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Stargroup investment in manufacturer starts to pay

ASX listed ATM machine operator Stargroup’s 19.25% investment in their Korean ATM machine supplier and manufacturer NeoICP, is now officially more than just a strategic tie up.

NeoICP recently announced they had booked a AUD$1.9m profit (EBITDA) for the first 6 months of the 2016 financial year, blitzing last year’s full year result of just $1.7m.

With a 19.25% stake in NeoICP, Stargroup are potentially staring at a wind fall of up to $372K for the 6 month period and with a formal dividend payment policy in place at NeoICP, the company expects to receive at least a 30% dividend for the period.

Importantly, NeoICP declared a significant AUD$28.6m worth of net assets as at the 31st of December 2015 and Stargroup have only been carrying this investment on its own books at just over AUD$900K.

The company says it will now revalue its stake in NeoICP on its own books following a couple of years of sustainable profits at Neo, potentially significantly increasing Stargroup’s stated net assets.

Mr Todd Zani, Stargroup’s CEO and Executive Chairman said “Stargroup is pleased with the continued improvement in the NeoICP results….clearly our investment is currently undervalued in our own books and we will be making an upward revaluation of this investment. We believe that it is reasonable to expect a future dividend payment from this investment, in line with the policy that is in place.”

“NeoICP are making significant inroads into the distribution of its products throughout the Asia Pacific region including the recent distribution of its casino settlement machines, cash redemption terminals and back office technologies in Macau.”

“They have also made good progress with their cash redemption terminals in China, Sri Lanka, Malaysia, Cambodia, Turkey and also South Africa.”

“The reciprocal shareholdings between Stargroup and NeoICP sets us apart in the ATM market place. Our joint ownership of each other means that we have an edge over our competitors and we consider that an ongoing dividend stream from our investment in NeoICP is the icing on the cake.” Said Mr Zani

 

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Stargroup (STL)

Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 29/06/18

1 year TSR5 year TSR
4thAdvance NanoTek1986%102%
302ndGoldfields Money27%5%
496thWestStar Industrial-4%-54%
505thStargroup-6%-11%
767thCarnegie Clean Energy-61%-6%
722 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

09/08/17
$12k Bought
27/06/17
$0 Other
27/06/17
$35k Bought
Total value as at the date of the transaction
Source: Morningstar

Revenue

87th↑Stargroup$563k
96th↑Carnegie Clean Energy$5.3m
97th↓Advance NanoTek$5.1m
100th↑WestStar Industrial$4.6m
101st↓Goldfields Money$4.2m
239 listed industrial companies ranked by revenue.
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Remuneration from Stargroup

1368thJay Kim$29k
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