Current offering is Independent investment research in the US & pronet FX currency service in China. research coverage is expected to be 300 early in the new year.
Current offer price is 13.5p, it moved higher recently after a positive trading update confirming it would smash next years forecasts on already contracted business alone, with much more in the pipeline.
Trading Update last week
Insinger lifted their EPS forecast 261% due to the significant operational gearing the company enjoys, they are currently trading on a PE of approx 6 versus average for research oriented peers of approx 25.
The Insinger forecast does not take into account any new revenues generated from the current pipeline or the continual increase in research coverage so is ultra conservative. Any revenue from the recently anounced Fx deals are also excluded.
Insinger 20 dec update
With the outlook for independent research very bright [recent regulatory change, introduction of CSA's], IIR are looking to extend their research coverage further to 400 - 500 in the medium term & 1000 - 1500 as a long term target. They are also looking to move into the UK, Japanese & Chinese markets, and have a number of product developments being worked on.
Any further revenue wins from their current research library flow straight through to the bottom line.
On top of the fast growing research business they are also in second round talks with Google over IIRs GMail trademark, the TM is IIRs and google upto now have had to change the GMail name in the UK to googlemail. In order to settle the disput google previously offered IIR an undisclosed sum estimated at several million in a BBC report. This offer followed an independent valuation of the Gmail trademark amounting £25m - £34m, it was turned down by IIR who are being realistic and looking for a figure closer to $10 million to settle.
GMail trademark independent valuation report
Litigation is ongoing but not burdening IIR as the costs of litigation is being funded by a 3rd party hedgefund, google have recently reopened talks.
My opinion is that the price today should be somewhere close to 40p - 50p which still only takes account of business in hand and not additional revenue from the pipeline & beyond, plus still giving IIR a valuation on par with research orienteed peers.
The stock does have a limited free float which I know can be off putting, but given the small debt £200k the company has & tax losses to utilise, the cash is going to really start to flow coupled with the potential of a multi million cash settlement from google dividends imo will be forthcoming.
To conclude this needs to 3 bag from here to approx 42p to simply trade at fair value to industry peers, the earnings forecast is currently a no brainer as a) It is based on contracted work & b) excludes any conversion of current and new pipeline which is growing fast.
Coverage also increasing in medium term to 400 - 500 stocks [today is 300]
New product development.
Has little debt and assumptions above are based on fully diluted number of shares in issue [6.2m new options associated with ESOP scheme to retain key staff].
Potentially a bonus of a multi million settlement from google for Gmail trademark claim - talks are discussing after previous offer by google was turned down.
