Going to keep it short again

Revenue took a hit because of a more strict selection process. However margins did improve

Unweighted pipe of 121m

PE of about 22x if you included discontinued operations

Looks like the turnaround could be a long drawn baseline tennis slugging match.

Can see why people are selling.

[held]

I discovered Verbrec thanks to Westferry, who would have invested in it 4-5 months ago. I've since noticed their position steadily increasing, and as of now, Verbrec is their 5th largest holding.

What interests me about Verbrec is that it's a turnaround story in plain sight. If they continue performing at this pace, even without further growth, they will be undervalued.

Currently, Verbrec's enterprise value (EV) is $50M. In their first-half presentation, they reported a profit from continuing operations of $2.9M. This positive result was offset by losses from legacy operations, which they have now exited.

This improvement is part of a turnaround plan led by their new CEO, Mark Read. I had the opportunity to meet him at my Brisbane Angels pitch and spoke with him for about 15 minutes. He impressed me as genuine and straightforward, and he spoke about favourable market conditions, notably their clients' desire to maximise asset use.

Overall, from my back of the napkin, Verbrec should on track to achieve a full-year profit of about $6M+ next fiscal year. This results in an EV/profit valuation of 8. If they don't grow much, they should be valued at around 11, implying a fair share price of approximately $0.17. If they grow at a mid-teens rate, the fair value would be closer to 13, suggesting a share price of $0.21.

Have been spending quite a bit of time studying the technology side of the business, particularly stockpile and asset management and whether there is the right leadership to drive organic growth here.

From my previous straw, Verbrec is similar to Cosol in enabling and supporting systems that deal with Asset Management What makes Verbrec different is they deliver a solution to the customer with the help of an external vendor and do not have an in-house team like Cosol. Furthermore, Verbrec just changed from NRX Assethub to MDO Prospecta which is a bit strange.

The more interesting side is the stockpile software that has been under development for the last few years and only now has started generating revenue (approx 1m pa). BHP is the only customer which presents huge concentration risk if they decide to leave.

The previous CEO, Linton Burns, did not appear to make much progress with the Asset and Stockpile software. Maybe his background from OSD (the company that merged forming Verbrec) in Oil and Gas wasn't really the right fit to drive technology growth,

At the same time, I'm not sure if the incoming CEO has the talent to sell their tech solutions with their engineering projects as Mark Read doesn't really fit that profile.

So this strategy of Verbrec from engineering services to using technology to drive growth in the business might be still too early to call.

On the other hand, at a recent investor conference that I listened to, Mark did articulate quite well his strategy in turning Verbrec around and giving some conservative targets such as picking the right projects and earnings stability without being arrogant or vague like other CEOs of small cap companies. I thought he answered the questions quite well. Would add that fluent communication is what you expect for someone that has worked in a really large company or corporation. I think he even talked better than Bill Beament!

Probably that conference must have drove the share price back up.

Better value under 11c when there was some aggressive accumulation going on. Unless there is some mega deal on the horizon.

Turnarounds are soo speculative but huge rewards on offer when done to precision. Just look at Capricorn Metals, Northern Star and Elders as examples.

[held]

Not sure if others noticed that Mark Read has quite a deep corporate history spanning 30 years and is one of the reason why I got interested in Verbrec.

Spent some time at BHP, Sedgman (2008-2011 when the share price was on the up after the GFC) and GHD in Advisory. Not just one company and seems to have achieved over the years.

More details in Linkedin if you search for Mark Read.

Looks like his experience has given him the ability to execute a radical restructure of the company and raise capital easily with the instos taking the shortfall instead of the underwriter.

[held]

Appears someone couldn't wait for the analysis today and I saw the volume this morning. I acted accordingly

So I'll release it now to see if whoever bought will have second thoughts?

Will start with a history thread and lay out the ugly side of Verbec.

Verbec is a solutions provider for the infrastructure, mining and utility sectors.

Mark Read is the current CEO who started in March 2023 and really took the sword to the business being a bit like someone from the "A-Team" and got carried away.

Anyway I digress...

Going to be very brief on revealing the skeletons in the history. I will probably miss a few things or be a bit biased.

March 2023 - Mark Read appointed as CEO

July 2023 - Michael Casey CFO resigns for another position.

Aug 2023 - Announce Net Loss After Tax of $9.5m. Verbec throws the "kitchen sink" and does big restructure including terminating a "legacy project" as well as strategic review of assets, feasible projects and resources to improve financial position.

Oct 2023 - Business review completed and legacy project terminated

Nov 2023 - Verbrec Capital Raise consisting of 2m placement to instos and 2m pro rata to shareholders. I believe the 2m retail raise was undersubscribed with the shortfall taken up by sophs.

I only have a small holding as of today. Don't know too much about corporate restructures but sometimes these can be lucrative. Oracle is a good example of this.

[held]

Found a bit of time going through the cess pool of anything under 300m again. Apart from all the myriad of mining companies including MAU, I found this one underlined in red.

Apparently appointed a new CEO recently in November

Business seems similar to Cosol???

[not held]