Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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Share price a bit bonkers now. If 180p was the “right” level in the run up to results with an expectation of $12m EBITDA then it should be well north of 180p at some point later this year when they hit more than $16m. Some people moving money out temporarily, I imagine, but this seem a bargain to me, for those prepared to wait a little while.
Good - a useful bit of cost saving there. Next year we can look back at their ridiculously conservative forecasts and laugh.
I wouldn’t rule out they are paying off the NHN loan early, Bango made it clear at the time of the RNS for the loan that there is no penalty for early repayment so if they are generating the cash why not save themselves 6% on US$ 8m
Stifel are forecasting EBITDA of $16.6m from revenue of $53.1m in ‘24, compared to $5.2-6.2 from $46.1m in ‘23. If the additional revenue falls mostly (90%) to the bottom line that would explain $5-6m of the $10-11m EBITDA increase. The remainder might be explained by synergy savings, though BGO have said this will be reinvested back into the DVM business - perhaps not all of it will be? So EBITDA is increasing nicely but cash is not. I don’t believe it’s due to repayment of the NHN loan other than just a couple of $m in H2 (per the CFO). So what’s going on? If operational costs were increasing they’d be included in EBITDA. Is the cash being used for exceptional outgo? Or paying for work that is being capitalised rather than go through the income statement? Or is some revenue being booked without cash being received?
Pen167
I’m with you, I haven’t seen anything in the TU or the Proactive interview that indicates that costs will increase in 2024, also my understanding on staff reduction following the Docomo deal is the same as yours and I’m of the understanding that the costs associated with the staff reduction (redundancy payments ) have been covered in 2023 so it’s all a bit of a mystery as why the narrative is as you mention, maybe they are planning to pay the NHN loan in full this year thus the increase in costs and the statement in the TU that with the its strong cash generation the group is well placed to return to a positive net cash position in FY 2025
The narrative that seems to be doing the rounds is that sales will increase in FY 2024 and costs will increase at a greater rate. The majority of Bango's costs are employee related and they do not seem to have been recruiting since they acquired the staff from Docomo. Some of the extra staff will have been gainfully employed and some 'let go'. I suspect that they had staff in excess of their requirement for a while but they held on to these to save recruitment costs at a later date. Can anyone enlighten me as to where the additional costs are going to arise ?
Agree with the title, I first bought here back in Oct 2022 but sold all my holdings last year. I'm now back in 19/01 (down 7%) but happy to avg down. Looking forward to this year, hopefully some good updates.
Don’t forget the global tech company that shall not be named going live after the integration being completed in 2023
Indeed - so much inertia here it’s hard to see what all the short term fuss is about.
The 8bn payments business is said to be growing at mid single digits - that’s extra revenue. Add the Tier 1 deal to be launched mid-‘24. The DVM deals concluded in ‘23 (including those signed in Dec) will add to the total. 7x new DVM deals in the pipeline compared to one year ago - aso extra there. And Ani Malhotra indicated he’d probably have been ok with the original ‘24 targets, which have been set to “restore credibility”. I think they’ll comfortably beat the consensus forecasts.
The forecasts put out for 2024 look like a BoD with an average age of 12 could achieve them. Bango have invented their own form of conservatism!
Sales in FY 2023 are $46.1 M, they were $28.5 M in FY 2022 and $20.7 M in FY 2021. I cannot see sales in FY 2024 being less than $46.1 M and with few of the Docomo costs in FY 2024 there should be decent profits next year.
Singer’s new share price target is 220p, reflecting the reduced revenue forecasts for ‘24. Given the company’s forecasts are very conservative, as discussed plenty below (ie they can’t afford to miss for a second time, eg due to a delayed major deal), then there should be plenty of opportunity to surpass the forecasts IMO. As Larbey says in the video, revenue flows 90%+ to the bottom line.
Check out Proactive website. 7 min video interview with CEO.
I think Simon Thompson has it wrong. The SP crashed on the day of the TU when consensus EBITDA was missed and some were hoping for outperformance. Analysts’ projections for ‘24 had not been issued at that time. And we know the reasons for the miss - changes to revenue recognition, a Tier 1 delayed client and some specific issues relating to the integration that had been missed. Nothing there to suggest the business is hitting any problems - indeed I was told the business is definitely *not* seeing any slowdown. The costs expended in setting up some of the new DVM clients late in the year had met thresholds for revenue recognition but weren’t included due to these new internal rules. So it’s not a case of excessive costs to support these clients. And BGO management has been very clear that cash generated is going to be reinvested in the business to seek to make the platform the de facto industry standard - this is why profit appears low in ‘24 in my view. The benefits will become very evident in due course.
That is the title of Simon Thompson’s article on BGO in Investors Chronicle . These are the concluding paragraphs of the article:
“ Based on revised estimates, Stifel now forecasts 2024 adjusted pre-tax profit and earnings per share (EPS) of $3.6mn and 4.6¢, respectively, or 75 per cent below its forecasts at the time of the interim results (‘Exploit Bango’s glaring valuation anomaly’, 18 September 2023). In addition, analysts now expect the business to be broadly operating at cash flow break-even in 2024 rather than delivering $7mn of cash generation.
In my view, the lower than expected level of profitability and the hefty profit downgrade to 2024 forecasts explain why Bango’s share price crashed. It also raises concerns regarding both the upfront and ongoing costs of supporting large telecom customers and the margin to be earned from DVM customers in the longer term.
The other important point to note is that there was no mention of the hefty 2024 earnings downgrades in Bango’s trading update. Effectively, the board has reset the bar, but not communicated this to shareholders directly. Clearly, the house broker's massively revised estimates for 2024 are based on discussions with the directors.
That said, I see no point bailing out at such a depressed level. The £86mn market capitalisation company is rated on less than seven times downgraded 2024 cash profit estimates to enterprise valuation, a multiple that has scope to expand and drive a share price recovery assuming Bango converts its pipeline of DVM opportunities. Hold.”
Ray Anderson sold a big chunk early last year, he could buy that same chunk back for less than half price today, that would certainly send a positive message
Personally I don’t see any director buys here. Seems a bit contrived to make what will be a huge turn on temporarily alarming the long term shareholders. However, if they do that’s their prerogative, the share price will recover regardless.
That will give a reading on when/if they think the recovery will happen and how hard and quickly the bounce comes.
This sp has been tipped many times forts technology and growth prospects. IMO this sp fall isa blip with crazy overreaction - its a gift of an entry point to those seeking to take a position. BoD seem top drawer and have skin in the game. No debt.
GLA
I hope the CFO will not mind me repeating verbatim this part of his reply to me: “….please be assured that the whole team here is beating itself up that a good year has gone South from some last minute items. We are intent on improving during FY24 and that begins with explaining the position to our shareholders.”
Very kind of you M2B to share that excellent article. Very insightful and a great inviting tool for present and prospective pi's. I agree that this is a faux pas onBGO's part which they really ought to have picked up on. a bit of damage in the co's reputational damage inevitably done. The said I feel they've learned their lesson and will not repeat. An excellent entry point for newbies or averaging down and we'll all look back in the not too distant future describing it a a simple blip. Well done to the BoD being open and transparent with pi's.
GLA
A takeover bid would have to be a very high price to succeed. The management own 11% of the shares and they genuinely believe this will become a £1bn company, there's no way they'll be selling out low. NHN own 14% and they clearly buy the story (having lent them $8m as well). So the 25% necessary to block is already there, before you add any others. Also few bidders start completely empty on shares, they usually build a stake first, which would move the share price upwards quickly, since we all see how subject to big swings it is. That said nothing would surprise me, but I cannot see how a bid would work unless at a price well above previous highs.