Originally Posted by
BlackPeter
Good discussion. And yes - looking at the other technology companies we had at the NZX, I agree that in terms of product offering DIL is the closest. They as well offer a technically quite simple product for a niche market - and hey, while theirs was an amazing roller coaster journey, they ended (as listed company) on a high.
Does this mean that every company with a similar product to DIL is to succeed - obviously not, and anybody who followed DIL knows, that they had more than one near fatal accident on their way.
Can't really compare them in terms of board competence, but agree that RAK as well as PEB as well as WYN suffered in part due to huge governance issues (be it plain incompetence, wrong skill sets, nepotism (RAK) or a combination thereof.
I haven't yet investigated the PPH board myself (an exercise I would recommend any potential investor to do), but had for this post a brief look into their latest report. Oh - surprise ... I note with interest that Chris Huljich is one of the directors. Any potential investor in PPH might want to research the history of Huljich Wealth Management (for some funny reason not mentioned in his PPH-CV).
And hey - here is another interesting name: Bruce Gordon; Now that's obviously a quite common name, but there was a Bruce Gordon at the board of Hanover who is on my "never again" list. Think as well he looked similar, but my memory is not photographic. Might be worthwhile to research whether this is the same person? Any of the investors know?
Both (if its the same Bruce) did sit on boards which had in the past problems to protect their investors funds. Up to each individual to decide, whether these are the best people to look now after their money in PPH. A very personal choice, but I think I know what my answer would be.
But apart from this - yes, there are obviously the fundamentals. Personally I do prefer to buy into companies which either demonstrated already that they are able to make money (I mean more money than they spend) or, alternatively (if they are startups like PPH) which have a potential large enough to pay for the risk that 80% of startups die off before they start to make money.
This means - to be comparable in earning potential with an established (money making) company, they would need to have at least 5 times the earning potential (to compensate for the 4 out of 5 companies biting the dust before they make money). Given their current market cap (nearly $500m) would they need to have a realistic NPV (edited, I first wrote here NPAT, which is obviously nonsense) of at least 2.5 billion to compensate for the 80% chance of a total capital loss). I'd love to see the growth assumptions turning this into a viable business case. Maybe I am a non believer, but I don't see this net worth in this particular startup with $15m revenue (FY2016) and a $20m loss. Given the amazing staff growth am I confident that for 2017 its not just their revenue, but as well their loss increasing.
Ah - and before I forget ... just watch their staff growth. If they kept growing as they did last FY, they must have passed (or at least approached) by now the 500+ staff barrier. This means they would need to put a lot of additional effort into (internal) communication and organisation. I have seen many companies failing to move over this hurdle and am wondering whether they have the management expertise to pass it. Any of the investors researched this? Do they have an experienced and empowered quality manager?
Will they manage to grow revenue ultimately faster than cash burn? Maybe, if all stars stay aligned and the low hanging fruit don't run out ... Would I want to bet my money on it? Certainly not.
Anyway - DYOR and GLTAH. Just remember - its a dangerous world out there :scared: and everybody wants just your best: your money :p