Group and Healthcare Australia.
http://www.itl-limited.com/

Disc: Holding


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## KnowThePast (3 October 2013)

It is small, obscure, doesn't talk much, and used to be very ugly. Love at first sight for me.

After listing in 2000, it implemented a "Growth by Diversification" strategy that was supposed to lead to great profits and revenue stability. As much as they hoped for the best, the strategy worked as it usually does - some evidence of success at first, followed by years of massive write downs and restructuring charges.

By last year, they've written down all of goodwill and sold off all of their poor performing business and are now left with something I really like. They spend money on R&D to create innovative healthcare products, then manufacture them in Malaysia and sell them. Mostly in Australia and US. 

They now have ROC of over 20%, original owners in place with substantial share holdings, little debt. So it ticks all my boxes.

They've recently become an approved supplier to NSW public hospitals, although it is difficult to predict what kind of contracts they may get out of it. They are certainly preparing for an increase in volumes however, buying a bigger manufacturing facility in Malaysia and organising funding for an expected increase in working capital. 

They have two main segments:
1. Healthcare Australia which manufactures procedure packs and various kits.
2. Innovative products group which invents, manufactures and sells a range of biological safety sampling devices.

A share buyback has been of great benefit to shareholders, they already bought back almost 30% of shares and are planning to buy back 10% more next year. This year, EPS has improved despite lower profit, as a result of the buy back. Their dividend payout is a healthy 4.2% at the current price. Obviously without the buyback, this could be substantially higher. 

My main concern at this time was two founding directors selling rather large parcels of shares. They've been doing it on market, at the time that on market buy back was happening. I imagine there woldn't have been enough liquidity otherwise to sell off 2 million+ shares. But the optimist in me says that:
a) they might want to partially cash out not that the share price has started to recover. Their salaries are not excessive.
b) they have a choice of taking some of their renumeration either in cash or shares. Provided that they think share price will go up, it is better to get shares and sell them later. Looking at the annual report, they have, in fact, taken up the shares option. William Mobbs has taken up about 2 million shares, roughly the number that he subsequently sold.

Innovative Products generate 38% of sales, but are responsible for 66% of profits. It is also where growth potential would be, aside from the population getting older argument. Being R&D reliant, it may well fluctuate greatly in the future.

Price looks very attractive at the moment, especially when looking at the cash flow. A discount must be made, however, due to the fact that their profit was boosted by $0.7m this year, as they didn't need to pay tax (due to prior losses).

I am very tempted, but at the current price, there isn't quite enough margin of safety for me.


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## galumay (3 October 2013)

I bought in this week, I agree with KTP's research, its definitely on the riskier end of my investment portfolio but within the boundaries I have set myself.


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## ROE (3 October 2013)

KnowThePast said:


> I am very tempted, but at the current price, there isn't quite enough margin of safety for me.




If you like a business but think it isn't cheap enough or think it wont drop or whatever reason
you can always take say 30% allocated position in case the upside turns and average down the 70% if it drop to 

your buying price..you covered with the upside but the down side you buying average down so it be fairly close to your target price 

- - - Updated - - -



galumay said:


> I bought in this week, I agree with KTP's research, its definitely on the riskier end of my investment portfolio but within the boundaries I have set myself.




I always play down this end as long as they has little debt, reasonable cash flow, the risk adjusted return if spread out to say 10-15 stocks will be probably better than higher cap stocks...

So far most of the debt free small caps business I got in, none fall over most went up a lot  and the sweetener will be the future dividend based on initial purchase price ... far far more than any banks or high risk bond paying you


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## McLovin (3 October 2013)

KnowThePast said:


> Innovative Products generate 38% of sales, but are responsible for 66% of profits. It is also where growth potential would be, aside from the population getting older argument. Being R&D reliant, it may well fluctuate greatly in the future.




Hey KYP

You said this division that invents stuff is where the growth is coming from. I'm trying to see where the R&D spend is? 

I love free growth, don't get me wrong!


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## KnowThePast (7 October 2013)

ROE said:


> If you like a business but think it isn't cheap enough or think it wont drop or whatever reason
> you can always take say 30% allocated position in case the upside turns and average down the 70% if it drop to
> 
> your buying price..you covered with the upside but the down side you buying average down so it be fairly close to your target price




An excellent suggestion, thank you. My position is quite small, but I think this will be a $30 brokerage well spent in many cases.




ROE said:


> I always play down this end as long as they has little debt, reasonable cash flow, the risk adjusted return if spread out to say 10-15 stocks will be probably better than higher cap stocks...
> 
> So far most of the debt free small caps business I got in, none fall over most went up a lot  and the sweetener will be the future dividend based on initial purchase price ... far far more than any banks or high risk bond paying you




Same here. It's not just the better averaged out return that attracts me either. Every now and then there's a small cap that will appreciate 100 fold or more. There's no way to predict which one it is, but by owning a few, you may eventually get lucky, if you stay in the game long enough.



McLovin said:


> Hey KYP
> 
> You said this division that invents stuff is where the growth is coming from. I'm trying to see where the R&D spend is?
> 
> I love free growth, don't get me wrong!




Hi McLovin,

They are expensing their R&D, until, quoting from report: "technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably." I couldn't find how much they spent on R&D either.

My comment, was, however a general observation, not anything specific the company is currently working on. I am not pricing them for above average growth at the moment.


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## jdenhaan (5 December 2013)

Anyone in this one? It's trading at barely 12x P/E. Fundamentally it looks like a solid company though. Thoughts?


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## galumay (6 December 2013)

Read the thread, there is some pretty good and recent analysis above. I currently hold ITD.


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## galumay (17 February 2015)

A very solid result for the half year, revenue up 9%, profit up 34%, some caution around 2nd half results due to impact of high inventory levels and the effect of the move to the new premises. I like the cautious, understated manner of management in this company. It contiues to perform steadily and hopefully the market will start to show a little more interest!


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## ROE (17 February 2015)

I still have it steady as she goes and collect dividend


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## JTLP (20 December 2016)

Anyone still holding these guys? Really lightly traded stock, but I do like the story and their recent AGM seemed pretty upbeat.


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## ROE (20 December 2016)

I still do and actually increase a fair bit more when it trades around 18c


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## galumay (22 December 2016)

Yep, still holding. In hindsight I got in a bit early a few years ago, but the story continues, divvies add up, and the price is now heading in the right direction as it gets rerated. Happy to continue to hold.


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## ROE (22 December 2016)

I post on hotcopper, this business has good product mix it just a bit boring and they need some new blood to market it and get the investment community noticing it, also the founder hold a lot of shares
he could help the liquidity by courting some institution to take some of his hand.

but hopefully growth phase will start next year and beyond and the market will get to know more of it soon enough.


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## JTLP (22 December 2016)

Well it's jumped twice in the last 2 days so maybe you did the trick ROE


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## galumay (22 December 2016)

JTLP said:


> Well it's jumped twice in the last 2 days so maybe you did the trick ROE




In that case I have a couple of other companies I would like ROE to work his magic on!


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## ROE (23 December 2016)

hahaha guess what my wish come true, founder release some share to a fund manager 
ASX announcement just release then

now to bring on some good people to juice up this business and we all set


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## galumay (23 December 2016)

must be your xmas present ROE!


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## JTLP (23 December 2016)

ROE did you average down during this period?


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## ROE (29 December 2016)

Yes I did I enter in 20s some years ago and still holding, as a long term investor I average down and up depending how I see the business fairing.


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## ROE (17 February 2017)

Alright time to show its magic, debt down profit double 

ITL Limited (“ITL”), an innovative diversified healthcare company, is pleased to announce excellent results for the half year ended 31 December 2016 compared with the previous corresponding period. Highlights 
● Profit after tax of $2.12m (Dec 2015: $1.04m; up 104%);
 ● Earnings per share of 2.2 cents (Dec 2015: 1.2 cents; up 83%);
 ● Revenue of $17.5m (Dec 2015: $15.7m; up 11%);
 ● Profit before tax of $2.12m (Dec 2015: $1.01m; up 110%); 
● EBITDA was $2.7m (Dec 2015: $1.6m; up 69%); 
● Net Debt $5.0m (Jun 2016: $5.5m; down 9%);


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## galumay (17 February 2017)

Looks great Roe, I havent had time to look through the details but I have continued to have confidence in ITL management to turn the ship around and its good to see the results paying off. I spent a while in the red with ITL, nicely in profit these days!


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## ROE (17 February 2017)

This is all you need to know 
Margin improvement and growing revenue a mother of all combo


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## galumay (17 February 2017)

ROE said:


> This is all you need to know
> Margin improvement and growing revenue a mother of all combo




Mr Market appears to agree!


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## Ves (17 February 2017)

Had a brief look at the report.

I'm not an owner,   but I would be keeping a close eye on the accounting treatment of the R & D and depreciable assets.

It's only minor at this stage,  but intangible assets and depreciable assets have both increased,  but there's only a slight increased in D & A.

Cash flow and accounting earnings will always be different here.

Earnings also look a bit cyclical to me.


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## galumay (17 February 2017)

Ves said:


> Earnings also look a bit cyclical to me.




To be fair, you probably have to look a bit deeper than that to understand the story and see where ITL have been going the last few years. As I said I havent had time to go through the report in detail, but this payoff for management is not unexpected.


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## Ves (17 February 2017)

galumay said:


> To be fair, you probably have to look a bit deeper than that to understand the story and see where ITL have been going the last few years. As I said I havent had time to go through the report in detail, but this payoff for management is not unexpected.



Well,  it's a company that develops and designs medical products.  As far as I know they are nearing 100 patents now.

My comment reflects the fact that these patents and the underlying products or devices that they cover have life-cycles. The nature of the industry is that there is always something better coming along so the earnings streams of a product are unpredictable. There's a constant need for R & D and earnings will fluctuate as the underlying products grow, stall,  decline (etc.)  throughout their own product life cycles.  That's just the nature of medical innovation companies IMO.

I'm not saying it's a bad thing - it doesn't have to be - it just makes it harder to value the company.  It also increases the Key Person risk because you need good management at all times.

Also refer above comments re D & A.  There's an argument that they should all be expensed due to the future uncertainty that is inherent in medical product innovation.


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## JTLP (17 February 2017)

Feel like I missed the boat on this one. Was looking around when I first posted but it's jumped a bit since then. On to the next!


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## galumay (17 February 2017)

Ves said:


> ...My comment reflects...




Very much appreciate your expanding on your initial comments - this sort of feedback and discussion is one of the things that makes ASF stand out from the rest. 

I agree that a higher margin of safety comes into play for the reasons you postulate -and probably sensible to keep a close watch on these sort of businesses to ensure there isnt material change that gets overlooked in the longer term.

Interesting point on the R&D & D&A.


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## ROE (20 February 2017)

JTLP said:


> Feel like I missed the boat on this one. Was looking around when I first posted but it's jumped a bit since then. On to the next!




I don't think so, I think the business has been dormant for a while with sourcing and building new products and infrastructure but now it start to pay off, I can see many years of growth ahead

The market didn't appreciate when it building and moving new plants in Malaysia for future capacity, now it starts to pay the dividend.


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## ROE (20 February 2017)

https://boardroom.media/broadcast/?refid=&eid=58a656ae196ffa2970ec87c9

Good run down on the business for new investor


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## galumay (26 April 2017)

Interesting write up popped into my feed today, 

https://www.livewiremarkets.com/wires/35324


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## System (7 December 2017)

On December 7th, 2017, ITL Limited changed its name to ITL Health Group Limited.


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## galumay (21 February 2018)

SP dropped quite a bit on the release of the HY report, its not easy to work out what is going on because of the effects of the sale of it Australia Customer Pack division and the soft half for the continuing operations. Net cash position has improved and 13% of shares have been bought back.

I am considering adding to my current position at these prices, but I just have to find a bit more confidence in what the continuing business is going to perform like.


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## galumay (22 February 2018)

Read the report in more detail and this is a disaster unfolding. No one predicted such a massive fall in profit. Basically having divested the Australia Customer Pack division, the remaining business is no longer profitable. This was not the outcome I or others expected, I had calculated a fall in EPS of around 30% with the divestment and expected the profit from the sale to be used to payoff the remaining debt and leave a strong cash position. I went from considering averaging down yesterday to changing my mind last night and selling out this morning. I basically broke even plus the dividends. 

I will continue to watch in case they can make a profitable business from the remains, but I expect the SP to drift down into the 20c range in the mean time.


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## Faramir (23 November 2018)

ITD wants to delist. It was 15 cents before opening. I do not hold. I never had the intention to hold. Does anyone think they have valid reasons to delist? They will still operate as normal. Liquidity of their shares is very low to them and it is way under valued. Well, that’s they said in their announcement. I don’t know ITD well enough to make a serious comment. Sorry.


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## galumay (23 November 2018)

Probably cost saving?


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## Faramir (23 November 2018)

Share price down 46%


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## System (21 February 2019)

On February 15th, 2019, ITL Health Group Limited (ITD) was removed from the ASX's Official List in accordance with Listing Rule 17.11, after security holders resolved to remove ITD from the Official List.


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