INDITHERM (Double Ya Money ?) (IDM)

‘DOUBLE YOUR MONEY’ or the next TEN BAGGER ?

Well at least I hope so –having saved the hard way for ½ the amount needed to put my son through university, I decided to let it ride on a carefully selected share, with a 6/12m view on doubling it.

Check out my thoughts and reasoning, throw in a bit of checking/verifying,( and if you come across anything to add, please help others save the time and leg work –post it here), then having done your own research - any decision is yours.

Article in the Telegraph cited a buy recommendation quoting a broker target of £5 by the end of the year. RESEARCH BEGAN & has Gone On Since:-

Pegasus (A subsidiary of Gettinge an international medical supplies group –T/O about $½ BILLION+ pa ) paid £400,000 just for the 10yr rights to market one application-heated medical operating table blankets.
-Apparently demand in this area alone is exceeding the company’s expectations and there is already a backlog in fulfilling orders.
-Company to move shortly to min 5x larger premises.
-With around 100,000 tables worldwide and a unique product – potential is huge.(Add in mega profit margins on anything medical and-WOW)
-The product is already approved for use in Europe.
-Pegasus have a target and pick up the tab for obtaining FDA approval for use in USA.(I gather the medical market over there can be lucrative !!)
-One of Gettinge forte’s I understand is wound treatment and they are looking to use inditherm in this area, in view of their size I would expect any successful developments to be rapidly exploited

My opinion –a unique tried & tested product with a mega international company selling it for you with already proven demand in an area with traditionally BIG PROFIT MARGINS.- Good enough for me to buy in!!

Interested yet – I was – but read on.

There is a $2 Billion market worldwide for insulation/lagging

Inditherm has ALREADY undertaken a 2yr validation testing with one of the WORLD’S LARGEST food manufacturers.
-Results shutdown and maintenance times slashed, resulting in significant savings in lost production.
-Product running on low voltages gives greater economy and safety compared to other methods, eg steam jackets.etc.
-Following the successful testing the food manufacturer is now buying.
-With up to 20km of piping one factory could take $20/30 Million of inditherm.

My opinion – A tried and tested product giving economies in running, maintenance, lost production and safer in a $2 Billion marketplace must be attractive- and it's already being bought by one of the worlds largest food manufacturer !.

Hope your interest is still with me.

Automotive applications.

Well as it’s low voltage and can run on variable voltages 12V included why not ?

Again successful trials in this area have already been completed.
-Major European manufacturer(sorry don’t know who yet) looking to introduce heated steering wheels incorporating inditherm onto some of their models from 1993.
-Inditherm has a partnership with a major manufacturer of steering wheels and they are in discussions with other manufacturers.
-Cars and a 12V heating product ??– heated car seats have got to be a huge opportunity under consideration/development or testing.

My opinion- A 12v heating product that has successfully been proven in car applications must have a bob or two’s market to go at -and arrangements already in place re one car producer !.

At the risk of getting you over excited (or putting you to sleep) I will cover other areas currently in trial/discussions etc on a one liner basis :-

-Clothing –trial under way with a police force.
-Clothing-discussions in progress with leisure clothing manufacturers.
-Clothing-Survival suit applications in discussions
-Tests underway with major UK supermarket chain re heated deliveries.
-Validation tests underway with major pizza group re heated inserts for delivery bags (runs off the bike/vehicle battery)
-Temperature critical areas such as pharmaceutical deliveries/transportation .

There’s probably a lot more I’ve not come across on my research.

My opinion- Can they produce enough of the damn stuff to keep up with the applications and the sales guys of their partnerships with Gettinge and those involved with the other applications.

BUT- you may say it’s loss making according to the accounts
Well you’re right – to Dec 2001 a mere £212,000(yes thousands not millions)
-Loss down around a third on the year before.
-Turnover up around 3x on the year before
-ALL THE R & D AND TESTING HAVE BEEN DONE.
-It’s now exploit it time.
-Costs would appear to run at £40/£50,000pm
-Company had a couple of million cash in the bank at the end of 2001

My opinion -It’s well funded to enable it to comfortably trade through to profitability.

Check your pulse it should be approaching the 100per min mark (If not try breathing on a mirror).

Still got any doubts ??

-Gartmore, AXA, Flemming Mercantile etc have a million or two in the shares.

-One private Co has around £2 1/2Million in.
-The Directors have big stakes in the company.
-A couple of big hitting directors with impressive CV’s including senior positions in international companies are on the board.

-And there’s just over 10M shares with a cap of under £25M (take out the existing big holdings-some locked in for 12months –add a bit of demand for the few shares circulating and – hey presto ??)

Anything else ??

Well the founder of the company Pat O’Grady has around 33% of the company and I believe he’s 58, if that were you, could someone tempt you with upwards of £20M to sell (say £5 a share).

If you were a broker/analyst on the look out (on behalf of a major corporate industrial with stagnant organic growth ops) for something unique with applications in huge markets that they could buy for say a mere £50m and accelerate the growth potential to what must be fractions of a £Billion turnover per annum –would YOU be looking and talking to your client (I’m in the wrong business I’m sure).

So there we are – Downside
- Could be a ramp(So do your own research as I did).
- Someone could try to circumvent patents, if they are strong, why bother, follow Mr Kiam’s example just buy it.
- Any host of if, but’s & might be’s could happen.

On balance I’m happy I’m in.(I think the founder virtually put everything ‘on the line’ for it, the city and the institutions have backed it and already doubled their money and stayed in) I think the potential is phenomenal.

Why have I posted this ??

Well as a private investor, finding a company with any remote prospects of a minimum doubling in 12m was hard enough, then I found that once I started checking out a potential company it was like pulling teeth trying to find out information just as a starting point from which to start my own checks from.

Could find no end of ‘buy this’, ‘don’t miss that’,’ these will go into orbit soon’ etc etc, but not much substance – hope this gives someone a bit (though lengthy) of substance to start from.

NB- Do your own research – The above merely represents my thoughts, based on my impression of - the aim float doc, year end accounts, articles on the net, bulletin board info and indeed my interpretation of other peoples interpretations & impressions etc.

To summarise-Tried and tested product with all the R & D done,already being bought by one of the worlds largest food manufactures, with potential of $30M per factory.Orders coming in faster than they can satisfy for the medical blanket application.Arrangements in place re steering wheels on a major european producer.Big financial institutional holders.Takeover possibilities.Application markets that are simply huge.Company philosophy of partnerships with market giants such as Gettinge to accelerate market exploitation at minimal cost. With a couple of Million in cash at the bank just for comfort.

Is it a double or is it nearer a ten bagger ?

Regards Gazkaz

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NB This is an update on the above posting made 26/4 following my attendance at AGM.(as such it is out of sequence from the above and the subsequent postings between the start of the thread and today)

These are my impressions & opinions only..

Following formal passing of resolutions, spoke personally & informally to Colin Tarry at length
-Been with the Co three yrs and very experienced in growing start up & Tech Co’s in international markets, has worked and run Co’s in USA.
-I’m very confident that he knows all the right directions and knows how to avoid all the pitfalls.
-He has an objective, a plan how to get there; and the knowledge, determination, experience and abilities to make it happen.

Pat O’Grady spoke to him for about 10mins –overall impression- very positive about him personally-he put everything on the line to get the company off the ground and I can tell he has a passion to see it through to it’s full potential.( & not a man I would ever bet against)
-He puts in the right people, with the right incentives and philosophy to take his company all the way to where it can go.

Bumped into the Co solicitor over coffee-even he’s a shareholder.

Having met the board and 2 of the key members=Are they still a BUY=I will conclude with the answer I gave to my friend who asked for a 1 minute summary of my opinion and he would call in for full details tonight:-

‘Draw the axis of a graph, on the left axis put some ascending share prices, then draw a graph based on an aircraft take off, steadily steepening upward curve.’

He asked ‘ what’s on the bottom axis ?’

I replied ‘Time increments & General stockmarket sentiment & conditions. That’s the only bit I think needs your own thoughts!’

Can see why the institutions just seem to buy, want more and will probably only check the price annually. I’m only an amateur and I’m enthusiastic-The Company did a full presentation to institutions last week(confirmed), they are professionals, and probably got a lot more detailed information than coffee and a chat. Reports suggesting very positively received don’t surprise me (and the following 2 days activity not merely coincidence.)

Shares can fall, capital is at risk in any share, do your own research and if in doubt always seek professional advice.
(In additional the writer is also not responsible- for that Monday morning feeling, fluff in your belly button, crumbs in your bed, empty loo rolls(after the fact), cuts and nicks from new razor blades before a big date, and market maker price manipulations/rampers/shorters, global warming etc.