STTCOMP XTD FA LONG
MC $3.4m
SOI 132m
Cash 2.1m
Net Assets $3.4m
Revenue 1.8m (HY)
XTD: XTD Ltd are in the digital advertising space with their primary income coming from train station advertising in Melbourne and Brisbane where growth over the last few years has been modest. Late in the last reporting period they landed a collaboration with IBM which should hopefully lead to increased revenue for the next reporting period.
They recently cleaned up the board with the appointment of Justus Wilde and Jason Bryne, 3 men with significant experience in e-commerce.
There are a few standouts from the recent half yearly that should have a material impact on the ongoing viability of the business. They ran at a loss of $1.044m on $1.787m half yearly revenue, $867k of this was an impairment for a subsidiary which they removed directors from hence lost 'contol', this should be a one off. $308k was for consultants who have since been removed. Operational costs have been reduced across the board by in excess of 50% from March therefore it can be expected that they are CFP by next half yearly.
Since 1 November 2018 the XTD directors have undertaken a review of XTD's contract performance, started investigating digital out-of-home (DOOH) market opportunities and re-positioned its investment in Contact Light. Whilst the strategic review is ongoing the following milestones have been achieved in the last 2 months of H2 CY18:
1) Removed all consultants. The XTD Directors are now taking full responsibility for its strategic direction and maximising shareholders' returns. The XTD Directors have made significant progress and will share itsstrategy in H1 CY2019.
2) Restructured XTD operations. This has resulted in:
a) Reduction in ongoing operation costs in excess of 50% effective March 2019.
b) Improvements to how we maintain our screen network that will result in better screen up-time in CY2019 than CY2018 and maximise advertising revenue.
c) Proposed changes to how content is delivered to operators and their commuters to optimise commuter engagement and maximise advertising revenue.
3) Commenced investigation into DOOH opportunities. The XTD Directors are actively seeking opportunities to utlise its strong cash position and the current Directors' track record for building successful businesses to make strategic investments in suitable DOOH networks.
4) Deconsolidated XTD’s investment Contact Light. In the last 3 financial years Contact Light has incurred a net operating loss on average of $1.18m per annum arising from the development and commercialisation efforts of its technology (with the majority of funding raised from equity raisings). There is no committed ongoing cost to XTD in relation to Contact Light however the XTD Directors are working closely with the Contact Light team to commercialise their innovative technology in H1 CY19.
IMO at 2.2c this company is significantly undervalued, Iv'e been buying what I can down here....
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