ISU came out with their results today. They were underwelming and showed a decrease in revenue mainly due to Covid and and reduced leads. On the bright side costs have been controlled and EBITDA was up to $20m a 52% increase on FY20.

My investment case for ISU still stands however. Their trail book is valued at $124m more than their entire market cap, so we are essentially getting the business for free. Cashflows will incease enormously over the next few years as this trail book is converted to cash. Further they have partnered with Bupa, so should return to growth this year as we come out of covid with a leaner platform. ISU will also benifit dramatically from openbanking. 

They are also a takeover target with their biggest competitor increasing their shareholding of ISU to 30%. 

Valuation of $1.20

Extremely cheap currently and unloved but at an inflection point. 

ISelect is a digital marketing platform, which helps consumers compare prices in the market of healthcare, telecommunications, insurance etc. It saves people time when trying to compare the prices of these different offerings. It works pretty well and I have used them in the past and had a great experience. They are paid commisions by the provider when costomers take up the products offered. 

ISelect has certainly had it's issues in the past with some govt litigation, which is all behind them now. It is completely unloved due to this.

This is a deep value play, as it has a market cap of $110m and a trail commission book worth $120m, more than its current market cap. So the companies net tangable assets are more than its current market cap and you are basically getting the business for free. The trail book is secure with almost no chance of the providers not paying them being mainly in the healthcare sector.

The business earn't $10m EBITDA in the first half after job keeper was taken out. The company should grow into fy 22 with the deal they have just done with Bupa being signed to their healthcare panel and healthcare makes up 65% of their earnings and Bupa makes up 25% of the market, so this is very significant. This bodes well for FY22. 

So if we assume a minimum $20m in operating profit for next year and assume a 6x multiple and add on the trail book of $120m we get a very conservative value of $240m. So I am valueing it at $1.20 a share. 

TAKEOVER TARGET POTENTIAL

IHA also increased its holding to 34% recently, a major competitor of their's. I can't see any reason why they would want such a large position in the business, other than to possibly make a takeover bid at some stage. Not a reason to buy the stock but definetely potential upside here.