1300SMILES

By Jason Fittler

1300SMILES is truly a home grown success story.

They have proved over the past 5 years that hard work and sensible approach to business will yield fanatics results.

For those who do not know the company 1300SMILES Limited (ONT, formerly be known as Townsville Family Dental Pty Ltd) provides dental surgeries, practice management and other administrative services to self employed dentists.

It also provides general dentistry services to patients. The services provided by the company allow dentists to focus on the delivery of dental services rather than on the administrative aspects of carrying on their businesses.

In 2009 1300SMILES produce a stellar result, our concern at the time is how will they improve on it. Last week they released their half yearly results up to December 2009 and again exceeded market expectations.

They announced a 15.5 percent increase in net profit before tax to $3.1 million and an 8.6% increase in net profit after tax of $2.3 million, this resulted from a 5 percent increase in revenue. They also announced a 20 percent increase in their dividend to 6.5 cents per share.

This stock is currently trading at $2.85 which is a 5% increase since the results were announced. They are paying a 4.5% fully franked dividend giving the stock a gross yield of 6.4%.

The only question is how long will you wait until you add this stock to your portfolio?

For more information on 1300SMILES please call us on 07 4771 4577.

1300SMILES Result

By Jason Fittler

1300SMILES was listed on the ASX by this office on the 11/03/2005.

The initial purchase price of the shares in the IPO was 0.80c, since that date we have seen highs and lows in the broader market, but this has had no effect on 1300Smiles.

Over the last four years 1300SMILES have worked away steadily doing exactly what they promised in their prospectus with spectacular results for the 2008-2009 year. Below I have attached a full copy of the results for your reading pleasure. I have also summarized the highlights below.

Highlights

1. Revenue up 47.3%.
2. Profit up 74.4%
3. Final dividend is 6.0c with a total dividend of 11.4c for the full year full franked. Up 34% year on year.
4. Net Tangible asset backing 12.8c up 280%, year on year.
5. Share price up 15% from this time last year and up 10% on result.

This stock has provide a excellent return over the past 12 months and for those who have held since the float you have had 240% capital growth and 37.5c in dividends and 16.07c in franking credits. This is a total return of 310% or 69% per annum.

I fully expect to see the price of 1300SMILES get back to its highs of $3.20.

Download full results here. (note: this file is 1.2meg, so please be patient when downloading)

Please call me on 07 4771 4577 if you would like more information on 1300SMILES. 

1300 SMILES Ltd (ASX code: ONT)

By Jason Fittler

At the current share price of around $2.50, ONT is trading at over three times its 2005 issue price.

How many other companies can you name, which are trading at a price higher than they were in 2005? You probably can't think of any. Many major companies are trading at around HALF their 2005 prices.

ONT's share price has stayed solid because the company's performance has been outstanding.

You all know that reported profits are sometimes little more than opinions, but CASH IS FACT. ONT's cash dividends have grown magnificently, global financial crisis or not.

The dividend grew from 3.8c per share in 2005 to 9.5c in 2008 (compound annual growth of 35% p.a.). The first dividend for the 2009 year took another big jump to 5.4c for the first half (up 35% on the previous year), so the full year dividend looks set to equal or exceed 11c. All of these dividends are of course fully franked, giving your real return a big kick forward.

In the first half to December 2008, ONT's profit was up 83% on a revenue increase of 58%. This in the teeth of the worst financial crisis of our generation. Dentistry, done right, is the sort of business which rides out periods of uncertainty with ease.

Over the past year, ONT's revenue and profit have grown gigantically, while the share price is almost unchanged. This means the risk has decreased dramatically: you can buy the same future income stream for the same price as last year, starting at a higher profit level and after another year's successful operation.

Because ONT has been profitable in every period, it has rarely needed to raise new capital, and doesn't need any now. As a result, it has never issued many shares and has a relatively small shareholder base.

On an 11c dividend, the yield at $2.50 would be 4.4%. That's a gross yield of 6.28%, to start, enough to make your investment self-financing if you use borrowed money.

I expect the dividend to continue its stunning growth.

This company is due to report in August, I fully expect to see a positive report. This is a small company you can get into on the ground floor.

You can hold this one just for the dividend but growth will happen. I do not know when, but it will happen.

1300SMILES (ONT) – Tomorrow’s Blue Chip Today

By Jason Fittler

This company has once again shown why old traditional values in running a business always produce a far superior result. While large companies both in an America and Australia are making excuses for poor performance, 1300SMILES has no need for excuses.

This reporting season the common cry from CEO’s is “It is time to get back to basics”; you will not hear this for 1300SMILES CEO, Daryl Holmes.  1300SMILES has always stuck with the basics and this is reflected in their half year results. The hard work of 1300SMILES over the past 5 years has now allowed them to achieve scale and build a sturdy business which has not been affected by the global economic down turn.

Highlights

1.    Revenue up 58%
2.    Profit up 83%
3.    Earning before interest and tax up 77%
4.    Earnings per share up 82% to 10.31c
5.    First half dividend up 35% to 5.4c.
6.    Cash flow from operations up 41%

But let’s take a closer look.

In the past 6 moths the company has reduced their total liabilities by $2.9 million while during the same period increased net assets by $1.9 million. So while most companies are selling assets to reduce debt, 1300SMILES has done this through smart use of resources from day one. It is also now paying a 4% full franked dividend to share holders, grossed up this is a 5.7% return.

How far this company can go is yet to been seen, given that the company has now arrived at critical mass allowing the company to operate at a scale where they can grow net profit faster than revenue I am comfortable in saying that this is “Tomorrow’s blue chip today”.  

It is no secret that I hold shares in this company and that many of my clients do. Our faith in Daryl Holmes and 1300SMILES has now been rewarded. During one of the worst falls in the history of our market this stock has out performed and will continue to do so.

Why?

They stayed with the basics, no fancy gearing or leveraging just simply old fashion business, this has put them at the front of the herd. As many large Australian companies look to change their business models back to basic, they could learn a lesson from 1300SMILES.