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As @PeregrineCapital pointed out, BTI's February Update is all about SiteMinder, which is their largest holding in the portfolio. BTI are still quite bullish given the significant portion it makes up of their NTA and for me, any sell downs from the BTI team would be worth paying attention to. (Even though they probably should to move capital into other unlisted ventures).
The update breaks down Short, Medium and Long term prospects for the company, but implies there is value at current levels.
I'm yet to do my review of Q2/H1 but will revisit this when I do.
The Good
The Not So Good
What Status
What To Watch
Siteminder trading update. Business continues to progress
Went through the SDR Investor Day Presentation slide pack released yesterday 16 Oct 2023:
https://www.asx.com.au/markets/company/SDR
It was well worth spending the 25-30 mins working through the 78 slides to get a flavour of the 2 Smart Patform offerings targetted to be released in FY24 and the opportunity ahead to upsell within existing customers, over and above the signing up of new hotels.
Having had some past exposure to cruise ship revenue management and reservation systems, the offerings make complete sense to me. It solves some big problems, especially for smaller hotels that do not have extensive distribution and revenue management capabilities.
Very keen to see how the SDR customer base takes up these new offerings and the resultant financial impact in the coming Q's.
SUMMARY
Discl: Held IRL and in SM.
Full Year and 4th Quarter Updates. (A bit late but finishing off the list)
The Good
The Not So Good
Watch Status (Trying a new method to be able to better compare ongoing sentiment)
What To Watch
SDR's FY23 results had no surprises as most of it was revealed during the earlier 4Q Appendix 4C Release. However, these charts in the pack stood out for me as it provided a bit more "colour" on the performance.
It was a strong result and it is executing/delivering on the trajectory Sankar said it would. Will be interesting to see how much this holds up in the next 2Q's as global economies decelerate further, eating into discretionary travel demand.
Discl: Held IRL and in SM.
SDR Director buy from Dean Stoecker - around $50k worth
The Good
The Not So Good
What To Watch
@Strawman any chance of getting Sankar Narayan back for another update?
Life360 and SiteMinder are among the locally listed companies to have banked with failed VC lender Silicon Valley Bank.
some local fall out
Siteminder Half Yearly Report
Consistent growth rate and has not missed a beat since IPO and subsequent tech sell off. Long growth runway and obvious large TAM. Continue to impress and I continue to add in RL PF.
Siteminder Quarterly report - impressive revenue growth numbers continuing (fastest in 5 years)
I’ve also been watching SiteMinder. This observation is a bit from left field, but it may have an impact on SDR in the short/med term.
Within 2 days, I heard 2 podcast references to hotels operating at low capacity, due to lack of staff availability and the subsequent flow on of price increases for accommodation to ensure operators are profitable.
My initial thought is that this is a headwind for SDR as there are less rooms to clip the ticket on. Alternatively, it could be a positive as operators need to ensure they fill rooms to a predetermined capacity to make a profit/break even. I don’t have a strong view either way, just another data point to consider.
Sources below:
Ref 1: “Imagine that China moves away from zero COVID. I'm not saying they will, I'm saying imagine, then all of a sudden, the demand for all sorts of basic materials, the demand for luxury goods. I'll give you just an example. I just went around Europe visiting clients and the hotel rooms that used to cost me 200 euros now costs 400 euros, and you can't get room service at night because they don't have enough staff anymore. What happens when the Chinese tourists come back? That probably goes from 400 euros to 600 euros.”
Excerpt from podcast, (my emphasis in bold) Louis-Vincent Gave: The Xi Pivot vs. The Powell Pivot October 20th, 2022
Ref 2: On The Call yesterday, Adam and Jun Bei discuss business travel, with hotels running low occupancy due to staffing issues and increasing prices to compensate. They note that business travel is strong but expect it to taper going forward re the higher costs to travel.
https://www.ausbiz.com.au/media/the-call-friday-21-october-?videoId=24901
Adam Dawes & Jun Bei Liu At 20.30
As a side note, the macrovoices podcast is interesting. It refers to a potential Xi pivot. That is, when China loosens covid restrictions, there may be a “flood” of liquidity that will be released from pent up Chinese demand.
Also on my watch list. Liking the model, the management, and the post-covid story. For no particular reason I'd like the comfort of buying this below 5x EV:ARR. Profitability still aways off so might happen ($2.64 by my numbers). If it doesn't no skin lost and there are others out there with more growth and lower multiples.
A solid result from Siteminder. @west has posted the key details, but the company has delivered exactly what they said at their IPO and in line with what CEO Sankar Narayan said we spoke to him in early June.
...and yet shares are down 33% since then!
Yes, they're burning through the cash, but they have +$100m in 'liquidity' ($25m in cash, $50m in term deposits, and a $30m loan facility). Moreover, it's more about what they are spending the cash on and what return they are getting on that -- and investors can't really pretend to have seen any nasty surprises.
Of course, the macro situation has changed a lot, as has general market sentiment. And they are directly related to travel.
Fair to point out too that shares are still on 5x ARR, so certainly some growth priced in.
Still, this is all about a huge market opportunity, high margins and a capacity (it is hoped) to scale effectively.
I don't own, but on my watchlist.
Just a rough cut to draw a line in the sand.
Will assume 25%-odd growth for 5 years to get a FY27 revenue of $400m.
Let's also assume a 20% net margin, and 280m shares on issue to get an EPS of 29cps.
I'll apply a PE of 25 and discount back by 10%pa to get a valuation of $4.50
Hope you found the discussion with Sankar Narayan valuable.
He struck me as a straight shooter with a clear focus on what matters, and as someone who is thinking years into the future.
You can catch the recording on the Meetings page, but a few things that stood out for me:
All told, it looks to me like a well run business that has not only survived a near existential threat, but emerged far stronger on the other side. Management is capable, aligned and thinking long term. The business is very sticky, and should scale well as revenues grow, and is unlikely to need any outside capital for the foreseeable future.
All that being said, despite the drop in the share price, shares are still on something like 10x ARR. Yes, it's growing well with attractive economics, but it feels like a lot in the current market.
Very rough quick Valuation more research to be conduct. Really hard to value at moment due to effect of COVID and how the hotel sector recovers from the pandemic. Overvalue at this stage for us unless we can see some massive future growth in revenue.
CEO Sankar Narayan – joined SiteMinder in January 2019. Previous roles before SiteMinder include CFO and COO at Xero (ASX: XRO), CFO at Virgin Australia, Fairfax media and Foxtel.
Podcast link below from last year interview with Sankar Narayan.
Founders
SiteMinder was co-founded by Michael Ford and Michael Rogers in 2006.
Michael Ford is currently a Non- Executive Director with SiteMinder with approx 12,453,770 or 4.62% shares on issue.
https://podcasts.apple.com/nl/podcast/s03e05-mike-ford-siteminder/id1490231090?i=1000458624547
Michael Rogers is currently SiteMinders Chief Technology Officer with approx. 2,300,353 Share or 0.85% of shares on issue.