meeting - very impressed, one to watch

Meeting with Management ? Very impressed, one to watch.

As mentioned in an earlier post, I flew down to Melbourne today to meet with Ross Haghighat (Chairman) and Michael Thomas (The new CEO). Straight off the bat I must admit I was very impressed. I was lucky enough to spend close to 3 hours with them today slotted in between previous meetings they already had scheduled.

Firstly, a big thank you to both of them for making time to meet with me. I am just an average shareholder, of was very impressed with how willing they were to meet with shareholders when asked.

After reading Eyeknow?s post on their meeting, I must say I fully agree with their assessment. You can read their post here:

http://www.hotcopper.com.au/post_single.asp?fid=1&tid=1519161&msgno=7035876

Without re-hashing previous information, the following is a summary of my thoughts on time very well spent getting to know KSX management and KSX future direction.
Disclaimer: At no point do I believe I was told anything today not already announced, and the following is my interpretation of verbal conversations, so may contain many errors?..

I would like to start by saying that it is truly my belief that KSX is VERY undervalued. KSX has been on Ross?s radar for about 3 years, but he only got involved about 8 months ago when he felt the time was right, and KSX were willing to undergo a transformation (with management changes). Ross (with backing of his US based equity company) have put both money and management time into turning KSX into what it has the potential to be. This is a transformation process, with stages 1 and 2 near completion, and stage 3 taking effect (see presentation).

Michael has recently joined, and his experience is VERY VERY impressive. Trust me that both these guys are on board and are not here to play tidily winks. I noted one comment from Michael that he was already well and truly in the space, and came across KSX when he tried to go down a certain path only to be blocked by KSX?s patent portfolio.

I asked lots of questions today. Not all my questions could be answered (due to disclosure laws) but I walked away feeling very confident in my investment in KSX

I asked about future capital raising requirements, as it is obvious they will be raising cash shortly. Both were very confident of raising cash at a premium to VWAP, and this would coincide with the Nasdaq listing. I expect this money to be raised mainly (if not all) in the US. Both Ross and Michael are based in the US, and have lots of contacts there. They have a proven track record in this area.

I also asked about the deal with Omron. I believe the market has not well understood this deal, and they were surprised the lack of market movement in the share price. This is a VERY BIG deal. Omron are the leaders in the space in Japan. Omron are basically taking the ball and running with it in Japan. This will be huge for KSX. After lots of discussion around Omron, it would not surprise me if we see more information about the tie up in the next month or two (end of September), and investors will be very pleased). Omron basically have Japan and two other large countries sown up.

This brings us to the US (not Omron). As announced, KSX is working with a large Top 500 company to push KSX in the US. KSX see major advantages working with 2 majors across the globe. More should be told around this before the end of September as well.

It was also obvious that both Ross and Michael see huge value in KSX?s products and patents. They see KSX as a major takeover target, but are also VERY aware of it not being sold for a song. They are NOT in this for 50% returns, but honestly see this at 10?s of bags from where we are today.

A lot of discussion today was around moving KSX from a $10m company to a $50-$100m dollar company, and then seeing M&A activity at multiples of this. I would like to think that lots of valuable thoughts/discussions were tabled, and we discussed at some length the differences around US listed companies and Australian based ones.

One factor I asked to be considered was for more detail to be released in the announcements, so investors could appreciate the story being told (along with the upside). As I have some experience being a shareholder of companies that have enjoyed re-rating success, we discussed at some lengths what is required for investors to be aware of good news stories. Whilst full details are not always possible due to restrictions by big pharma, I am confident that moving forward, we will see management focus more on the Investor relations side of the business.

That said, Management truly came across as world class, and leaders in the field. Discussion were more along the lines of differences between US and AUS markets. US investors do not need to be spoon feed. We all agreed that the Nasdaq listing is a very positive move when it comes to market cap recognition.

There are actually multiple value facets to KSX which I don?t think investors have well understood. The most obvious facet is the sale of devices. I think most see this potential. One major potential not so seen is interest by major drug companies. This all relates to increasing compliance with existing patients.

I?m running out of time at the moment as I have to board a plane, but I will post more thoughts when I get a chance.