IRE
General thoughts on the update from new management.
I like the intent behind the IRESS update.
Everyone knows they’ve got a great spot as the incumbent, and with a new pair of hands can either a) build from there b) put up the for sale sign c) exit some markets where returns are poor and scale not forthcoming.
That line of “better than 2022, with the potential to be higher” is definitely the hook for sticking around as a shareholder.
No matter the track record, every business is at risk of going stale. It certainly looked like that might be happening, and investor patience/ client credibility gets impacted.
So the “tried and true” market solution; fresh eyes, fresh blood, blame the previous team, go from there.
The below is also music to the ears of long-suffering shareholders. Overseas expansions have eaten too much capital, and taken too long to produce returns.
My take of the below would be: those long run targets, viewed as slightly ridiculous now, set by prior mgmt, now punted, will be rebased, and, depending on the juicing here, potentially a modest uplift to near term. “We can do more than we have been, but less than we said we could”.
As always with IRE, it seems they are doing “just enough” to cause us to stick with them.
Update: (minor).
Perhaps repeating ourselves, somewhat, but the below outlook statement does provide support for the above points, about the near term uplift, noting that it is a little unusual to be able to “immediately” identify and implement profit uplift opportunities that weren’t already targeted, or on their way, already, unless you were just taking the axe to something (which is usually ill-advised long run).
So it is possible that previous management, who set oddly seeming / very high NPAT targets, did have a few possible margin accretive ideas in the bag, but didn’t make it to see them take root.
All very amateur sleuthing, but, trying hard to read between the lines.
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