my thoughts on inq

I completed a bit of a review on INQ over the weekend, and sent a note out to a couple of interested colleagues this morning. Thought I'd share it here. Identifying details have been removed.

Please note: details below were gleaned from less than a couple of hours of research so apologies if any of my figures or details are off. As always, DYOR.

------


G’day boys,

Considering your backgrounds I thought you might by interested in having a look at this one.

INQ – Investorfirst
http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=inq
http://www.investorfirst.com.au/

Core business is managing the HUB24 platform. They have recently undertaken a business realignment, selling off a less profitable stockbroking side of the business, to focus completely on the platform market.

As you’re probably aware, HUB24 is an impressive full service, online only, STP wrap offering (sound familiar), servicing mostly an IFA market. They are Investment trends most improved platform for 2013.

HUB24 has seen FUA grow from $110m to $252m in the past 12 months (leading up to Dec 2012), and currently services a relatively small 220 planners.

Revenue is still negative with a net loss of 6.47m for the half year, but that does include loss from a number of one-off significant items during the period, but now they have exited the stockbroking business and completed the development of their equity trading functionality, operational/development cost should come down for this year.

Plenty of cash on hand following a couple of recent raisings, so no dramas there.

The interesting thing for me in the business valuation. Currently sitting with a paltry 33m market cap, knowing what I know about platform development I’d value the hub24 ip alone at far in excess of this. 33m barely gets us a couple of screens built in the new *** enterprise world!

Assuming they can keep growing their FUA (and now they have a full wrap offering, this is going to be a very attractive prospect to the IFA market), this would have to be a no-brainer take-over target for any of the majors looking for a re-fit of their legacy platforms, or just picking up half-a-billion+ in FUA / planners without spending a lot of money.

Finally, Mike Taylor of Pie Funds has just taken a fairly substantial stake in the business, which is a good vote of confidence in my book.

Worth a bit of research in my opinion.