Exceptional Value

Occasionally an investment emerges representing exceptional value at the current price. At the present time we believe we are seeing two such investments listed on the ASX.

Pacific Energy (ASX: PEA) got a mention here just in June. Since that time we have lifted our assessment of this remote energy business. Their move into solar to replace diesel should provide both the company and their clients with significant savings. Their shares offer value now with a dividend yield of 4.2% and a cashflow yield almost four times that – then there is the potential for further growth.

Back in October we announced our investment into Buddy Platform (ASX: BUD). Since then the initial commercialisation of its plans has been impressive. The potential for revenue and profit growth in the current year seems to be even more impressive.

Buddy Ohm was launched in March 2017 and even the company is surprised at the rapid take-up of the product. The Buddy Ohm system remotely monitors a building’s consumption of electricity, gas, water, steam and solar power generation, as well as temperature and humidity monitoring, helping to reduce consumption through awareness. This insight into energy consumption and generation leads to reduced energy usage and savings for customers. Buddy management claim to be unapologetic environmental enthusiasts. Significant revenue will flow from Ohm installations in Australia, the USA, Canada and Central America starting during the 2017/18 financial year.

Harder to quantify is the revenue to flow from their recently acquired Parse software. Parse is widely used by mobile phone app developers and was acquired from Facebook at no cost. Buddy has announced that its Parse on Buddy software will be provided to developers for free. Not such a silly move, as the Company has unlocked a much larger opportunity to supply data to customers that want insights drawn from the usage of the millions of mobile devices built upon Parse on Buddy. The data so collected has contributed to building anonymised, aggregated data of value to many potential customers. Buddy believes that the market for this data can be counted in the millions of dollars, starting in early 2018.

The potential being realised by such a small company is exceptional.