Australian (ASX) Stock Market Forum

ENG - Engin Limited

Comment......

Company has gone from

30 Jun 05 ---> 5800
31 Dec 06 ---> 18000
30 Jun 06 ---> 40000

if this rate of growth continues

i could see that 100 000 by mid next year is very easily achievable

ij
 
Don't get me wrong i'm just playing devils advocate here..

They are impressive growth numbers absolutely, but a lot of the exuberence on this thread a few weeks back stemmed from this magical breakeven point at 40,000 subscribers. Now they need to dilute the shares some 25% more to raise capital to upgrade infrastructure and expanded marketing to cope with this larger number to bring them onto 100,000.

So therefore was 40,000 ever a realistic figure?
 
22 c might seem low today

but i thought 24c was low the other day

then before i thought 27c was low


i wonder what i will think on monday



ij
 
I guess my only real problem with this company is that everyone I know who uses it is constantly complaining about poor reception/bad lines. To the point where my friend will actually hang up that phone when I call him and call me back on a normal one :cautious: not a good sign imho...
 
LPA said:
I guess my only real problem with this company is that everyone I know who uses it is constantly complaining about poor reception/bad lines. To the point where my friend will actually hang up that phone when I call him and call me back on a normal one :cautious: not a good sign imho...

I don't think that could hold true and engin still be in the position they are in now. Illka Tales said at a breakfast earlier in the year that they commonly encounter these problems, where subscribers sign up with budget ISPs and are not getting what they pay for. Just because person XYZ brought a 512/128k broadband service doesn't mean you are getting these speeds and there are no congestion. This is dependant upon the ISP. Unfortunately engin can control their connections to the backbone internet, but have no control over what ISP the customer chooses to connect with, the quality of the customers router or technical capability of their setup.

My experience has been contrary to you. I have Engin on an Internode ADSL connection in Adelaide. I have a friend using Engin, also on an Internode ADSL connection but in Sydney - he sells the service to his customers. We have never had any issues and quaility has been excellent.

I had a chap ring me on Tuesday night for an hour. He was ringing from his Engin service connected to Bigpond cable. I noticed no problems during the call, and I asked him what he though of the service. As he is on cable, he is over the moon. No phone line rental and his engin service has been excellent.

If engin was a bad as you say for every customer, then I would be questioning their growth figures. The fact is quaility only effects a small percentage of customers and is the majority of cases, the cause is outside of engin's network and beyond their control. The same problems exist with all Voice Service Providers.
 
pch said:
Don't get me wrong i'm just playing devils advocate here..

They are impressive growth numbers absolutely, but a lot of the exuberence on this thread a few weeks back stemmed from this magical breakeven point at 40,000 subscribers. Now they need to dilute the shares some 25% more to raise capital to upgrade infrastructure and expanded marketing to cope with this larger number to bring them onto 100,000.

So therefore was 40,000 ever a realistic figure?


I guess you can look at it both ways. They could just wait for 40,000 customers and then close their sales office and refuse to sign up any more customers. Their current network is more than capable of handing this number, and they wouldn't have to raise any additional capital. When they break even in a couple of months, they could start putting those funds away, or get a loan for capital expenditure to support a network expansion. Then towards the end of the year, they could open the sales line and start signing up customers again.


I think engin has been having trouble keeping abreast of growth and there has been some evidence where they have been slow to keep the network in front. I guess as soon as they finish one upgrade, they are ready for the next. If they don't manage this properly, then they could be in trouble.

It was a presentation last year that suggested break even would be 40,000 customers.

In a presentation from engin earlier this year, they indicated in the "near future" they would be expanding their network to support 250,000 subscriber lines, move into New Zealand and "scale backend for growth". So a capital raising should have been expected. It's also a high growth sector and lots of things have changed between the break even announcement last year and present.

While its a little sketchy on what the money will be used for, they do indicate it will be used for upgrading "network and support systems to provide a step change in the Company’s operating capacity." While the "company expects to be serving in excess of 100,000 subscriber lines by June 2007", I wouldn't be surprised if this 'step change' will be infrastructure to support the initial target of 250,000 subscriber lines. This would then be give the company some head room for growth should predictions be light and also means this is probably going to be the last significant capital expenditure in a while.

You also have to remember economies of scale and that this will help to lower costs. They also indicate the money could be used for "geographical expansion". This could mean New Zealand, but I read it as extra gateways into additional local call connection points. Another presentation late last year indicated "Additional gateways will be deployed to increase margins" At the moment they have 12 gateways or local call collection points meaning they ware any extra costs where calls must transit another telcos network to reach a local call collection point that engin doesn't have a presence in. Expanding this network, will as the presentation suggest, will help increase margins.

I see the news as quite positive. Engin have been in the business long enough to understand the growth issues, and indications to increase the network to 250,000 indicates they are confident this equipment wont collect dust and never get used.

That's my spin on it.
 
All good points. I should have disclosed that I built an ISP in 1999-2003 so I am very much aware of the internal goings on and the sorts of infrastructure challenges posed. Therefore I always felt that Engin were at the mercy of ISP's that massively oversubscribe (we did and my former colleagues still in the business also do too).

ISP margins are so low that its an effective way to compete with the Telstras of the world who charge more to their wholesalers than they charge retail..

Unfortunately engin have no control over this and all they can hope to do (and they are doing) is negotiating alliances with ISP's so that they can guarantee true QOS. Anyone who thinks that a box that says 'Quality of Service' as a feature actually gives them anything is kidding themselves. It is not QOS until all parties agree on how to handle voice traffic end to end. A typical example of end to end for most ISP's is:

engin box -> last mile -> Telstra DSLAM -> Telstra ATM mesh - > *ISP ATM feed to Telstra* -> ISP infrastructure -> *ISP upfeed* -> internet -> engin infrastructure -> engin SS7 type PSTN gateway -> phone network

The items marked with * is there the ISP scrimps and the 'Telstra ATM mesh' bandwidth is also beyond the ISP's control. Telstra is not about to treat engin voice traffic with any priority..

Please don't get me wrong - I'm not anti engin at all and I haven't really sat down to work out what I think its fair value is. (no I don't hold yet but I follow all ISP and telco stocks). I just think its important that people need to understand that there is more to VOIP than just 'cheap phone calls'.

ps - No ISP in Australia has mastered billing yet :) Its a major, major challenge, but thats another long winded story for another time :)
 
Article in AFR today interviewing the CEO.
He addresses many of the market's concerns.
There seems to be a sentiment problem associated with this stock esp. in light of the experience of certain VoIP providers in the US.
Fortunately for ENG shareholders, Ilkka Tales claims the Eng business model is quite different and therefore will not be beset by the same problems experienced by the US providers.
As a shareholder, I feel a little bit more comfortable about continuing to hold for the time being......
 
I read the article

He says Engin has the cash to continue trading without raising new equity

but this would not give them the ability to accelerate marketing

he says the cost of customer acquisition is less than $100
(note Vonage is $290)

he says they have expanded to NZ

generally a positive article

I must agree, I feel a little more comfortable holding for the moment
and perhaps purchasing more!!!




ij
 
Buying more maybe a good idea as it is trading at around 0.19. The problem is that it fell very heavily in the last few days.
 
fab, will be a good top up time, and trading also
as is oversold imo, small gains could be made over the coming weeks by buying in the panic and selling as it bounces
 
Pharaoh,

Sounds like you were right. Up 25% today. Looks to be that the annoucement they made had a relief effect on the market
 
Pharaoh,

Sounds like you were right. Up 25% today. Looks to be that the annoucement they made had a relief effect on the market
 
exellent
its nice to be right occasionally

the selloff has been stupid really. glad its back on track now
watch everyone buy back in once they have sold off for tax loss purposes
 
I have been interested in this thread for some time. Followed it closely and the movements on the ASX. I fall into the sceptic parcel. Why. So little action by Engin to consolidate FTM position.

Thursday, 07 July 2005
News that VoIP provider Engin is planning a capital raising that will nearly double its market capitalisation has revealed the company is set to embark on a massive TV, print and radio campaign to drive subscriptions to its Internet Telephony services.


So they capital raised in 2005 for this massive campaign. Results? Everyone...A lot of contibutions here have been +ve about break even for months. Still not here. I certainly saw little evidence of this massive campaign. Most people I speak to know little about Engin. A good sign it is having little impact.

Why is this stock talked up so much. I feel for all those that purchased since Feb when it made its move. The vast majority would be writing of losses.

Pure speculative stock in my opinion. Glad I didn't jump on board and follow the masses, My fear for Engin is that by the time they make a serious move on the market new technologies and companies will move in. Anyone Remember tech boom and stocks like PLX? We can talk up all of these stocks like UNW (I consider in the same basket) still not showing results

Just my thoughts. yes I know it is my first post here why would you listen to my thoughts? I suspect there are many who don't contribute but read these forums. They deserve the bear as well as bull.
:2twocents
 
Hi browngornet

No, it's good to have a balanced view on each stock
this site, unlike say HC is good in that few blindly ramp stocks, as with a smaller group, we are all accountable to each other.

I have always been bullish on Engin.

Why? Cos I like their fundamentals, how they have shown initiative by saying they will build the subscriber base, which they have done, and it's a brilliant trading stock.

It was 6c last year, 16c Jan, 49c a few months ago, 17c a few weeks ago, and 25c today.

Wow. If you believe in the company, like I do, you could have made wonderful profits along the way.

They are on the back of taxi's, ceo Ikka Tales speaks at some of the biggest telco / IP forums, and they are growing 4000 a month.

BPL is coming soon, and that will be huge for them.

Just my thoughts, but I have done very well so far and once breakeven comes, should be happy days to continue...
 
Clarification on meaning of "breakeven"

Hi everyone.

I'm not sure if the concept of "breakeven" and the implication of the capital raising have been misconstrued a little.

Financially (IMHO), Engin can declare breakeven when their monthly operational costs (salaries, running expenses, lease etc) can be covered from revenues generated each month.

Effectively the company reaches a point of equilibirum - ie. subscriber numbers are stable (not declining) and there would be a "cap" on the number of subscribers they could service.

The capital raising is being pitched as a means to ensure future expansion initiatives can be realised/supported.

As such, shareholders are voting effectively one of two ways - to remain "as is" or to "position for further expansion".

Taking something like BPL - if this reaches market maturity and there is large uptake, the company needs to be positioned to take advantge of their tentative foothold.

Thus, raising capital now to position themselves.

An alternate to a capital raising may be to borrow the money and run debt. Of course, this requires the revenue streams to be able to service such debt, which is what growing the customer base is aimed at achieving!

One needs the (network) capacity to achieve this growth and delaying the expansion may mean we lose a window of opportunity.

I just hope that the Engin board consider the support ongoing shareholders (to date) have lent the company and consider something like a "one for two" offer or rights issue.

Just my :2twocents
 
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