Up 10c this afternoon, on big volume. Fundie buying up? Look out above.
even more puzzling, the rally comes a day after a rather subdued "Trading Update" http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01514055
Ms Marquette: la donna e mobile
View attachment 57811
This looks like it's going to be a good "traders" stock for those confident enough to buy at support and sell at resistance but the trend for the short to medium term is bearish and volatile.
Data#3 expands service offering via proposed investment in WiFi Analytics company.
Aligned with current business.
Incremental and staged investment.
Funded from surplus cash flow.
http://www.asx.com.au/asxpdf/20140613/pdf/42q5yb12rzyvcn.pdf
Funnily enough, I was just talking yesterday with a friend about how much better it feels when a company your invested in funds expansions with discretionary cash flow as opposed to debt or rattling the shareholder tin.
The biggest downside to a strategy is less of the cash flow being directed to shareholders, i.e. a reduced total return, whereas the biggest downside of the alternative sources of funding is much more capital destructive.
Profitability guidance looks promising.... probably recovering a bit quicker than I anticipated if it's maintainable into the medium term.
Pretty happy with the result today.
John and Laurence have done a good job of getting the info out to holders too; the recorded webinar is a good listen and gives some good insight into the vibe of DTL at present.
Employee expenses are up heavily this half, but as John Grant states - these are entirely revenue driving employees. Looks like the strategy of carrying costs and investing ahead of the curve continues to play out.
In order to grow profitability over the PCP despite the hefty jump in employment expenses, DTL managed to increase the gross margin to a level not seen in a H1 result for a few years.
I note that there was no discussion over Cloud Product offerings. This was something I picked up at the AGM that John mentioned. He said that the industry was finally starting to gain momentum and that the big developers were finally making globally resellable cloud offerings.
Depending on the future of the product segment, I see a few paths for DTL.
If they can continue to maintain/grow the product segment then we may see more of the same - a low margin, but highly successful business that operates on negative working capital without much need for reinvestment.
However, based on the acquisition activity and the re-shaping of the industry from capex to opex, there is a good chance that the service segment will slowly become the more relevant segment.
The valuation implications are very difficult to model as a number of factors will change; working capital will likely increase substantially from the massive negative balance we currently see (perhaps a loss of advantage here?), margins will substantially increase, revenue growth may be subdued or even in decline until the growth of services reaches scale to make the product revenue redundant, others I haven't though of?
Pretty happy with the result today.
John and Laurence have done a good job of getting the info out to holders too; the recorded webinar is a good listen and gives some good insight into the vibe of DTL at present.
Employee expenses are up heavily this half, but as John Grant states - these are entirely revenue driving employees. Looks like the strategy of carrying costs and investing ahead of the curve continues to play out.
In order to grow profitability over the PCP despite the hefty jump in employment expenses, DTL managed to increase the gross margin to a level not seen in a H1 result for a few years.
I note that there was no discussion over Cloud Product offerings. This was something I picked up at the AGM that John mentioned. He said that the industry was finally starting to gain momentum and that the big developers were finally making globally resellable cloud offerings.
Depending on the future of the product segment, I see a few paths for DTL.
If they can continue to maintain/grow the product segment then we may see more of the same - a low margin, but highly successful business that operates on negative working capital without much need for reinvestment.
However, based on the acquisition activity and the re-shaping of the industry from capex to opex, there is a good chance that the service segment will slowly become the more relevant segment.
The valuation implications are very difficult to model as a number of factors will change; working capital will likely increase substantially from the massive negative balance we currently see (perhaps a loss of advantage here?), margins will substantially increase, revenue growth may be subdued or even in decline until the growth of services reaches scale to make the product revenue redundant, others I haven't though of?
The spike that happened last week was nothing unusual for this stock. It has these kinds of spikes around about 1 or 2 times a year, both up and down. Some much larger than the one on Friday. (As can be seen in the chart below). The fact that it happened in one day is more a sign of liquidity more than anything else.
View attachment 57849
If you're not in this stock yet, DO NOT ENTER. A bounce was long overdue.
View attachment 57304
Wait for price stabilisation and a clear trend back in the right direction. You will always miss out on the first move and the most exciting gains but they are the ones that carry the highest risk, are almost impossible to time and wipe people out before they've learned the lesson that "nothing is a sure thing" in this game.
Patience.
(Of course I could be very wrong so do not take this as advice. I'm either right or wrong It is just my personal opinion based on my Technical Analysis skills. I am not qualified to give you personal advice)
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