Australian (ASX) Stock Market Forum

EPY - ePay Asia

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Yeah I think it is a ridiculous amount as well - it would nearly be best for all other shareholders if NPAT was less than AUD 6mm and the dilution didn't have to occur! They try and argue that it is effectively delayed consideration for the purchase of the business - and given I don't have enough information on how the valuation was done unfortunately it is difficult to comment.

The 32mm came from the prospectus (although the way they worded it was quite confusing). Basically their are three scenarios, NPAT less than 5mm (in which no additional shares are issued), NPAT between 5mm and 6mm (in which 32mm shares will be issued) and NPAT exceeding 6mm in which 72.5mm shares will be issued which looks to be the likely scenario.

So even though Simon Loh sold a number of his shares earlier in the year (I think he now holds around 42%, following the issue of shares he will be back over 50%. Overall it seems very excessive given he has already directly benefited from the increasing share price.
 
Sold today Costa.

You know I love the growth prospects of e-pay, but the issuance of 73m shares is just too much in my opinion...especially when profit of 5-6m is 40m less shares.... coupled with the adjustments ot the results announcements, plus a few other shady things just makes me feel like pocketing my 20% gain and getting on out.

Trust me I can see the prospects that you guys see, it just doesn't quite fit my risk profile and I wish you guys all the best.
 
Yeah that dilution is a major weight on the share price, as I mentioned before you need to see a 36% increase in NPAT in FY07 just to keep eps flat. Whilst the Indian and Chinese markets provide good growth opportunities in FY08 its a little far out for me personally.

The other thing I don't like about this company is it's very thin margins. It trades on the kind of margins of a food retailer, even lower. It wouldn't take much of a hike in operating costs to see this already thin margin eroded. Although the guys at pegasus think that the likelihood of a major telco entering the resale space is very low you could imagine what would happen to EPY if these guys decided they could do the same at a lower cost. Stockpanther I don't blame you for taking your 20% and running. It's a little too risky for my blood as well.
 
Fair enough Stockpanther - your reasons for selling a definately valid. I think that once things become clearer next year (in terms of the impact of the dilution on the SP / EPS, the level of growth EPY manages to achieve into FY2007 and how margins hold up) you may well have the opportunity to buy back in.

As you mentioned one of the attractive features of this stock is it is one of the few companies listed on the ASX with exposure to the South-East Asian markets.

All I can say is Simon Loh will no doubt be having a good Christmas this year!
 
consolidating at 50c area... it will b interesting when the full yr report comes out... and how the share prices will react when simon loh gets his 73M shares! :eek:
 
73m additional shares

Can people advise where I can find out about this additional share issue for Simon upon reaching more than $7m, is it in the prospectus?

I must say I did not read that prospectus very well, anyway.

If you have the prospectus, anyone like to kindly send to me at cultureshop2000@yahoo.com

Thanks.

Sounds concerning, but like someone mentioned they need to grow 37%, that's not difficult I think even for 2007, I think they would do at least 50%, given the improved concentraiton of revenue from Malaysia and contributions from Indonesia.

Remembering that 2006 they grew triple digits, and not just single triple digits, but at least in the 200%!!..

For a holder who rides out 2007 without selling, it will consolidate and pick up more momentum for 2008 when 2007 was laying further foundations (ie. China)..

Fair is fair, Simon did create this company and of course he'll do what everybody else would do, but we get our rewards later...

Barriers to entry is one attractive thing about this company also!
 
Details of the deferred consideration to be paid to Simon Loh were in the prospectus (I don't have a copy unfortunately and while you used to be able to access an electronic copy via EPY's website not sure if this is still the case).

What people need to remember is that the additional shares to be issued to Simon Loh is just a deferred payment for the sale of his company - given it was difficult at the time of the reverse takeover to precisely value the company, they decided to base the purchase cost partly on first year revenues (which should be indicative of future cash flows). So while prima facie the issue of news shares and the dilution on existing shareholders may seem bad news - the goods news is the profit/growth EPY achieved.

In the absence of any signficant announcements re entry into new markets, I expect the growth rates EPY have achieved to consolidate over 2007. As I have mentioned, the FY2006 results and 2007 guidance will be key.
 
I've done a PE calculation and based on 287m shares, with $8m net profit after tax, with a share price of 51cents, it represents a PE of 19, now with the price around 55 to 60, its not going to change much more than say to 22.

Anyway, conservative forecast was for $11m for 07, but obviously that's too conservative, it was struck and forcasted much earlier, from a broker way before the 2 quarters results came out.

So even at $11m compared to $8m, its more than 30% revenue growth, for a PE of 22, so its certainly reasonable. with large upside for future growth.

A good story still.
 
Does anyone smell a rat here? Net profit after tax was $6,011,365 just $11,365 greater than 6,000,000 that Simon Loh could get bonus shares for nothing. He gets a total of 72,500,000 shares for the profit being over 6,000,000, if it was less than he would receive less shares on a pro rata basis...approx 36.25 shares for every dollar of profit over 4,000,000 up to a maximum of 6,000,000.

I really think the figures have been massaged up to over 6,000,000 so that Simon Loh gets as many shares as possible, there is a large amount of money sitting in accounts receivable, a lot more compared to 2005, yet accounts payable has barely increased.

I will take a further look at this when I have time, but I am interested to see what other peoples opinions are. I am seriously considering finding out who the auditor is and contacting them to make sure they are aware of this fact and ask them to take more notice of revenue and expenses (which can be changed to bring the profit figure up)
 
On March 3rd, 2014, ePay Asia Limited (EPY) was removed from the ASX's official list following the compulsory acquisition notice from GHL Systems Berhad.
 
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