TZL - TZ Limited

[prawn_86]

For somebody who has written of their investment, you seem awfully annoyed!!!
Just relax and wait for the Half Yearly in Feb - What's another 4 months for somebody that's waited 4 years?

Its not my money im worried about, i wrote that off a long time ago. Who is to say they will give any actual details in the half yearly? They havent so far.

As far as im concerned selling one item into an industry could represent a "significant market", doesnt mean they will get further market share or even make profits from it

 

[UBIQUITOUS]

Its not my money im worried about, i wrote that off a long time ago. Who is to say they will give any actual details in the half yearly? They havent so far.

As far as im concerned selling one item into an industry could represent a "significant market", doesnt mean they will get further market share or even make profits from it

Prawn, I'm afraid that's investing for you. There's no such thing as an absolute sure thing - no matter how much you want it to be.

However at these prices, and with increasing revenue, I'm think TZL is a no brainer investment.

As for profits, I think you do not understand the tech sector. Yes margins are important, but so is revenue growth, and TZ are most definitely showing the latter. If you want to know the margins, I'm afraid you are deluding yourself if you think you'll see them in an announcement. Can you point me to any company where the margins are stated in a sales announcement? No, I didn't think so.

So that brings us back to the accounts - the litmus test.

ps, can I have your shares seeing you still claim that they are written off. How else can you realise a loss in your accounts?

 

[prawn_86]

However at these prices, and with increasing revenue, I'm think TZL is a no brainer investment.

How do you know they are increasing revenue enough for it to matter? If they are only selling a few items then revenue is still increasing, but not enough to afferct the share price

 

[skc]

Prawn, I'm afraid that's investing for you. There's no such thing as an absolute sure thing - no matter how much you want it to be.

However at these prices, and with increasing revenue, I'm think TZL is a no brainer investment.

As for profits, I think you do not understand the tech sector. Yes margins are important, but so is revenue growth, and TZ are most definitely showing the latter. If you want to know the margins, I'm afraid you are deluding yourself if you think you'll see them in an announcement. Can you point me to any company where the margins are stated in a sales announcement? No, I didn't think so.

So that brings us back to the accounts - the litmus test.

You don't need details of the contracts, but you must at least have some top down guesstimate of some numbers. If you assumption of $10 per share needs every Australian to have a bank of 6 lockers in their home, then you are setting yourself up for disappointment. I doubt very much you have done that exercise.

And valuing technology company on blue sky profit growth potentials? That's soooo 1998!

 

[UBIQUITOUS]

If you assumption of $10 per share needs every Australian to have a bank of 6 lockers in their home, then you are setting yourself up for disappointment. I doubt very much you have done that exercise.

It is once again clear that you have not even looked at this company. Locker banks in homes? That's new to me!

Perhaps you can start your understanding about the product market right here:

http://mashable.com/2011/09/06/amazon-locker-system/

8,000 locker banks for one company at a price of $125k per locker bank (which TZ has stated they have sold locker banks for) = $1B.

All from one company. And if you don't think Amazon can afford that, I suggest you look at what they are outlaying on their fulfillment centres - Over $100m per centre!

However, to start with your research, I've heard that the company website is a good place to start if you are new to f/a.

www.tz.net

 

[skc]

It is once again clear that you have not even looked at this company. Locker banks in homes? That's new to me!

I know the lockers are not in homes. I was just saying you want to make sure the valuation do not rely on unrealistic assumptions (such as a ridiculus amount of lockers).

Perhaps you can start your understanding about the product market right here:

http://mashable.com/2011/09/06/amazon-locker-system/

8,000 locker banks for one company at a price of $125k per locker bank (which TZ has stated they have sold locker banks for) = $1B.

OK now we are getting somewhere... so we have half a data point for some valuation... any more?

 

[UBIQUITOUS]

OK now we are getting somewhere... so we have half a data point for some valuation... any more?

Sure, I'm quite happy to help you out!

Take these 3 links together. Do they all point to the same? Unbelievable coincidence?
Looking at the companies that TZ is possibly dealing with, TZ only has to strike one deal for new shareholders to see significant upside.

http://www.dailytelegraph.com.au/no-more-parcel-queues/story-fn6b3v4f-1226064659764

Pitney Bowes is negotiating with potential site owners and is expected to have numerous trials running soon.

"We want to install the lockers at locations that give convenient access for the public, as well as in offices around the country" said the managing director of Pitney Bowes Australia, Tony Simonsen.

Similarly, building groups are considering installing banks of lockers and post boxes at new residential developments.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01208461

TZ Limited is pleased to announce that Pitney Bowes Australia Pty Limited ("PBA"), exclusive distributor of Telezygology, Inc's Packaged Asset Delivery products for the corporate mail, corporate mail services and postal market segments in Australia and New Zealand, has entered into an agreement with a major Australian service provider to supply TZ's intelligent locker systems for trial evaluation as part of a strategic initiative to create and significantly enhance consumer options for parcel distribution in Australia.

This is a major achievement for TZI and it indicates that our SMArt System™ solutions are leading edge in terms of innovation and value added capability,” said John Wilson, TZI CEO.

http://www.theaustralian.com.au/bus...ry-post-a-winner/story-e6frg9io-1226128445961

One of the problems with parcel delivery is knowing when people are at home, so to make life easier, Australia Post is about to launch its Smart Locker program.

When you order something online, you nominate whether you want it left in a locker bank, a central clearing depot or at home. The lockers will be at the regional mail centres, as will be the personal pick-up, and pin numbers will be provided to enter the lockers.

 

[McLovin]

What's the patent these guys have? There website mentions 180, but I'm struggling to find what they cover and I find it hard to believe that this won't be copied if it's even mildly successful.

 

[steamshovel]

SKC,
I think it's like investing in a mining company, the potential is there, but you never know if you are going to hit oil,coal,gold etc. you may never strike it rich, but you have to at least be mining !
or maybe it's like buying a lottery ticket, I know for sure you won't win unless you have a ticket, so why don't you buy one in TZ, you may win, no guarantee
I know every time they draw a lottery, somebody wins, may as well be you !


Good luck SKC

 

[skc]

SKC,
I think it's like investing in a mining company, the potential is there, but you never know if you are going to hit oil,coal,gold etc. you may never strike it rich, but you have to at least be mining !
or maybe it's like buying a lottery ticket, I know for sure you won't win unless you have a ticket, so why don't you buy one in TZ, you may win, no guarantee
I know every time they draw a lottery, somebody wins, may as well be you !


Good luck SKC

Your logic is compelling.

I thought we were getting somewhere in putting a framework estimating their profit potential. But no... you relapsed into the land of fantasies. Apparently the mere idea and hope of any potential would do as your investment criteria.

Good luck to you.

 

[steamshovel]

Your logic is compelling.

I thought we were getting somewhere in putting a framework estimating their profit potential. But no... you relapsed into the land of fantasies. Apparently the mere idea and hope of any potential would do as your investment criteria.

Good luck to you.

Fair enough mate , yep, hope of potential will do it for me everytime !

Can't give you an estimate of profit, as that would be a fantasty.

Long weekend, maybe you can do some of your own research.

Come back next week and let us know what you have found out, if anything !

Cya
Steamshovel

 

[skc]

Sure, I'm quite happy to help you out!

Take these 3 links together. Do they all point to the same? Unbelievable coincidence?
Looking at the companies that TZ is possibly dealing with, TZ only has to strike one deal for new shareholders to see significant upside.

Thanks. There is in fact a very good chance of TZ doing this with Australia Post...

So how many lockers are there in total? There are talks about these lockers at regional shopping centres and also petrol stations etc. One per 20k population? That's 1,000 banks across Australia or $150m worth at $150k each.

It won't all happen in a single year... may be 250 a year? So that's ~$35m revenue a year but at what margin? If they get 20% that's $7m profit. Spread that over 4 years and discount at say 12% you get NPV ~$24m... or ~20c per share.

Let's say you double that for the data centre market and you double that again for all the other blue sky applications... 80c per share without any real discounting for time and the most optimistic assumptions on yet unknowable applications.

Nothing here is concrete but at least within the realms of possibilities. It is up to the individual investor to decide how much they are willing to pay for such possibilities... $0 for me as I much prefer to wait for confirmation even if that means I pay a much higher price.

Now what assumptions do one need to make to arrive at a price target of $2.50, or even $10-20 as some suggested?

 

[steamshovel]

Thanks. There is in fact a very good chance of TZ doing this with Australia Post...

So how many lockers are there in total? There are talks about these lockers at regional shopping centres and also petrol stations etc. One per 20k population? That's 1,000 banks across Australia or $150m worth at $150k each.

It won't all happen in a single year... may be 250 a year? So that's ~$35m revenue a year but at what margin? If they get 20% that's $7m profit. Spread that over 4 years and discount at say 12% you get NPV ~$24m... or ~20c per share.

Let's say you double that for the data centre market and you double that again for all the other blue sky applications... 80c per share without any real discounting for time and the most optimistic assumptions on yet unknowable applications.

Nothing here is concrete but at least within the realms of possibilities. It is up to the individual investor to decide how much they are willing to pay for such possibilities... $0 for me as I much prefer to wait for confirmation even if that means I pay a much higher price.

Now what assumptions do one need to make to arrive at a price target of $2.50, or even $10-20 as some suggested?

Why do you want to know about TZ ?

 

[skc]

Why do you want to know about TZ ?

To assess if it stacks up as an investment opportunity for me.

 

[UBIQUITOUS]

Thanks. There is in fact a very good chance of TZ doing this with Australia Post...

So how many lockers are there in total? There are talks about these lockers at regional shopping centres and also petrol stations etc. One per 20k population? That's 1,000 banks across Australia or $150m worth at $150k each.

It won't all happen in a single year... may be 250 a year? So that's ~$35m revenue a year but at what margin? If they get 20% that's $7m profit. Spread that over 4 years and discount at say 12% you get NPV ~$24m... or ~20c per share.

Let's say you double that for the data centre market and you double that again for all the other blue sky applications... 80c per share without any real discounting for time and the most optimistic assumptions on yet unknowable applications.

Nothing here is concrete but at least within the realms of possibilities. It is up to the individual investor to decide how much they are willing to pay for such possibilities... $0 for me as I much prefer to wait for confirmation even if that means I pay a much higher price.

Now what assumptions do one need to make to arrive at a price target of $2.50, or even $10-20 as some suggested?

1 per 20,000 population? That means 1,000 lockers!!! I agree with that - see below!

Although I agree that an initial roll-out with the mystery client of TZ's will be small; any notable increase in online ordering to the trialed postcodes will surely lead to a national roll-out over future years, where the offering will have to cover most of the population in urban areas.

http://www.dailytelegraph.com.au/no-more-parcel-queues/story-fn6b3v4f-1226064659764

They will probably be at petrol stations and supermarkets, allowing access to the lockers all day, every day, bypassing Australia Post's pick-up system.

Petrol Stations

http://www.anz.com/documents/economics/Service_Stations_Aug_2006.pdf

2006: There are currently 8,000 service stations in Australia


Supermarkets

http://en.wikipedia.org/wiki/Woolworths_(supermarket)
http://en.wikipedia.org/wiki/Coles_Supermarkets

Total: 834 + 741 = 1,575 Coles and Woolies locations

Rail stations

http://en.wikipedia.org/wiki/CityRail
http://en.wikipedia.org/wiki/Railways_in_Melbourne
http://en.wikipedia.org/wiki/Transperth_Trains

Sydney - 307 stations
Melbourne - 200 stations
Perth - 69 Station
etc

Of course, the above is all a best case scenario. I do not think that anywhere near all of the above locations will be serviced. Basing it on an eventual 10% coverage,
we can safely expect 1,000 locker banks

1,000 locker banks @ $125k each = $125m in revenue.
With a 20% per annum software licensing and maintenance agreement, we can expect closer to $150m over 5years.

Considering that there will be a huge software markup, the margins will be very high. However, lets just say that they are 40% (even though commonly software margins are closer to 80%). That results in $50m net.

For that sake of simplicity, lets just say the rollout would take 5 years, TZ would earn a ballpark $10m per year.

$10m/125m shares= eps of 8c per share in year 1 (so no need to discount after deal is announced).

Sure, future years would need to be discounted for time value, but such a deal with 20% pa ongoing annuities after the rollout would command a high p/e.

Discounted earnings per shares

Year 1- 8c
Year 2- 5c
Year 3- 3c
Year 4- 2c
Year 5- 1c

Total - 19c per share current.

Discount further at a huge 10% for conservatism = 1.9c eps.

The p/e would be astronomical for such a company multiply earnings a thousand fold.

Therefore, I really don't see a current valuation (post confirmation) of such a deal as anything near 50c. More like $5.

Then double it for this development if TZ is successful:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01197047

And to think their are possibly countless deals like these two.

 

[skc]

Total - 19c per share current.

Discount further at a huge 10% for conservatism = 1.9c eps.

The p/e would be astronomical for such a company multiply earnings a thousand fold.

Therefore, I really don't see a current valuation (post confirmation) of such a deal as anything near 50c. More like $5.

Then double it for this development if TZ is successful:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01197047

And to think their are possibly countless deals like these two.

Don't disagree with the market size (good enough starting point). Let's just say they maintain 8cps profit. Now applying a PE of a thousand?! Again... that's so 1998!

DTL (a software company) trades at 12 and it's one of the most proven performer in the industry for the last 5 years. 8cps x 12 = 96c. Given that none of the revenue and profits have actually been confirmed or earned, and TZ can hardly be classified as a proven performer, the current ~50c share price is not ridiculous but probably much too rich for me.

Even though I completely disagree with your valuation (i.e. your PE multiple) I do thank you for the information.

 

[steamshovel]

SKC
If it's an investment opportunity for you, why don't you do you own research ?
It's you that has to be happy in the end.

Cya

UBIQUITOUS, it doesn't matter what you come up with, it will be shot down by discounts and market percentage,They can be ramped back up by PEs. all smoke and mirrors in the end.
Proven performers don't have blue sky in the end, they are quantifiable,TZ isn't, at this stage yet.

 

[skc]

SKC
If it's an investment opportunity for you, why don't you do you own research ?
It's you that has to be happy in the end.

Cya

Noted. Good luck with your lotto ticket as well.

 

[UBIQUITOUS]

Don't disagree with the market size (good enough starting point). Let's just say they maintain 8cps profit. Now applying a PE of a thousand?! Again... that's so 1998!

DTL (a software company) trades at 12 and it's one of the most proven performer in the industry for the last 5 years. 8cps x 12 = 96c. Given that none of the revenue and profits have actually been confirmed or earned, and TZ can hardly be classified as a proven performer, the current ~50c share price is not ridiculous but probably much too rich for me.

Even though I completely disagree with your valuation (i.e. your PE multiple) I do thank you for the information.

SKC, looking at your example of DTL, you appear to have a grave misunderstanding as to what drives the market to pay it's p/e multiple on a company.

It has taken me all of 5 minutes to identify why DTL trades on a historical p/e of 12:

• DTL has been profitable for 9 years - since 2002.
• In that time, revenues have increased from about $100k to $700m - a 7,000% increase.
• Before partying on the above, consider that after 9 years, they have only a NPAT of $15million
• This shows that after 9 years they are managing a net margin after tax of a whopping 2%
• The above should ring alarm bells. Quite simply, there is not enough fat built into the business to survive a substantial downturn in the business
• Obviously from the performance, this is not a growth stock. The management also believe this, or they would not be paying out such a huge dividend of 77cps (and those dividends won't last long at all!)
• This is why the market pays only12 x earnings. DTL is in effect a high volume, low margin operation and is valued as such. Kind of like how a distributor is valued.
• TZ is at the position DTL were many years ago when starting out, as in effect the TZI business was reset with the board changes. I doubt a single shareholder or management believe that they need a shocking 9 years (like DTL) to make a NPAT of $15.
• As for understanding P/Es, if TZ becomes just barely profitable and earns a single $1 in the current year and the share price hits $1 (market capitalization of $125m), then the p/e will be:
  
  EPS 1/125,000,000 = 0.0000000080
  P/E = $1/0.0000000080 = 125million!!!
  
  So, as you can see, valuing a company based on a p/e alone is nonsense, as in the above situation TZ would have moved from a $7 loss to $1 in profit, and end up with a p/e of 125million! Such an increase in earnings over 1 year and the company being worth $125m certainly wouldn't raise any eyebrows, and would probably draw in investors.
  
  However, by your logic, it would be millions of times overvalued!
  
  Good luck with your investing!
  

 

[steamshovel]

Taken from the Audited financial statements just released, Page 64.

TZ Limited
30 June 2011
Notes to the financial statements
Note 15. Non-current assets - intangibles (continued)
Telezygology Inc.
Key assumptions for value-in-use calculations for Telezygology Inc. are as follows:
- Discount rate - 16.6%
- Gross margins - budgeted gross profit margins are between 57% and 60%, historical gross margins ranged between57% to 64%-
Revenue growth rates - 2012 (445%), 2013 (62%), 2014 (57%), 2015 (37%) and 2016 through 2020 (5%).
Management determined budgeted gross margin is based on expectations for the future after redetermining the
product strategy for TZI and securing commercial partnerships for distribution. Discount rates used are pre-tax and
are specific to relevant segments and countries in which they operate.
Management believes these growth rates are achievable and they are confident the forecasted revenue growth can
be achieved.
The recoverable amount of the goodwill, trade names, re-acquired right and other intangible assets of TZI is
estimated to be $22,004,976 (2010: $22,620,537) which exceeds the carrying amount at 30 June 2011 by
$10,232,976 (2010: $8,044,351). If a discount rate of 30.1% was used instead of 16.6%, the recoverable amount of
goodwill, trade names, re-acquired right and other intangible assets would equal the carrying amount.
The forecasted and projected revenues for upcoming financial years show significant growth, and an overall sales
level well above what TZI has experienced previously. There are several factors contributing to the workup of the
financial information, and the material points are noted below:
• TZI's products/solutions for these business units have only recently been commercialised, with sales in the last two
fiscal years representing lower levels that are accustomed to new products.
• The data centre micro-security market is estimated to be a $1.5 billion market that will grow at 4% - 6% annually in
the near term.
• Commercial partnerships with the signing of key distribution and reseller agreements.
• A strong sales pipeline is in place to support sales anticipated for the 2012 financial year and beyond.
• TZI has achieved positive results post year end in excess of those