# TSM - ThinkSmart Limited



## ormond (28 November 2007)

Thought i'd start a new thread on thi co. which i recently bought into.
Currently trading in the UK, Spain, France and Australia, the ThinkSmart business was established by Ned Montarello in 1996, recognising a gap in the market for meeting the needs of small businesses and retailers with a fast, fuss free finance solution that would enable businesses to get finance for the IT equipment they needed on-the-spot.
They have some deals with JB-hifi and office works.
Today announced they are launching rentsmart in the USA with co. called Office Depot(1200 stores in USA with annual sales of $5 billion plus)
They are starting out in Florida stores before a full roll out in 2008.
Current market cap. aprox $200 mill.
Any thoughts out there on this company?


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## Rainmaker2000 (28 November 2007)

*Re: TSM - Thinksmart Ltd*

I had a quick look at this baby..........its not a bad prospect, but I would not be a buyer at these price levels.....even after share price falls, it's about PE14 for an assetless company.....which does not make it cheap.......but then again its not friendless either......it's got its niche......its interesting that its gone offshore so quickly when it has not at all won over the Aussie market.....for example, I imagine Flexirent provides a similar product at Harveys.......just looking quickly I could not get a feel for its credit risk but it is of course exposed to sub prime lending which I suggest explains its post float price slide..........

Bottom line though, if you dig deeper and find something truly exception or ingenious about how they do business compared to their competitors, then all the minuses above become pluses....namely sub prime may provide an opportunity to grow in US cause lessor competitors may be scared to take on credit........and its growth prospects look exceptional and I imagine a role with HomeDepot would have massive, massive potential...........You would only invest on this potential if you did some intensive research on their business model.....if they do things differently and better then others, then todays share price could be a memory whatever the valuation if the growth promise is fulfilled.....happy fishing


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## ormond (28 November 2007)

*Re: TSM - Thinksmart Ltd*

Thanks for your thoughts Rainmaker2000
The research i have done sugests TSM does not face a balance sheet constraint which is tied to volume growth.
Their revenue will come from higher brokerage from rising lease vols.
I think this is a company with very low capital requirements which will rapidly speed up growth imo.


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## VSntchr (21 February 2011)

*Re: TSM - Thinksmart*

FY10 Result out today.
Record profit.
Result isn't overwhelmingingly amazing in my honest opinion, as a capital raising should ensure profit growth.

However it was not dissapointing and I will continue to hold.


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## robusta (21 February 2011)

*Re: TSM - Thinksmart*



VSntchr said:


> FY10 Result out today.
> Record profit.
> Result isn't overwhelmingingly amazing in my honest opinion, as a capital raising should ensure profit growth.
> 
> However it was not dissapointing and I will continue to hold.




Now this company is starting to interest me. Have added it to my watch list and will be interested as more investment funds become available.


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## VSntchr (25 February 2011)

*Re: TSM - Thinksmart*

Good run today. Very happy with SP movement since FY10 results. 
Stock is very thinly traded, but today was big volume..hopefully a few more people are discovering that TSM is one to watch!


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## tinhat (26 February 2011)

*Re: TSM - Thinksmart*

Onto the watch list. Thanks. Will check it out.


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## Tightwad (23 May 2011)

*Re: TSM - Thinksmart*

Anyone still watching?  Down to .65 today


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## robusta (24 May 2011)

*Re: TSM - Thinksmart*



Tightwad said:


> Anyone still watching?  Down to .65 today




Yep still watching and I have my finger on the button.


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## VSntchr (24 May 2011)

*Re: TSM - Thinksmart*

One major shareholder selling out has seemed to have helped this one fall quite fast. Giving us a very nice MOS..


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## skc (24 May 2011)

*Re: TSM - Thinksmart*



VSntchr said:


> One major shareholder selling out has seemed to have helped this one fall quite fast. Giving us a very nice MOS..




My EPS forecast is ~7cps so current price is definitely worthy of a buy... However, all retailers are getting killed at the moment... so it's a matter of whether their footprint expansion can grow faster than any fall in existing sales (e.g. in JB HiFi stores).

IOOF still has ~9%... impossible to know what their final target hold level is. If they want to clear their holding their watch-out below! I think I will err on the side of caution and wait for IOOF to dip below substantial holder level...


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## VSntchr (24 May 2011)

*Re: TSM - Thinksmart*



skc said:


> My EPS forecast is ~7cps so current price is definitely worthy of a buy... However, all retailers are getting killed at the moment... so it's a matter of whether their footprint expansion can grow faster than any fall in existing sales (e.g. in JB HiFi stores).
> 
> IOOF still has ~9%... impossible to know what their final target hold level is. If they want to clear their holding their watch-out below! I think I will err on the side of caution and wait for IOOF to dip below substantial holder level...





Some good point there..also, am I correct that TSM operates on a financial year ending in December?
Retailers are getting killed, JB hi-fi especially...its down alot again today...I would be very interested in buying (I think its worth over $20) despite for the fact that I just cannot get past the fact that around 30% of revenue is in the format of content which can be (and soon probably will be) downloaded.
This, however, will not directly affect TSM..as the customers will still be purchasing TV's, laptops etc in store (I acknowledge online buying - but not to the extent of downloadable content)...
So in my line of thinking, the battering of retail may have some affect on TSM, but perhaps not as much as some may believe...witness TGA's report today to see that in times like this, often rental companies can do quite well - perhaps due to people not wanting to outlay a large amount..

Happy to stand corrected, but I think there is quite a few complex issues at play that only some solid financial reports can put to rest for us!

EDIT: forgot to add...TSM's online signature thingy will also go well for people who want to get everything done ASAP - all they have to do is pick up the goods - paperwork all done online in minutes...


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## robusta (26 May 2011)

*Re: TSM - Thinksmart*

Well finally picked up some TSM today. One of the best things about this business is they can add new customers, revenue and profit with a very low capex spend.

New group signed up today.

http://www.asx.com.au/asxpdf/20110526/pdf/41yvvvt3zrw8xc.pdf


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## tinhat (29 May 2011)

*Re: TSM - Thinksmart*

Good on you robusta. I added some more to my holding on Friday.


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## VSntchr (7 June 2011)

*Re: TSM - Thinksmart*

No wonder the SP has been struggling over the last few weeks (rebounded this week however)...Orion has been dumping more shares...this round of over 4.5m units. 
Seems like there are a few funds dumping substantial amounts of shares...I wonder where they are putting the money? Cash until more certainty prevails perhaps?


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## robusta (15 August 2011)

*Re: TSM - Thinksmart*

Well some questions answered today regarding TSM, NPAT up only 5%, EPS actually down due to dilutive capital raising for new funding model.
TSM is operating in a very difficult enviroment with FX headwinds and exposure to cautious consumers, but there is a lot to be positive about going forward. Cash flow is excellent, margins should increase by ~ 25% in the next couple of years, and retail is possibly at a low point in the cycle.


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## McLovin (16 August 2011)

*Re: TSM - Thinksmart*



robusta said:


> Well some questions answered today regarding TSM, NPAT up only 5%, EPS actually down due to dilutive capital raising for new funding model.
> TSM is operating in a very difficult enviroment with FX headwinds and exposure to cautious consumers, but there is a lot to be positive about going forward. Cash flow is excellent, margins should increase by ~ 25% in the next couple of years, and retail is possibly at a low point in the cycle.




More than that, we should start to see the change from brokerage to annuity style business flow through. I think, all things considered, this was still a very solid result.


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## notting (16 November 2011)

*Re: TSM - Thinksmart*

Has appeared to put in a double bottom.  Has been drifting around for a few days since Just then bounce with some enthusiastic buying!
Now up 7% in 5mins.
Just sold down to 2.25% maybe I got a bit exited too quickly!


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## VSntchr (16 February 2012)

*Re: TSM - Thinksmart*

TSM smashed down 12% this morning.
FY11 NPAT actually beat my expectations...but the announcement also stated that FY12 would be virtually the same. I thought by FY12 we would be seeing the benefits of the new accounting policies???|

Also, the risk of losing the warranty contract which is due for renewal march 31st seems to have been factored into todays drop....


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## McLovin (16 February 2012)

*Re: TSM - Thinksmart*



VSntchr said:


> TSM smashed down 12% this morning.
> FY11 NPAT actually beat my expectations...but the announcement also stated that FY12 would be virtually the same. I thought by FY12 we would be seeing the benefits of the new accounting policies???|
> 
> Also, the risk of losing the warranty contract which is due for renewal march 31st seems to have been factored into todays drop....




If I'm reading this correctly, FY11 NPAT will be $6.9m, FY10 NPAT was $6.8m and FY12 NPAT will be similar to FY11. So zero growth for two years. 

The growth seems to be there, it's just being covered by a high currency and the new funding model. I wait to see the accounts.

Interesting that they've manged to get the deputy CFO of BSkyB.


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## tinhat (3 April 2012)

*Re: TSM - Thinksmart*

ThinkSmart Limited today announced that it has received notice that its warranty services contract with Dick Smith and the Warranty Group will not be extended beyond 7th April 2012.

As foreshadowed at the time of the recent full year results announcement, the warranty services contract, which is not core to ThinkSmart's strategy, was due to expire on 31 March 2012. In line with the company's previous guidance the impact of the non renewal of this contract will be approximately A$1.2m in NPAT for the remaining nine months of 2012.

This notice is unrelated to ThinkSmart's primary contract with Dick Smith for its core RentSmart products which is scheduled for renewal in December 2014 and contains no change of control provisions.​
More info in the official asx announcement.

And kaboom goes the price hitting 0.305 around midday.


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## notting (16 May 2012)

*Re: TSM - Thinksmart*

Moving very much against it's recent trend and todays market capitulation.
Volumes aren't massive but that can be a little tricky with no great amounts of liquidity.


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## VSntchr (24 May 2012)

*Re: TSM - Thinksmart*

More bad news for TSM.

Ned Montarello does a wonderful job of painting a rosy picture for the future of this company but it seems that the market has had enough of his over-promising and under-delivering.

Profit to be lower in FY12 after a downgraded FH12 to a $2m loss...


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## McLovin (24 May 2012)

*Re: TSM - Thinksmart*

FXL is a superior business. TSM seems to be about 3 years behind them. Have a look at FXL's fastest growing businesses they're both things that TSM is trying to get into; "no interest ever" and commercial leasing products.

From the AGM address which stuck out to me: 



> One of the largest incumbent providers has insisted on exclusive arrangement -- forcing retailers to choose between it and Fido. As a result we have changed our strategy...




I'm pretty confident this incumbent is FXL. The problem with TSM's existing business is that it relies very heavily on retailers providing it with significant volume of consumers willing to take on debt. They're trying to diversify out of that with their new products but they're behind the curve and the elephant in the room isn't giving up market share without a fight.

That being said, their UK business is still performing well and at under 20c this thing is probably worth a punt for those so inclined.


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## Nutmeg (24 May 2012)

*Re: TSM - Thinksmart*

TSM is another stock that Montgomery used to ramp up if I recall.


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## VSntchr (25 May 2012)

*Re: TSM - Thinksmart*

Interesting to see that the announcement last night indicated that Ned Montarello was very close to being disapproved for the long term share incentive plan!

Considering that TSM is going to post at least a $2m HY loss (I doubt their statements are conservative), their Aussie market is horrible (look at JB and Dick Smith for direct indicators), and the growth in the UK may moderate after experiencing initial exponential type growth...I really cant see any catalysts for the SP moving up in at least the next 6 months.

I think I'll throw this one to the bottom draw until the half yearly comes out, at that time perhaps the worst will be out of the way and I'll reconsider this one.


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## skc (25 May 2012)

*Re: TSM - Thinksmart*



VSntchr said:


> I think I'll *throw this one to the bottom draw *until the half yearly comes out, at that time perhaps the worst will be out of the way and I'll reconsider this one.




Surely this one has hit some if not most of your fundamental stop loss criteria already?!

You are giving Tech/A plenty of ammunition for his TGA thread discussion...


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## VSntchr (25 May 2012)

*Re: TSM - Thinksmart*



skc said:


> Surely this one has hit some if not most of your fundamental stop loss criteria already?!
> 
> You are giving Tech/A plenty of ammunition for his TGA thread discussion...




LOL!

I meant throw it in the bottom draw for analysis, thankfully im not holding :

Pretty disgusting that management raises capital at 35c, fully aware of what is to come....shareholders have been shafted!


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## skc (25 May 2012)

*Re: TSM - Thinksmart*



VSntchr said:


> LOL!
> 
> I meant throw it in the bottom draw for analysis, thankfully im not holding :
> 
> Pretty disgusting that management raises capital at 35c, fully aware of what is to come....shareholders have been shafted!




Got you... I don't use a draw for my "to-be-analysed" pile so...


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## VSntchr (25 May 2012)

*Re: TSM - Thinksmart*

It was on my "BUY" watchlist...thus I had already analysed...but now its gone back down to the "Revisit in 6 Months" watchlist.


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## KnowThePast (6 June 2013)

*Re: TSM - Thinksmart*

Hi all,

I have two questions about TSM, something that I don't seem to understand.

Change to lease accounting was blamed for the loss in the latest annual report. Lease accounting spreads profit evenly over the whole interest term, rather than booking it all at once. *Why would this cause a loss though?* Does this mean the business was operating at a forward loss previously, masking it by growing and share issues? Probably not, I am sure I am not understanding something, but what is it?

Second question - how exactly do they make money off their FIDO product? There's no interest, so where's the money coming from?

Thanks


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## McLovin (7 June 2013)

*Re: TSM - Thinksmart*



KnowThePast said:


> Change to lease accounting was blamed for the loss in the latest annual report. Lease accounting spreads profit evenly over the whole interest term, rather than booking it all at once. *Why would this cause a loss though?* Does this mean the business was operating at a forward loss previously, masking it by growing and share issues? Probably not, I am sure I am not understanding something, but what is it?




Under the old model they used to recognise pretty much all their revenue upfront. Now they will earn 40-50% more over the life of a contract but it will be recognised over 2.5+ years. So the implementation has created a bit of a pocket in revenue.



KnowThePast said:


> Second question - how exactly do they make money off their FIDO product? There's no interest, so where's the money coming from?




Higher cost for the product (I think)


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## McLovin (8 June 2013)

*Re: TSM - Thinksmart*



McLovin said:


> Higher cost for the product (I think)




Or they don't they just have the interest dressed up as other charges.

http://www.smartfido.com.au/Quick-Quote


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## KnowThePast (8 June 2013)

*Re: TSM - Thinksmart*



McLovin said:


> Or they don't they just have the interest dressed up as other charges.
> 
> http://www.smartfido.com.au/Quick-Quote




Makes sense.

Thanks McLovin, much appreciated.


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## piggybank (12 December 2013)

*Re: TSM - Thinksmart*

TSM sells Australian business for $43m. Consequently the price closed at 39.5c (up 41%) 

http://stocknessmonster.com/news-item?S=TSM&E=ASX&N=661622

http://stocknessmonster.com/news-item?S=FXL&E=ASX&N=773454


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## piggybank (14 February 2014)

*Re: TSM - Thinksmart*

P&F Daily Update:-


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## hotkiwi (19 July 2015)

*Re: TSM - Thinksmart*



piggybank said:


> TSM sells Australian business for $43m. Consequently the price closed at 39.5c (up 41%)
> 
> http://stocknessmonster.com/news-item?S=TSM&E=ASX&N=661622
> 
> http://stocknessmonster.com/news-item?S=FXL&E=ASX&N=773454




Anybody looked at TSM recently ?
Now that they have abandoned all their AU actions, and concentrate on the UK, the shareprice seems to have bottomed out around 35 c.
Any thoughts ?


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## Tightwad (19 July 2015)

*Re: TSM - Thinksmart*

some people are still keen on it, the story is always that something is going to happen...


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## Klogg (20 July 2015)

*Re: TSM - Thinksmart*

A brief summary:
- Net cash is about half of market cap - although this is does not include the CDS with Secure Trust Bank (STB) and the cash security deposit
- Expected NPAT of 3.5m for the FY
- Assets under management growing at double digits
- Recent dutch auction and on market buyback reduce shares on issue substantially (above calcs taking this into account)
- Media noise about the Chairman wanting to take the company to the UK exchange (and off the australian exchange) caused a fair few to sell.
- David Gamell holds a significant amount through Wulura investments - now holds about 10% after increasing his holding substantially in the 31-32c range

FYI: I don't hold - metrics look good, but single client risk (Dixons Carphone - even though contract has been renewed), unknowns in UK retail and my inability to fully understand how revenues are recognised is stopping me.


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## tinhat (21 July 2015)

*Re: TSM - Thinksmart*



Klogg said:


> A brief summary:
> 
> - Media noise about the Chairman wanting to take the company to the UK exchange (and off the australian exchange) caused a fair few to sell.




It wasn't just media speculation, that is what I was told by their shareholder communications PR company that were spruiking the share buy-back plan.


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## Klogg (21 July 2015)

*Re: TSM - Thinksmart*



tinhat said:


> It wasn't just media speculation, that is what I was told by their shareholder communications PR company that were spruiking the share buy-back plan.




Thanks - I had no idea.
Do you know if this was written in any of TSM's publications? Given the Shareholder comms company was willing to tell you this, I would think it was written in an announcement somewhere.


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## tinhat (21 July 2015)

*Re: TSM - Thinksmart*



Klogg said:


> Thanks - I had no idea.
> Do you know if this was written in any of TSM's publications? Given the Shareholder comms company was willing to tell you this, I would think it was written in an announcement somewhere.




Klogg, I can't remember any details of what was in announcements at the time.

Its no big deal to me as I was underwater on a very small holding I decided to sell at the highest offer price in the buy-back auction and then liquidate what was left on market afterwards because dealing with the paperwork if they did delist was going to be too much hassle and I'm always carrying too many stocks in the portfolio anyway. They managed to talk a lot of their shareholders into selling into the buy-back at a very low price. I understand they had a lot of small retail investors, possibly due in part to it being a stock that Roger Montgomery was spruiking around the time he had launched his book. They did a decent capital return via the special dividend from the proceeds from the sale of the aussie business so I'm not too pissed.


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## McLovin (29 May 2016)

*Re: TSM - Thinksmart*

I'm trying to understand what's going on with TSM. They sold the ANZ business to FXL in 2014, to focus on the UK. The UK business is pretty much their entire business now. They are going through a strategic review at the moment and are saying they want to spin-off and float the UK business, leaving TSM as not much more than a cash box. I can't make top or tail of how spinning off your only real business "unlocks value" (isn't being listed how you unlock value?) and the company has been pretty scant in giving any details.


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## skc (30 May 2016)

*Re: TSM - Thinksmart*



McLovin said:


> I'm trying to understand what's going on with TSM. They sold the ANZ business to FXL in 2014, to focus on the UK. The UK business is pretty much their entire business now. They are going through a strategic review at the moment and are saying they want to spin-off and float the UK business, leaving TSM as not much more than a cash box. I can't make top or tail of how spinning off your only real business "unlocks value" (isn't being listed how you unlock value?) and the company has been pretty scant in giving any details.




No idea... I am guessing value can be unlocked if the UK market is willing to put a higher multiple on the business than here in Australia. But it feels like a nice way to waste almost $2m in fees in strategic review (considering how small TSM's market cap is these days).


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## McLovin (30 May 2016)

*Re: TSM - Thinksmart*



skc said:


> No idea... I am guessing value can be unlocked if the UK market is willing to put a higher multiple on the business than here in Australia. But it feels like a nice way to waste almost $2m in fees in strategic review (considering how small TSM's market cap is these days).




Being listed in the country you do business is a legitimate reason, but I just don't trust that management have no ulterior motive. TSM seems to be run more like a private business. After they sold their ANZ business they did a buy-back by tender with a price range of $0.31-$0.42/share. At the time the company had 24.5c of cash sitting on the balance sheet. The lower bound of the buyback was a farce (6.5c for the UK business!). It just looked like Montarello trying to put one over shareholders. I guess that's why I am suspicious of these guys.

As you point out, they have spent $2m on a strategic review. That's a fair chunk of cash for a company that made $3.4m last year.


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## System (7 December 2016)

On December 6th, 2016, ThinkSmart Limited (TSM) was removed from the ASX's official list at the request of the Company, in accordance with Listing Rule 17.11.


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