News: STL Stargroup posts FY NPAT of $1.9 million, page-22

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sharks37

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01/09/17

10:54

Post #: 26924889
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Originally posted by oxxa23 ↑

yep, i think people just don't believe the forecast for whatever reason....or maybe just not an undertanding what the make up of it is.

sure the gross margins haven't been great on the first 8 million of revenues.... but, people are forgetting the following:

- most of that revenue was purely atm transactions. up until indue ownership (which was pretty much none of last years figures) we used to lose a lot of our transaction fee in switching costs to business undertaking the switching. That will now be STL margin becuase of the indue acquisition, rather than a third party. therefore, there is massive incentive for us to now get more and more atm's out in the market. STL has traditionally focused on quality locations.... which i'm sure will still be a focus. but, plenty of locations that may have been not have been profitable enough previously now will be. We had scarce reserves of cash to outlay, now that we're in positive cashflow we can afford to purchase more and more atm's and distribute these into the field. these will now make us both margin on the transaction and the switching.... we used to only make margins on the transaction, and well, naturally enough, you had to make enough money on that part to warrant investment in the atm, and even more so with minimal cash to invest.

- there is forecast growth in sales of hardware and software. the prelim report indicated 95% of the 4000 atm's distributed into australia will require hardware and software updates. the margin on these sales is far greater than the historical atm transaction margins.

- then there is the casino machines, eftpos and general indue growth that will all have a far better margin that the atm transactions...

people are getting caught up thinking that the revenue growth to $20m will all have the same slim margin as our atm transactions in 2017. not going to be the case....

Expand

From memory the vertical integration with Indue is supposed to reduce operating costs by approx 15%, so yes Oxxa I also expect margins will improve in FY18.

Cheers, Sharks

STL Price at posting: 2.3¢ Sentiment: Buy Disclosure: Held
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News: STL Stargroup posts FY NPAT of $1.9 million, page-22

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