Topicus Software is Constellation Software's 20 year old European Baby

 Topicus was started in 2001 and it was a Dutch company  focused on the pan- European market since day1. It was acquired by Constellation Software on January,2021.It is headquartered in the Netherlands and has offices in about 10 other European companies.It has a market cap of $4.7 billion compared to about$47 billion for Constellation Software. On a fully diluted basis there are 129 million shares.39.4 million of those outstanding shares trade on the public market.About 39 million remain with the original Dutch shareholders. .There were 39.4 million preferred shares owned by Constellation that were converted to subordinate voting shares in February,2021.                                                                          Topicus is in the business of vertical market software which models a business's operation from the start to the delivery to the customer.This allows the Topiucus customer to improve his operation for every stage and the overall turnaround time.This then speeds up processing time and reduce individual operation cost and overall cost.

    Second Quarter Highlights

   This blog and many other analysts are betting on Topicus (TOI) following in  the footsteps of it's highly successful parent Constellation Software.To this end TOI had a 54% increase in revenue to EUR178 million in Q2 compared to EUR 116million in Q2 2020.While net income increased to EUR169million compared to EUR 14 million in Q2 2020.This translates into $.12 per share.A number of acquisitions were completed for cash considerations of EUR 5.2 million during the first half.And subsequent to Q2, TOI completed a number of acquisitions for cash considerations of EUR 50 million. Consequently TOI still has a negative free cash flow.               

 

     The Constellation Software model 

 The voting structure for TOI is complex but Constelleation Software (CSI) owns subordinate and super voting shares.Consequently CSI controls 50.1% of TOI voting shares.And as a result Topicus has been active on the acquisition trail.In Q2 it bought a number of acquisitions for cash consideration of EUR 5.2 million.And subsequent to Q2 it completed the acquisition of a number of businesses for EUR50 million.So it is following in the footsteps of it's parent CSI.

    But Topicus is different than almost all other Constellation purchases.Traditionally CSI will include the acquired property under the Constellation Software umbrella.But Topicus was given more independence and handled as a spin-off.And it too is acquiring small businesses and making them part of the Topicus operation.All of their acquired properties to date have been in Europe.And Constellation is keeping a close eye on the new operation.

    This blog has no forecast on the expected price by yearend.But it notes that the price has already come up from $57 to $128 in 2021.Investors should be cautious here until Q3 results come out especially when TOI is showing negative free cash flow (because of the expenditures on acquisitions).        https://www.woodbridgegroup.com/ 
 

Oceanagold gets Didipio mine back

    Oceanagold,in a press release,on July 16 announced that the Phillipine government which had closed the Didipio mine to study the effect on the local environment had now  given a new 25 year arrangement (FTAA) to continue operating the gold and copper mine.No date was given on the new startup date nor when normal operations would resume.However OGC said ,in it's press release,that milling would begin "as soon as possible".The staged restart will begin over the next several weeks.And in full operations it will produce 10,000 ounces of gold and 1000 tonnes of copper in a month.This will have an immediate impact on OGC earnings and stockprice as the Didipio mine contains a stockpile of 19 million tonnes of ore.The total value of the stockpile of copper and gold is estimated by this blog at $17 million or $.025 per share.

       Past Blogs

    This event has been covered by several other of my blogs including Workathon dated May2 and January 25,2021.There was some speculation that the Phillipine government might be asserting  that it intended to take an ownership position in the Didipio mine.This blog suggested that OGC might ask the Australian government to intervene on it's behalf to sign a new FTAA agreement.But none of that took place and OGC has remedied the problem by returning 1 - 1.5% of it's gross revenue to the Phillipine government in order to assuage the environment problems that might occur from the mine.And according to the OGC managerment Didipio will be sarting up again in several weeks.Furthermore Oceanagold management has increased it's production guidance by about 20,000 ounces for 2021 because of the startup.

   Q2 Highlights 

 Oceanagold had a good second quarter aside fron signing a new FTAA agreement. Revenues were $183 million versus $149 million in Q2 2020 while adjusted EBITDA was $95 million and e.p.s. was $.05 per share compared to $.02 in Q2 2020.First half production was at $177,000 ounces and as a result management revised annual guidance to 350,000-370,000 ounces excluding production from Didipio.While Didipio is expected to produce 18,500 ounces of gold and 3500 tonnes of copper in the fourth quarter.

     Back to Work 

    Oceanagold had a setback when the Phillipine government shut down the mine almost 2 years ago.But it was not dormant during this period as it developped the Martha Underground Project and the Waihi mine.Also it bought a lot of property surrounding the Waihi mine.So production has not fallen during this period;it has actually increased.And, in addition,it has a stockpile of gold and copper ore on the Didipio mine worth about $17 million.It has been suggested that OGC pay 1-1.5% to the provincial government but this may only last for 1-2 years.But the new production is expected will add up to 18,500 ounces and 3500 tonnes of copper in the last quarter.As a consequence this blog sees that e.p.s. may hit $.16 -$.20 per share in 2021.This should be enough to gradually push Oceanagold shares back to 2019 levels when it was trading around $3.50.Right now the price of gold has fallen but should not stay down with all the government liquidity still pouring in to the economy.

https://www.woodbridgegroup.com/