GTK - Gentrack

[visionary]

This you visionary?

http://nzx-prod-s7fsd7f98s.s3-websit...200/315345.pdf

Hi Winner, certainly I wish that I held this much - I work in a small group overseeing family funds, nothing near this large.

I will go through and disclose my reasons for buying in, and averaging down (I know, averaging up is best but sometimes we don't get it right and need to decide if we miss the difference between the buy and the market bottom, or we continue at rational data points to try to get closer to it by averaging down) tomorrow as I go over the days trades for Friday.

We generally are buy and hold 6 months - 5 years duration so are happy to continue searching for the bottom and accumulate as this falls. We do not see this current price fall as a long term direction for the company, it appears to be a blip due to market conditions for which the company needs to decide how it can gain penetration in a market at a standstill - that may mean building relationships, customising the offering and spending money for a sale to come through and not after the ink is dry. These steps will help the ink dry faster when the paper dries out after Brexit, Megxit, and England gets its mojo back with Bojo.

I hope our buying helped someone out that did not have as much faith in the determination of future change and progress as we do.

[Joshuatree]

Thanks visionary for sharing.Weve held a few for a while and keep getting bad news which kills the momentum We are reviewing whether to cut our losses or not.My feeling is crystallise losses but we will see. cheers JT

[BlackPeter]

Interesting - and sure, if the UK ever sorts out its Brexit woes and finds money again to do sensible stuff then this might return to being a flyer. Personally we would think that this might take however some decades rather than some months or years. No mojo in Bojo - LOL

May we say - we are really glad we sold out around $6 (as documented on this thread). Now, this was what we would consider as "visionary". In our humble opinions still for some time better places to park the money.

[RupertBear]

Interesting - and sure, if the UK ever sorts out its Brexit woes and finds money again to do sensible stuff then this might return to being a flyer. Personally we would think that this might take however some decades rather than some months or years. No mojo in Bojo - LOL

May we say - we are really glad we sold out around $6 (as documented on this thread). Now, this was what we would consider as "visionary". In our humble opinions still for some time better places to park the money.

I bailed out about the same time as you BP and at times wondered if I had made a mistake in doing so. But after the latest downgrade I am very very relieved to be out and I totally agree there are better places to park my money at the moment, ATM and SKO for example are ticking along very nicely for me

[horus1]

This is a sign of what will happen in Energy as new technology bites. It applies to NZ as well.

[Blendy]

Do we think today's market update is as bad as Mr Market thought it might be last week?

[BlackPeter]

This is a sign of what will happen in Energy as new technology bites. It applies to NZ as well.

With all due respect - I have difficulties to see how the Gentrack problems have anything to do with new technology biting. Could you enlarge a bit?

What I see is a board spending too much money into acquisitions which are now underperforming. Partly due to miscalculations with political realities (the BREXIT saga), but partly just because the Gentrack board got trapped in the typical "Wanna buy growth' syndrome and paid too much and / or bought the wrong organisations. Many mediocre boards before did fall into the same trap and many more will follow.

Gentracks product is basically an industry specific ERP system, which seems to do the job. Their mistake was to try to enhance revenue growth by going on a spending spree.

[Dlownz]

Well looks like the market thinks that's bad. Another big drop today.

[Balance]

The old 'downgrades come in threes' comes true again!

From $24.8M EBITDA in F19 with expectations of a 'broadly' flat result for F20 to updated profit downgrade to between $8m to $12m - over 50% down!

And history shows :

July 2019 - downgrade for F19 from marginally higher than F18's $31m to between $27m to $28m.

Sept 2019 - downgrade to $25m to $26m.

Nov 2019 - further downgrade to below guidance range.

[Balance]

From $24.8M EBITDA in F19 with expectations of a 'broadly' flat result for F20 to updated profit downgrade to between $8m to $12m - over 50% down!

And history shows :

July 2019 - downgrade for F19 from marginally higher than F18's $31m to between $27m to $28m.

Sept 2019 - downgrade to $25m to $26m.

Nov 2019 - further downgrade to below guidance range.

Looks to me like there will be 2 more downgrades for F20 before the year is through.