Stock Quickie – ICS:ASX

How did we get here?

Showed up on SWSt filter. 

What do they do?

They provide medical billing and collection services for the medical industry. Despite being an Australian company, they primarily operate in the UK under the MDC brand. 

Weighing machine

RoE of between 8-20% that seem to be quite vulnerable to being hit by changes in costs/environment/regulation, etc etc. Stability can’t really be relied upon, though management seems very capable, and business seems to be cash generative enough to weather these issues. The margins fluctuate with these, and are good, 10% in the bad years, 20%+ in the good years. 

They are debt free, display reasonable growth (~12%), and have a high dividend payout ratio (75%) with a yield of about 3.5-5%. 

They are an incredibly small company $20M mkt cap, but have high insider ownership (32%). I’d classify this as a “small cash flow company”. 

Have managed to grow all their metrics well, though in a bit of a lumpy fashion, for the past 10 years. 

Voting machine

They’re very average, currently trading at about 16xPE. Historical range fluctuates between 8-33x, so they’re in the middle of the range.

Other options

CL1, RMD

Worth looking further?

Probably. They’ve been on quite a run this year. The share price has risen from $1 to close to $2. They’re a narrow moat business, in the tech sector, that’s well run and boring. 12% growth for 16x earnings, is probably reasonable. It would be good to look for a better entry point for that value (e.g. 13x, or a 5.5% div yield).