Ann: Preliminary Profit Advice - Half Year Ended 31 December 2016, page-42

@BrownDirtCowboy

1. You make reference to ASW not losing any major clients due to service (well you actually said we - so not sure if that is 'we' as in shareholder or 'we' as in an employee of ASW) so why would companies like NST or GBG leave ASW then? These are two companies I have noted that have departed ASW over time, would you consider those to be big companies?
It is hard to keep a track of who ASW are gaining and who they are losing, would be great for Mr Chong to address this

"We" means shareholders, not employees.

I have no idea why NST and GBG moved to other registry providers. I can assure you that they are not the only ones. Over time, there had been others who had moved as well.

NST has more than 12,000 shareholders and the trading of its stock is quite active, therefore I would classify them as "big".

GBG has more than 14,000 shareholders but as the share price slides down, the trading of its stock becomes not quite as active anymore. 5 years ago, GBG was a "big" client, now not anymore.

I don't agree that Mr. Chong needs to update the market every time ASW wins a new client or loses a client. In any case, if you know where to look and is diligent enough to monitor it regularly, you can work out whether ASW's clients base is increasing or decreasing.

2. You made mention of the SOL migration process running smoothly, is that something that has been openly discussed by ASW or do you have another source of information?


It hasn't been discussed openly by ASW.

My source of information is scuttlebutt and inference.

Before SOL moved to ASW, one of its associated companies, BKI was already with ASW. SOL then acquired 10% of ASW by acquiring some of Mr. Chong's shares and by being issued new shares by ASW.

Some time after that, SOL decided to move its own registry to ASW.

Without having to be spelled out clearly, we can infer that SOL must have been quite happy with ASW as an investment and as a service provider. Otherwise, why would they want to become a 10% owner of ASW and move their registry to ASW?

3. Why would it be a false belief that CPU or LNK are more prestigious or can offer a better service?

There is no difference in the services provided to the shareholders of a company whether the company engages CPU or LNK or ASW or others to provide the registry service. All the mailouts will still be sent out on time, all the dividends will still be paid on time and all the resolutions in an AGM will still be counted properly.

A company's directors might think that CPU or LNK can provide a better service, but the reality is, ASW is also capable of doing any of the things that CPU or LNK can do.

If the purpose of a car is to carry passengers from one point to another, then a Toyota and a Mercedes are both capable of performing this basic task. A Merc is certainly a nicer car than a Toyota, but you have to pay more to drive a Merc.

A company's purpose is to maximise shareholders' value. To achieve this goal, its directors should opt for a service provider whose prices are the most competitive and yet still capable of delivering all the services that the company requires.

4. With regards to companies like BKW or NHC migrating to ASW, how do those companies come into the picture or are a high chance of migrating in your opinion? How do you know this?

BKW and NHC are both controlled by the same people who control SOL. If they move to ASW, then they will get two benefits: 1) lower registry costs, 2) increase in the value of their ASW investment

All good with the stats you've provided, do you do this for other companies you own shares in? It seems like a lot of work

Yes, I do, in fact for some of my other investee companies, I do even more.

It's not hard work at all. I only have to update my spreadsheets twice a year.

You mentioned the activity for PLS, GEM and SOL, but during quieter times that revenue dries up.

The WA market, which is ASW's bread and butter, is not exactly firing up at the moment. Can you imagine what will happen to ASW's profitability when the market recovers and ASW's clients are doing all sorts of raisings, M&As, new listings, divestments, etc.

It is good to see that increased activity is handled by ASW, but how do we know it is handled with ease?

If it's not handled properly, can they still report increased revenue and profit? They've been doing this since 1996 and Mr. Chong started with just a handful of customers.

ASW has just increased its employee numbers quite significantly. I am of the opinion that they are preparing for better times ahead.