Have opened a position in Kinatico (KYP) - IRL and here. Another company converting from traditional software to SaaS. They do compliance software for workplaces - think certification checking when onboarding staff and ongoing monitoring. Eg mining drivers, aged care, etc. “RegTech” is a growing area with compliance requirements only getting more complex - their product integrates with most HR systems and handles this complexity for clients. Some nice enterprise clients and adding more as time goes by.

My theory is that they are at an inflection point and with moderate growth and a lower R&D / development bill in FY26 and ongoing they could start a much more profitable trajectory as the operating leverage starts to kick in.

Balance sheet is solid with $10m cash, positive cash flow and no debt. About $120m market cap and at current numbers a very high PE (just over $1m profit this year) but expecting that PE to drop to the 20s on FY26 results and more beyond.

I’ve not met management but the 3 key execs have good pedigree and skin in the game. I really like the chief revenue officer - seems to know his product very well (and gets more airtime than the CEO at briefings!)

In summary my thesis is:

• growing SaaS revenue into a market that is growing - they say TAM is $2.8b and growing
• pricing is ok if you look forward (and squint back :-)
• solid balance sheet
• Should get lots of leverage from growth and capex bill has peaked (at least CEO thinks so) - just turning NPAT profitable in FY25
• product is sticky and gaining in acceptance / child care is a interesting opportunity off the back of the inquiry also
• shares on issue have stabilised and even a little buyback last year - there’s no major dilutive options or like out there
• management have good pedigree and are well aligned

Downsides/question marks/risks:

• that money burns a hole in their pocket and they do something stupid like M&A
• management take increases - it’s been big as a %age of profits but my theory is it’s front ended and will fall as a percentage of earnings
• The big ERP players figure out reg tech and start doing it for themselves
• it’s scalable here but limited / costly if you go overseas
• liquidity of the stock isn’t ideal

Thats about it - would be interested in other straw folks views…@Strawman - would be great to get them on for a meeting too…

Rich