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Added 4 days ago
#Bull Case

I attended the Altium technology day where management outlined their plans.  Key tak-outs were as follows :

  • Their strategy is to transform the industry through dominance - this indicates an unwavering desire to crush the competition 
  • IoT is the new "gold rush", so Altium is focussed on building a better spade to help IoT manufacturers dig better
  • Their new product is looking to consolidate the three key segments of the industry - electronics manufacturing, design and parts supply
  • They are targetting to double their user base by 2025 (from 50k to 100k)
  • They are also looking to mitigate some of the industry players risk from design to production by creating financial instruments that help 
  • The sales strategy is to have strong account based management with deep relationships with customers and understand the end user needs - this is meaning that they will use fewer distributors if any so that they can control the sales cycle

All in all, the long term thesis is very interesting and definately a long term hold

 
Last edited 4 months ago
#HY2019 Results

Wow.

Revenue growth of 24% to US$78.1m. Well and truly on track to achieve (and beat) long held 2020 target of US$200m in revenue.

Even better, EBITDA margin was 36.7%, ahead of 35% target. 

Net profit up a massive 58%.

Name any of their key metrics -- they ALL moved in the right direction. Of particular note was China, which saw a 49% lift in revenue (there's a lot of potential remaining here too).

Of course, still debt free with US$58m in cash.

Company has provided an aspiration goal of US$500m in revenue by 2025 and believes the EBITDA margin could expand to 40%. That would represent top line growth of 20% per annum between FY18 and FY19.

On that goal, EBITDA would grow by ~24% per annum between FY18 and FY25

Valuation is the hard part here. Using trailing twelve months (TTM) figures and an US/AUD exchange rate of 72c:

P/S ~20, EV/EBITDA ~54, PE ~67

To put that in context, Alphabet (Google), which is also growing top line at ~20%, trades on a PE of ~26 and a PS of 5.6. Altium is a fantastic tech company, but then again so is Google, right?

I have zero concerns about the quality and strength of the business. My worry is that unless shares can mainatin very high multiples, shareholders could see pretty ordinary returns from here. ALU is a $4.3b company, and it's not easy to maintain high and sustainted levels of growth at this scale. 

I have consistently under-estimated what the market will pay for this company. So be warned... 

Investor presentation can be found here

AFR article here

 
Added 8 months ago
#Bull Case
stale

SP has rallied recently tracking the IT sector on the ASX - may have some pull back but should over the long term contiune to rise - Gotta jump in somewhere. 

Customers include but are not limited to those listed below

  • Automotive: i.e. Tesla, Ford, Volkswagen
  • Aerospace: i.e. Boeing, Lockheed Martin, SpaceX
  • Life Sciences: i.e. Cochlear, ResMed, Phillips n Mobile Devices: i.e. SAGEM, Honeywell
  • Consumer Electronics: Apple, Amazon, Fitbit, Bose
  • Electronics & High tech: Google, G.E.
  • Research & Education: John Hopkins, CSIRO n Industrial Controls: Siemens
  • Computers: Microsoft, Lenovo n Semi conductors: Qualcomm