ASZ - ASG Group

[Joe Blow]

ASG Group Limited (ASZ), formerly eSec Limited (ESX), provides technology applications and business systems integration to government agencies and private companies nationally. The company is certified partner with many vendors, such as HP, Oracle and Microsoft.

http://www.asggroup.com.au

 

[Noddy]

ASG with a decade of earnings growth, together with three acquisitions last year, has developed into a national company.
Flagging solid growth for 2011, and paying a solid dividend from an ROE of around 14%,
a recent capital raising at $1.20 to consolidate the business in Perth was fully subscribed.
A DCF calculation came up with a value of $1.36 to $1.40.

Price chart shows a move up from a years low to $1.175, consolidation, a further move up then a dip to offer a buying opportunity around the $1.20 level IMO.

Not holding any, but will buy in tomorrow.

Interested in any comments

 

[Miner]

View attachment 41013

ASG with a decade of earnings growth, together with three acquisitions last year, has developed into a national company.
Flagging solid growth for 2011, and paying a solid dividend from an ROE of around 14%,
a recent capital raising at $1.20 to consolidate the business in Perth was fully subscribed.
A DCF calculation came up with a value of $1.36 to $1.40.

Price chart shows a move up from a years low to $1.175, consolidation, a further move up then a dip to offer a buying opportunity around the $1.20 level IMO.

Not holding any, but will buy in tomorrow.

Interested in any comments

Did you buy ASZ and what do you reckon now ?
How it compares with TLS or AMM ?
I do not hold but woudl like to learn your view since you posted some four months back

Regards

 

[nem23]

The share price in recent days have dipped below $1.00. Does anyone has any idea as to what is driving the share price of ASZ down. I have checked the various media reports, there does not seem to be any negative news pertaining to ASZ. Does someone knows of some impending news that is affecting the share price. May be an opportunity to buy.

 

[Country Lad]

........May be an opportunity to buy.

May be more prudent to wait till it breaks out of its year long downtrend.

 

[McLovin]

What's going on with ASZ? I picked up a bit a few weeks ago, I had been looking at it for ages, and now it's taken off. I'm thinking there could be a contract announcement on the way.

 

[Ves]

What's going on with ASZ? I picked up a bit a few weeks ago, I had been looking at it for ages, and now it's taken off. I'm thinking there could be a contract announcement on the way.

I've been holding for quite some time. Got in in the low 80s. I have been watching every now and then on Commsec, and the buyer's seem to be lining up. The share price didnt even decrease after the recent dividend. Someone obviously knows something. I am still worried about the buy-out payment they need to fund come 2013. Interesting to see how dillutive it will be (maybe not at all if they win a big contract).

 

[skc]

What's going on with ASZ? I picked up a bit a few weeks ago, I had been looking at it for ages, and now it's taken off. I'm thinking there could be a contract announcement on the way.

Not sure but I closed my position today on open. It's had a good run although I only got in at 86c.

If the market jitter continues a major contract win will probably be considered bad news... given that they've never done a 9-digit contract before.

 

[McLovin]

If the market jitter continues a major contract win will probably be considered bad news... given that they've never done a 9-digit contract before.

Gees...Feeling a little glass half empty today?

I'm hanging in there, I basically wanted some exposure to IT services and cloud computing. If ASZ can capitalise with some big contract wins then that's the icing on the cake, otherwise over the next 5 years the market will keep growing. Smallish investment because even after quite a bit of research, I'm still struggling to split them all.

 

[skc]

Gees...Feeling a little glass half empty today?

I'm hanging in there, I basically wanted some exposure to IT services and cloud computing. If ASZ can capitalise with some big contract wins then that's the icing on the cake, otherwise over the next 5 years the market will keep growing. Smallish investment because even after quite a bit of research, I'm still struggling to split them all.

Glass half empty is an optimistic day for me. Today I see the 50% filled glass for what it is, but I am worried about the evaporation, the wind, the vibration of the table etc etc. The more I think about it, the more thirsty I get so I had no choice but to drink the water.

My timeframe was always ASAP and I've been know to make some early exits...

 

[Ves]

Poor result today.

EPS down about 8.8% and I believe the fact that they paid less deferred acquisition expenses masks the fact that this could have been even uglier.

The cash balance went from about $13 mil twelve months ago to an overdraft of $4.5 million. Management would have shareholders believe that this is due to the fact that they have bought forward a lot of investment decisions (it looks like there is definitely capex of some sort). The problem is, they are borrowing to pay dividends at the same time!

I am surprised that the market did not whack this one further today.

Once I get my head clear and have a closer look at the report it is most likely that I will exit this position at a small loss (depending on whether the price finds a floor before then or not...).

I don't have any particular faith in management at the moment. The whole "we are shooting for big contracts" (this time it is $600 mil!!) mantra and the fact that they did not flag this result in the lead up to reporting season being the reasons. Lots of spin in the investor preso.

 

[McLovin]

Poor result today.

EPS down about 8.8% and I believe the fact that they paid less deferred acquisition expenses masks the fact that this could have been even uglier.

The cash balance went from about $13 mil twelve months ago to an overdraft of $4.5 million. Management would have shareholders believe that this is due to the fact that they have bought forward a lot of investment decisions (it looks like there is definitely capex of some sort). The problem is, they are borrowing to pay dividends at the same time!

I am surprised that the market did not whack this one further today.

Once I get my head clear and have a closer look at the report it is most likely that I will exit this position at a small loss (depending on whether the price finds a floor before then or not...).

I don't have any particular faith in management at the moment. The whole "we are shooting for big contracts" (this time it is $600 mil!!) mantra and the fact that they did not flag this result in the lead up to reporting season being the reasons. Lots of spin in the investor preso.

I got out of this yesterday for much the same reasons as you describe. Way too much fluff in the report. And they have been saying for the last ~18 months that they are trying to win large contracts but then in this report that changed to "now we have everything in place to start winning large contracts".

 

[tech/a]

Technical buy at .70c
Stop .66
Like the low risk
Shackeout of weak hands.
Looking initially at 85c on the up side.
Will post a chart with analysis when I have more time.

 

[herzy]

Technical buy at .70c
Stop .66
Like the low risk
Shackeout of weak hands.
Looking initially at 85c on the up side.
Will post a chart with analysis when I have more time.

Surely the big drop was fundamental? Profit decrease, lack of sales, reduced dividend etc.

 

[Ves]

I got out of this yesterday for much the same reasons as you describe. Way too much fluff in the report. And they have been saying for the last ~18 months that they are trying to win large contracts but then in this report that changed to "now we have everything in place to start winning large contracts".

There are plenty of others, briefly:

The "normalised" EBITDA, they mentioned something to do with "opportunity costs" - no one ever does that, it's meaningless

Fairly sure if you take all of the fluff out of the P & L the bottom line is basically the same as 2009 - but there is something like $65 million more assets & acquisitions on the balance sheet. This means profit dropped 42% compared to pcp

They have $16 million or so (I don't remember the exact figure) in deferred acquisition payments to make in the next few months. The rest is script, so further dilution. No cash in the bank, almost $4.5 million overdraft. I wonder just how much they are starting to be at the bank's mercy. They've burnt through more cash last year than some small mining explorers!

Their main mode of operation going forward seems to be, as someone else on another forum said, "if we build it they will come" (referring to the data centres), but there seems to be a lot of hoping to go along with all of this.

I am wondering whether they will need to tap the market for cash in the next 12 months?

Definitely should have gone with my gut feel and sold yesterday. I agree with tech/a in terms of it finding support at $0.70. Doesn't help me much though!

 

[McLovin]

There are plenty of others, briefly:

The "normalised" EBITDA, they mentioned something to do with "opportunity costs" - no one ever does that, it's meaningless

Ha! I saw that too and scratched my head. I've never seen a company add back, what I guess economists would call, "revenue foregone". When companies start using such fuzzy metrics they are clearly trying to paper over something.

I am wondering whether they will need to tap the market for cash in the next 12 months?

I also noticed that they have $10m bank loan which has become current. There is no mention of what will become of that. If they can't roll it over then they are going to need to fund it with equity. There's not much fat on this company left.

Why can't DTL be back under a $1.

 

[Ves]

There's not much fat on this company left.

There's probably none in reality - negative net tangible assets! Such poor disregard for their balance sheet IMO.

 

[craft]

Definitely should have gone with my gut feel and sold yesterday. I agree with tech/a in terms of it finding support at $0.70. Doesn't help me much though!

Since you realised your investment thesis for ASZ was invalidated, how much has hesitation cost you so far?

 

[Boggo]

There's probably none in reality - negative net tangible assets! Such poor disregard for their balance sheet IMO.

Aren't you doing exactly the same, ie, having a poor disregard for your own balance sheet by hanging on to a stock that is in freefall

Maybe I am missing something here but I am having difficulty understanding why anyone would be holding on in hope to something that has halved in value.

(click to expand)

 

[tech/a]

Surely the big drop was fundamental? Profit decrease, lack of sales, reduced dividend etc.

Technical analysis is (to me at least) The ability to read and anticipate
the participants conviction in the stock going forward.
There reactions to Fundamentals are recorded in price and volume.
Their anticipation is also recorded in Price and volume as well as time.
My stop is in place so that when Im wrong---Ill live to anticipate another day.
When I can move my stop to B/E its no longer a risk issue.