GTK - Gentrack

[visionary]

Hi all, Gentrack has had a rough ride. A terrible ride, infact.
I noted in the AGM questions that the company appears to be directing at least part of its' business towards software development and sales. I would have liked to ask a little further as to if this would see the company working in line with its' current offerings, or offering new SAAS options in different industries.

On the electricity metering business, an interesting aspect to consider will be:

- The NZ elections - Labour may look to regulate electricity providers, specifically the large wholesalers as they have just done with petrol suppliers.

- Australia is facing severe climate change, and pressure to be more "aware" of how, where and when power is being used. There is a strong move globally to get off coal. Scott Morrison, or anyone that succeeds him at any time, may come under pressure to move off coal generation. This will increase energy prices in Australia and make customers more energy conscious.

- Brexit has caused disruption within the British market. We have lost customers as a result of this disruption - mergers, and closures of suppliers. As noted, an unusually large number of suppliers closed shop, this is something that John Clifford noted he had not seen before, that he had only ever seen one supplier go under. As such, we can determine that the market conditions are extreme.
With our model moving to SAAS, it is even more cruciual that if suppliers in the UK are closing, and others are merging, that we get our "pay per customer" Software as a service model deployed with those British suppliers to maintain high market share. This can be (and probably is already) being done with a combination of:
- Pricing sales strategies
- A realistic review of the SAAS offering, to ensure it is superior in every way to any competition on the market today.
- Around the clock, 24 hour support for results resolution. I am not talking about a call center in India, I am talking about being able to call a developer directly who can log in from home to diagnose and resolve any issues. This can, and should be, a billed service.
- A defined MOAT strategy, which would encompass the buyout of any company which takes more than 20% market share in any defined market for which GTK see greater than 50% market share. The technology can then either be run separate, or incorporated into the current Gentrack offering. This would prevent any large players from eclipsing Gentrack, whilst continuing to develop the company offering to its' global customer base.
- Any new developed tools, or tools taken on as aspects of an acquisition, should continue to be offered as "bolt on extras" as the Airport Sales system which was discussed at the Airport should be.

- In the UK, there is a market problem at face, but an underlying sales challenge. Sales and the BOD should focus on this aspect in the UK.
- I would be strongly interested in how the service could be used in South east Asian Countries such as Thailand, which are developing rapidly, inflation of electricity is an issue, and theft of electricity both on the grid and from neighbors is a problem.
- There are huge manufacturing hubs in Thailand, and increasing manufacturing activity in Vietnam, with many of these in industrial estates. How do power companies manage these, and can Gentrack make life easier, more efficient, and more profitable for power companies, and more measurable for businesses? Perhaps I am barking up the wrong tree.

We have more to learn about GTK, but are comfortable with the risk.

It is looking ugly for my portfolio, but that is how I trade - generally unless we can see intrinsic industry wide issues which cannot be resolved, or issues with the way the company is being managed we are comfortable holding until the company goes under. We have lost money with RCR, Alita Resources and recently withdrawn from Protean energy as a result of poor management signals this year. But we have picked some winners too, Servcorp at AU$2.70, multiple good profits on A2 (who hasn't done well from A2!), quick profits on Venus Metals, Battery Minerals and holding good profits in AVZ Minerals.

From there, a list is developed of poor BOD and management, and any company which has anyone on that list does not get invested in until that person exits and any residual failures they exited because of are cleansed in the next quarterly report.

If someone could help me out with the dirties dogs on the NZX, THL and SML, that would be great. You could even pay the guy next to Pokeno to go and bother someone else, you would make a lot of people happy.

Enough yammering from me, let us pray.

[BlackPeter]

Hmm ... not quite sure what you are trying to say.

They say 'hope' is not an investment strategy ... and somehow I would put 'pray' into the same category, but maybe this is just me ...

Sounds like you think that at some stage some market might recover and there will be opportunities for some companies. I'd say this is a sound working assumption, but maybe a bit too general to be useful.

However, not quite sure why you point in this thread to opportunities in the electricity metering industry. I always thought GTK is building and selling ERP systems for utilities like airports, water supply and - yes, a bit of energy supply (but more on the billing side).

Do they sell metering solutions? And, if they do - do they have any moat in that area compared to the big players?

[Jaa]

Is Gentrack really a weak company?

They have no net debt, 80% of the business is vital software to power and water companies. The other 20% vital software to airports. Regionally diversified and should be able to cut costs by trimming payroll.

Guess they won't have any new sales for a while and even new projects at existing companies will be put on hold. Still you have a company with $111m of yearly sales valued at $90m. That kind of multiple applied to all SAAS companies would give heart attacks to venture capital investors like Punakaiki Fund.

Anyone know how they charge for their new SAAS products? Hopefully not per passenger! I think the utilities business is per connection.

[winner69]

‘Blackout’ period suspended

No doubt a rush of director, management etc selling coming up?

[Baa_Baa]

‘Blackout’ period suspended

No doubt a rush of director, management etc selling coming up?

Or buying at these very low prices?

[carrom74]

Or buying at these very low prices?

Baa Baa- could you please elaborate? do you think the directors/ employees are actually buying? When they have the green light to escape?

[Cadalac123]

There was a 100000$ buy at the start of the day followed by a subsequent 200000$ sell order later on in the day when the shares rose. I'm sure that wasn't an insider!

[Baa_Baa]

Baa Baa- could you please elaborate? do you think the directors/ employees are actually buying? When they have the green light to escape?

I'll wait for the shareholder notices rather than guessing their movements. If they think the company has a future then the current price must look attractive to buy, conversely if they think the future is bleak, the current price must look attractive to sell.

[carrom74]

I'll wait for the shareholder notices rather than guessing their movements. If they think the company has a future then the current price must look attractive to buy, conversely if they think the future is bleak, the current price must look attractive to sell.

Thanks. I suppose today's surge is just on the back of reaffirming its guidance and not another downgrade.Directors/stakeholders could buy..but who knows until we see a ticket.

[Quantitative Easing]

What do we think of the result? Could be worse...