TPC Consolidated ASX:TPC

• Very illiquid, small MC ~ $37m
• high insider ownership - CEO/founder since 1996 owns 4.4m shares ~ $12m/ 40% of issued shares
• Revenue increasing steadily over last 5 years since TPC transitioned towards energy retailing (CovaU)
• Declared dividend in FY20 and FY21~ 5% yield based on todays price
• No debt, conservative balance sheet with $7m in cash
• Steady share count
• >20% gross profit margin, net margin around 5%
• ROC > 20%, ROE > 35% over last 4 FYs
• Initially started as a calling card business - this was sold in 2014 for $19m. The company then pivoted their strategy towards the energy market, launching CovaU in 2014. Chief Strategy Officer was brought in around this time in 2015 to help with this strategy. Took them 3 years to become profitable (FY17)
• FY21 revenue largely from CovaU business ($92.6 out of the $93.6m), and the remaining from mobile/telecommunications business ($1m)
• Recently expanded into more states across Australia - in all states except NT
• CovaU - 4.4 stars on productreview - energy retailer, gas and electricity focussing on the SME markets.

My thoughts:

• The company has invested heavily in the last few years into expanding their business across different states, and this is starting to pay dividends (literally).
• I had a browse around the website, read through their annual reports and published updates - I still can't quite wrap my head around the competitive advantage of the business. Perhaps it is a combination of: Disciplined management with good cost control, quality customer service/ better pricing vs their competitor, rapid expansion and proven strategy to enter new markets (other states). That being said, I also think that there is no real moat around this business.
• To sum it all up, this company is now producing good cash flow, growing their revenue and profits, it is still a founder-led business with decent insider holdings.

Would be interested to hear your thoughts Wini. Putting this on my watchlist - AGM happening on 26/11/21.