Hi all
very good discussion. I use to follow ASW - but never bought - and was surprised to see the current share price (much above where I remembered it). There are a lot of things to like about ASW but my notes recorded that my biggest concern - which remains - is the lack of top-line growth. The 2016 was very good on that score, and a significant surprise given what I recall is their inability to grow revenue for several years IIRC. Unfortunately ASW offer very little explanation for it.
All I know about registry service providers is from dealing with them for many years. I would have thought a key value driver is winning new issuer clients. But for the reasons you have discussed above, churn is low. so the best bet is winning new listings. I have some expereience on that front - but for all of the IPOs Ive been involved in (the princely total of 3) the registry was selected by the organising broker/investment bank (on behalf of the client) IIRC. They just went with who they knew/liked. admittedly, two of these IPOs were really large affairs (think govt privatisation floats) so maybe only the big registry providers could do the job.
I would really have liked more mgmt discussion on why revenues grew. The only comments they have offered AFAIK were that "... an increase in corporate activity during the latter half of the year contributed significantly towards the increased revenue for the period." (from the 15 June trading update). That sounds like it might have been one-off, rather than a sustainable increase (eg due to winning new issuers). I note too that Chair's letter to shareholders writes of maintaining customer numbers - nothing about growth.
How confident are you that ASW's 2016 revenue numbers (and thus probably profit too) can be sustained? Grown further? Without revenue growth, eventually margins suffer IMHO.
ASW Price at posting:
78.0¢ Sentiment: None Disclosure: Not Held
