JIN - Jumbo Interactive

[Douglas]

Re: Jumbo Interactive (Buffet would like this stock)

Yeah it would be better if the dividend was higher. I always look at the cash flow statement to make sure of investing as it is a good indicator of performance and not subject to the same accounting difficulties you mentioned. Looking at Jumbos cash flow, they made 6.5 million in operating cash flow, spent 2.7 million in investment cash flow leaving 3.8 million left for the company to spend. If they had returned all that to shareholders it would have been a dividend of 9.5 cents. They however are fairly conservative and are also laying aside funds for future expansion so spent the 3.8 million as follows. $1.07 million for buybacks, paid $300,000 off debt, $166,000 thousand in dividends and increased their cash in bank by $2.3 million.

 

[JTLP]

I remember reading somewhere that their contracts are only guaranteed until 2012/13/14 (can't exactly remember). Thus why this is probably priced "cheaply" according to some. They will need to rebid on these and if unsuccessful then they would be in some serious trouble...

Anyway FYI and DNH

 

[McLovin]

Re: Jumbo Interactive (Buffet would like this stock)

Yeah it would be better if the dividend was higher. I always look at the cash flow statement to make sure of investing as it is a good indicator of performance and not subject to the same accounting difficulties you mentioned. Looking at Jumbos cash flow, they made 6.5 million in operating cash flow, spent 2.7 million in investment cash flow leaving 3.8 million left for the company to spend. If they had returned all that to shareholders it would have been a dividend of 9.5 cents. They however are fairly conservative and are also laying aside funds for future expansion so spent the 3.8 million as follows. $1.07 million for buybacks, paid $300,000 off debt, $166,000 thousand in dividends and increased their cash in bank by $2.3 million.

The problem is that I'm dubious as to whether those capitalised expenses really should have been capitalised. I think there are very, very few examples of where customer acquisition costs should be capitalised and this doesn't strike me as one. There is also ~$900k in capitalised website development costs. For a company this size with, from what I have seen, a relatively basic website, it's seems strange that there is no mention of what R&D was done wrt website development during the year considering almost 20% of operating cash flow was ploughed into development. Add those two numbers back to your operating cash flow, the remove the income tax received item and apply a more reasonable income tax paid number and it doesn't look that great.

 

[robusta]

WOW - good old US of A. Good luck to all who hold.

http://www.asx.com.au/asxpdf/20120117/pdf/423ssj5j6qwrs6.pdf

 

[McLovin]

Bit of an over-reaction me thinks. Up 34% because they hired a couple of execs to pursure opportunities.

 

[robusta]

Bit of an over-reaction me thinks. Up 34% because they hired a couple of execs to pursure opportunities.

You could be right there.

 

[skc]

Bit of an over-reaction me thinks. Up 34% because they hired a couple of execs to pursure opportunities.

Probably an over-reaction but a trading opportunity nonetheless. Watched the action and bid up to 42.5c on open but didn't get a fill.

The ruling means JIN's potential market is now 50x bigger than before, so a sharp rise is not without reason. If they land a deal or two then it will be a company maker.

The funny thing is...the ruling actually passed late last year. The smart ones already bought 3 weeks ago. It also shows that there are zero analyst following JIN.

http://www.bloomberg.com/news/2011-...ternet-lottery-jackpots-after-u-s-ruling.html

 

[McLovin]

The ruling means JIN's potential market is now 50x bigger than before, so a sharp rise is not without reason. If they land a deal or two then it will be a company maker.

I did a quick Google search and there are already several sites selling lottery tickets for American lotteries (as well as European). They use local agents to buy the tickets.

Here's an example...

http://www.thelotter.com/

Worth noting as well that the lottery industry in Europe is worth almost double the American one and doesn't have restrictions on it. I wonder why they haven't done anything there.

 

[McLovin]

Well that fizzled out quickly.

 

[skc]

Well that fizzled out quickly.

Technically it's done a gap fill but also an ugly weekly candle.

Fundamentally the upside of a deal in US is probably at least 60-70c, while the downside will be a continued slow drip lower.

There's a long shot bonus that the Australian license is renewed... although the market hasn't priced that in for the last few years (and prob for good reason). The database of existing clients might worth a couple of $m.

 

[ROE]

something is up
has a very good run last few days and even like a day today ...

Could be nothing just risk and reward for this stock look extremely square on
the upside some months ago, even if they didn't have anything, no work, no renewal
they will have enough cash in a few years to wind up and hand back cash to shareholder
and you wouldn't lose much money at all... so only upside and the upside is huge...

disc: I load this up about 6 months ago

 

[ROE]

Headline profit up 7% but look closely, it is a stunner business
underlying profit up more like 50% wooho another rising stars

 

[ROE]

Incredible volume and price last few days...
no news, no speeding ticket ...

Friday up 15%
Today up 12%
tomorrow? looking at sell side it going to be up again...

Come on out with a contract or 2 on US and this going to be my 10 baggers baby...it may even beat CCP
to the 10 baggers for me

 

[ROE]

I did a quick Google search and there are already several sites selling lottery tickets for American lotteries (as well as European). They use local agents to buy the tickets.

Here's an example...

http://www.thelotter.com/

Worth noting as well that the lottery industry in Europe is worth almost double the American one and doesn't have restrictions on it. I wonder why they haven't done anything there.

Now I have a sizeable interest in this business I can explain a few things

thelotter.com is a grey market operator, it doesn't have any official license
so if they want they can shut it down at any time

where as JIN is an official accredited agent, it operates within the law so there is no risk
to its business being shut down for not compliance or not having license...

Can only be a good thing for license operator , if and when these guys get shutdown
who would stand to gain market share

 

[ROE]

Second profit upgrade for the year ..

FY 2012 NPAT IN THE RANGE $5.9 TO $6.2 MILLION (23% to 29% inc)
FY 2012 REVENUE IN THE RANGE $94 TO $98 MILLION (24% to 29% inc)

STRONG SALES FROM A GROWING CUSTOMER DATABASE AND RECENT RUN OF LARGE JACKPOTS

 

[catfish]

Very interesting times for this company. I picked up a few recently as I was attracted to the amazing upside from a potential US contract. I have also seen some positive commentary on this stock recently which will only assist price in the short term. For now it's exciting to be part of this story.

 

[ROE]

Very interesting times for this company. I picked up a few recently as I was attracted to the amazing upside from a potential US contract. I have also seen some positive commentary on this stock recently which will only assist price in the short term. For now it's exciting to be part of this story.

Yeah I'm super impressed when I discovered them and try out their online lottery and bought a few tickets.

So easy, their online system I ranked it.. one of the all time best for me in term of online usability...

I shop a lot online and use numerous site, JIN and Wotif are best of the best up there

when it come to user interface and it is such a pleasure to use, Just like google
search engine then there is everyone else...

Right now the market still pint this stock down but once they score a US or two contract this stocks should be on a PE of 15-20 or more ...

such an awesome leverage earning business, every dollar extra after the fixed cost of running the IT system the margin get bigger.....

just have a look of their revenue grow vs profit grow rate ..staggering unheard of in
the world of normal brick and mortal business.....

I think they will exceed the current revise forecast as a few more big jackpot are lining up from now till 30 June .... next week Tuesday 70m should draw crazy number of people playing and if that doesn't pop like the last 2 (30m,50m) this will get to
90m or 100m Jackpot ...now that would be a fireworks finish for the FY year

 

[catfish]

Yeah I'm super impressed when I discovered them and try out their online lottery and bought a few tickets.

So easy, their online system I ranked it.. one of the all time best for me in term of online usability...

I shop a lot online and use numerous site, JIN and Wotif are best of the best up there

when it come to user interface and it is such a pleasure to use, Just like google
search engine then there is everyone else...

Right now the market still pint this stock down but once they score a US or two contract this stocks should be on a PE of 15-20 or more ...

such an awesome leverage earning business, every dollar extra after the fixed cost of running the IT system the margin get bigger.....

just have a look of their revenue grow vs profit grow rate ..staggering unheard of in
the world of normal brick and mortal business.....

I think they will exceed the current revise forecast as a few more big jackpot are lining up from now till 30 June .... next week Tuesday 70m should draw crazy number of people playing and if that doesn't pop like the last 2 (30m,50m) this will get to
90m or 100m Jackpot ...now that would be a fireworks finish for the FY year

Interesting comments from CEO regarding jackpots and their ability to bring in those registered customers which do not play on a regular basis. I also believe the result will exceed revised forecasts, let’s hope no one wins next week.

Very impressive and typical of an internet business with profit growing faster than revenue as you mentioned. Better to put your capital into JIN rather than using it on their services, although 70 million may exceed to return on my investment in JIN. haha

 

[ROE]

May use my JIN dividend and get a few tickets this Tuesday

If I win I take 5% of JIN stock

 

[Ves]

SKC, I will reply here so as not to de-rail the DTL discussion thread.

Jin is not a IT company. It is a marketing company with a customer database and a licence to sell lotto tickets.

The reason that I said this was that they developed their own systems / website, over the last decade. It's a world-class system. I consider most services based companies that rely heavily on "people power" to be marketing companies at heart. They also won the SA Lotteries contract recently by the way. Gives the earnings a higher degree of certainty than there was twelve months ago. Certainly wouldn't hold this company as a core holding though. Agree that there is still speculation involved.