Stargroup flags asset re-rating

Published at Sep 28, 2015, in Technology

Tech player Stargroup (ASX:STL) has flagged the possibility of raising the value of one of its chief investments after Korean company NeoICP reported its results late last week.

The Korean outfit, which STL has a 19.25% stake in, reported EBITDA of $1.6 million with a reported NPAT of $1 million.

While the value of NeoICP’s assets was reported as $26.6 million, STL currently values its stake at just $938,368.

However, its equity interest is theoretically worth $5.1 million.

While STL did not offer guidance on what it would seek to lift its valuation to, it did say it may consider doing so “later this year”.

Stargroup’s investment in NeoICP is a strategic one, with the Korean company manufacturing the ATMs Stargroup rolls out around Australia.

About STL

Last month STL merged with iCash Payment Systems to create an ATM and EFTPOS company, whereby STL takes a clip on all transactions put through the machines.

STL has estimated its stake in NeoICP helps reduce costs by around 30% and saves it $1.1 million in capital expenditure per year.

It estimates its 100-plus ATM network brings in 600 transactions per month per machine, with STL charging customers $2.50 per withdrawal.

Margin is about 80c after costs, with STL aiming to generate $300 to $400 per machine per month.

STL’s gross revenue for 2015 is forecast to be $1.5M, an 840% increase on 2014. In 2016, STL expects to generate $4.5M

It has also sought to diversify into other areas such as ‘cash recycler’ ATMs and PayWave Technology.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Thanks for subscribing!