QANTM Intellectual Property Ltd (ASX: QIP)
QIP Details
Impact from subdued conditions: QANTM Intellectual Property, which transitioned to public ownership through the joint ownership of firms Davies Collison Cave (DCC) and FPA Patent Attorneys, had lately released its 2017 financial results entailing a 3.6% slip in total revenue (including Associate Charges) of $103.2 million, over 2016 figure of $107.0 million, while service charges revenue (including patents, trademarks, legal advisory/litigation) of $80.4 million, was down 1.3% over 2016 result of $81.5 million at the back of lower patent applications in 2017 and lower patent advisory fees and patent prosecution revenues. This was partially offset by 1% drop in operating expenses. However, the group had a better performance in terms of revenues from trade mark.
The group’s foreign exchange gain in 2017 of $0.9 million was a slip on $3.1 million in 2016. Thus, EBITDA including FX was of the order of $24.5 million, which is a 7.9% drop against 2016. As a result, net profit after tax of $14.8 million, was down 9.8%. The reduced debt level ($7.4 million as at June 2017) still look high with gearing at 9.4%. All in all, the group had failed to achieve the FY17 Prospectus forecast.
Meanwhile, the group had updated the market about subdued conditions and aims to have a return in Australian patent and trade mark filing applications to long term historical, GDP, growth rates. However, the revenue growth has still been linked to market growth while operating expenses in 2018 are said to remain flat but subject to the revenue environment.
Business Outcomes (Source: Company Reports)
Given the shortcomings as of now and industry headwinds with the decline in prosecution work over the past one year, it will be prudent to keep a watch on the group’s performance in the future to look for any positive catalysts for growth. Meanwhile, we give an “Expensive” recommendation at the current price of $1.475
QIP Daily Chart (Source: Thomson Reuters)
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