It's time to again look at ITSI. This company has been in business for about 15 years, provides computerbased lottery & parimutuel systems and has provided systems to most world markets outside the U.S. including the Swedish Lottery, the primary supplier to the Royal Hong Kong Jockey Club, Australia, the Ukraine and other major markets. During the past ten years, this stock has traded between $1 and higher levels several times with the last cycle high rising to $20. The current down cycle was triggered with the writedown of the large Russian Lottery which did not materialize and the writedown of several other unprofitable operations. Now, with the company restructured at a lower cost basis, a new president recently installed and losses narrowing with the backlog rising sharply reflecting recent new orders, it's again time to look at ITSI at a level below $1.5. An important element is the Berjayas Group's (Malaysia) 40% stake investment at $5.5 per share and the prospect of the China Lottery getting more real and Berjaya has a very strong presence in that market.
The chart has turned bullish and we think its realistic to see the potential for about $3-4 range this year without a very major new project.
Gunther Karger
Discovery Group, Inc. |
