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Very bullish new article here - "massively undervalued"....
Https://uk.finance.yahoo.com/news/brilliant-uk-growth-stock-think-143000498.html
Conclusion:
"I don’t think it has put a foot wrong since its 2020 listing. To me, that means 2024 could be a breakout year"
Looking strong - almost back to all-time highs now.
So few trades....
Weird!
Good write-up from Investors Champion:
Https://www.investorschampion.com/channel/blog/amp/an-exciting-new-fast-growing-arrival-on-aim
Cavendish (Finncap) have today reiterated their forecasts and 270p target price.
Summary:
"A robust investment case – Fonix is focused upon leveraging its highly scalable, cloud-based platform to expand with existing clients and win new clients as mobile payments continue to scale. The structural strength of the platform is demonstrated by no churn from major customers in seven years, and it is diligently expanding its market-leading technology outside of the UK when led by existing clients. The successful execution of the strategy has driven Total Payment Value (TPV) to £268m in FY23 from £125m in FY18, adjusted EBITDA to £11.6m in FY23 from £3.3m in FY18, and underlying EFCF to £9.0m in FY23. We conservatively forecast adjusted EBITDA growth of +9% in FY24 and +10% in FY25, and expect that any upside to our forecasts would benefit from strong operational gearing through to EFCF, which would be returned to shareholders through the progressive dividend policy".
Paul’s opinion - today’s update reassures nicely, which it needs to with a forward PER c.20x.
A stand-out feature of FNX is how sticky its clients are.
Also the international expansion excites me, as this can apparently be done at little cost & risk.
I’d like to speak to management again, and my key question would be how can it dislodge incumbents in international markets (which it must have done very effectively in Ireland), to grow further? Bolting on additional, decent-sized overseas markets, could be transformative, if it’s possible.
Fonix seems to have an excellent business model - capital-light, and cash-generative, so it can self-fund growth at the same time as paying out most of its cashflows as dividends (with cover of about 1.2x).
I’ve reviewed this company 6 times in the last year, in 5 cases going green, with just a slight wobble in Mar 2023 when the share price got a bit ahead of itself at 237p, so I shifted down a gear to amber briefly, purely on valuation concerns.
With the price now more reasonable, at 193p, and the good news continuing to flow, I’m happy to remain at GREEN.
This really does look a very good, high quality company, that’s also paying a c.4% dividend yield. It’s not put a foot wrong since floating in Oct 2020. Management remain big shareholders - there's nothing quite like the owner's eye!
Superb track record actually -
https://app.stockopedia.com/content/small-cap-value-report-tue-14-nov-2023-placeholder-980108?order=createdAt&sort=desc&mode=threaded
SUBSCRIPTION ONLY hence copied
FNX today report they've "had a positive start to the financial year, comfortably in line with expectations".
Which implies a potential beating of expectations later in the year.
So a "Positive start to new financial year with strong growth in both the UK and Ireland" and "strong income growth from new and existing media clients in both the UK and Ireland".
Finally:
"With high levels of repeating revenue and a strong, expanding run-rate from key clients, the Board continues to be confident in the growth potential for Fonix for the rest of the financial year and beyond"
Https://uk.advfn.com/stock-market/london/fonix-mobile-FNX/share-news/Fonix-Mobile-PLC-AGM-Statement/92548000
Good to see FNX taking steps into the Portugese market:
Https://www.anacom.pt/render.jsp?contentId=1758558
Anacom are:
"Portugal's national regulatory authority for the communications sector, for the purposes of relevant Community and national legislation, including electronic communications and postal services."
Also, FNX were rated a Buy in the IC's recent survey of the top 100 AIM companies:
"Fonix Mobile
Retailers’ desire to reduce the number of online transactions that are abandoned at 'checkout' lies behind the impressive results that have driven the share price performance at Fonix Mobile(FNX). The company’s technology allows merchants to charge customers’ mobile phone bills, turning the device itself into a payment enabler. The tech is used by most as an extra payment channel that complements existing services such as Google, or Apple Pay. When it adds customers, they tend to stay signed up and Fonix has experienced very little in the way of churn.The company has around 145 active customers,including large enterprises such as ITV (ITV) and Channel 4, and there is an international push in progress with Fonix adding customers in Ireland such as state broadcaster RTÉ. Media companies represent roughly 75 per cent of gross profits, with more opportunities available as broadcasters develop their online service offering. Buy."
Https://www.fonix.com/blog/rte-partners-with-fonix-for-interactive-services-on-a-four-year-contract/
"RTÉ partners with Fonix for interactive services on a four-year contract
12/10/2023
We’re delighted to announce that we’ve partnered with RTÉ, Ireland’s public service broadcaster, headquartered in Dublin to power all its mobile and telephony interactivity across their various broadcast channels.
The partnership will see us support mobile interactivity and competitions across the RTÉ portfolio, including high-profile shows such as Dancing with the Stars and The Late Late Show.
We’re thrilled to be working with RTÉ and to showcase the exciting work we’ve been doing behind the scenes to drive this partnership forward. Providing a great experience for consumers while also ensuring first-class, revenue-generating mobile payment technology is core to Fonix and our success.
Fonix’s proven track record in dominating the UK television market has been key to securing this great milestone deal, enabling our continued growth in Ireland and supporting key brands in this exciting market."
Great review on Investors Champion:
Https://www.investorschampion.com/channel/blog/an-exciting-new-fast-growing-arrival-on-aim
"The final dividend was lifted 8.7% to 4.89 pence with the full year dividend payout £7.24m (FY22: £6.50m).
Outlook
New client wins from ITV, RTÉ, Channel 4 and Wireless Radio Ireland significantly underpin growth expectations in the year ahead whilst at the same time creating high barriers to entry to prospective competitors.
The Group’s serviceable market has expanded significantly in the last 12 months through direct network connectivity in Ireland, and they will continue to consider establishing further direct connectivity in other territories in future years.
The first few months of the new financial year have started strongly, with a robust run-rate of consumer activity with key customers.
Fonix considers that the market for frictionless mobile payments remains significant and continues to grow year-on-year, despite the expansion in alternative payment options such as Apple Pay and Google Pay. For the majority of Fonix customers, adding carrier billing as a payment option is largely shown to reduce checkout abandonment and increase sales, rather than cannibalising existing transactions with alternative payment methods.
Forecasts and valuation
The house broker upgraded forecasts following the July 2023 trading update. House broker forecasts for the year ending June 2024 remain for adjusted pre-tax profit of £12.4m (growth 13%) and adjusted earnings per share of 9.5 pence, which assumes growth of 6.7%. The forecast dividend of 7.8p equates to a yield of 4.0% (share price 193p, market cap £193m). For June 2025, profit is forecast to rise 6.4% to £13.2m with earnings per share up 5% to 10 pence and a forecast dividend of 8.5 pence."
"Compelling growth opportunity
Unless selling shareholders are well and truly pulling the wool over our eyes, which looks increasingly unlikely following continuing positive momentium since listing in 2020, Fonix continues to look cracking value. The ‘Risks Factors’ section of the admission document doesn’t reveal any less obvious risks to us, but a slowdown in major charity events would have an impact, although charity business only generates fixed service fees as opposed to transaction based revenue. While the rating has risen since we initiated coverage, it's still rare to find a profitable and fast-growing facilitator of mobile payments to be trading at 23x forecast earnings estimates (share price 193p) and also offering a 4% dividend yield.
Unlike many other new AIM listings over recent years, Fonix hasn't put a foot wrong since its IPO in the last quarter of 2020 (share price 90 pence), paying out attractive dividends along the way.
With the market for charity donations being worth over £10bn annually in the UK alone, carrier mobile payments providing a 'near-free' commission model and with Fonix's exceptional reference clients, there i
Cavendish (aka Finncap) retain their 270p target price.
They summarise:
"A robust investment case –
Fonix is focused upon leveraging its highly scalable, cloud-based platform to expand with existing clients and win new clients as mobile payments continue to scale. The structural strength of the platform is demonstrated by no churn from major customers in seven years, and it is diligently expanding its market-leading technology outside of the UK when led by existing clients. The successful execution of the strategy has driven Total Payment Value (TPV) to £268m in FY23 from £125m in FY18, adjusted EBITDA to £11.6m in FY23 from £3.3m in FY18, and underlying EFCF to £9.0m in FY23. We conservatively forecast adjusted EBITDA growth of +9% in FY24 and +10% in FY25, and expect that any upside to our forecasts would benefit from strong operational gearing through to EFCF, which would be returned to shareholders through the progressive dividend policy."
Cavendish now - "conservatively" - forecast 9.5p EPS, a 7.8p dividend and a £10.9m cash pile for this year.
Very good results, in line with the trading update which resulted in upgrades from Finncap/Cavendish.
A lovely 7.8p dividend for the year. Huge recurring income. Ireland is really taking off now. There are other international opportunities in the air. Even the charitable sector which declined with the economic downturn is turning positive (though given the small margins this sector is much less important than others).
Above all, the tone of the narrative is extremely bullish. In particular:
"The first few months of the new financial year have started strongly, with a robust run-rate of consumer activity with our key customers. We continue to make great progress on our strategic goals and recognise that by delivering on these objectives and nurturing recent client wins we have a great opportunity to exceed expectations."
https://uk.advfn.com/stock-market/london/fonix-mobile-FNX/share-news/Fonix-Mobile-PLC-Final-Results/92091793
What the hell happened today?
Nice summary of FNX's progress since IPO - Investors Chgampion summarise the current share price as "cracking value":
Https://www.investorschampion.com/channel/blog/amp/an-exciting-new-fast-growing-arrival-on-aim
Finncap have reiterated their 270p target price.
They summarise:
"Strong trading drives FY23 upgrades of +4-5%
In today’s trading update, Fonix has announced FY23 gross profit +5% ahead at £15.1m, adjusted EBITDA +4% ahead at £11.6m, and confirmed confidence in the group’s prospects for FY24 and beyond. FY23 TPV of £268.1m is +1% ahead of our previous forecast, the platform engaged with a record 19m customers in FY23, and customer retention has continued at 100%. Both the payments and messaging segments delivered over +16% yoy gross profit growth, and scaled gross profit as a % of TPV to 5.6% from 5.1% in FY22.
The FY23 launch in Ireland has demonstrated robust progress, with 16% of the Irish adult population already using Fonix’s platform for a payment transaction, and all three tier 1 media clients in Ireland now live on the platform. The success of the Irish operation provides an excellent blueprint for expansion into other international markets, as Fonix aspires to be the world’s leading provider of interactive services.
Following tier 1 client wins and expansions in the UK and Ireland, including ITV in March, the outlook confirms a strong revenue run-rate for FY24, with a growing pipeline of prospects across all sectors and markets. After today’s update drives upgrades of +4-5% for FY23 gross profit and adjusted EBITDA, we conservatively reiterate our FY24 forecasts at this point, and look forward to further detail at the FY23 results on 21 September.
As the platform scales, it is continuing to generate strong growth in underlying free cash flow, and the board intends to grow the dividend in line with the progressive dividend policy to pay out at least 75% of adjusted EPS. We reiterate
our target price of 270p based on 3% FY24E EFCF and dividend yield, and as Fonix continues to deliver upon the investment case by expanding with existing clients and winning new clients from a growing UK and international pipeline, we look forward to further updates on international launches, and new contract wins."
Great to see the year end trading update coming in ahead of expectations - the £11.6m EBITDA compares well to Finncap's £11.1m forecast (and more than the "marginally" noted in the statement imo!).
The main drivers for growth continue to gather steam, with Ireland in particular growing quickly and well ahead of expectations. The third tier 1 media client launch bodes well for the current year.
Both payments and messaging grew a very handy 16%, only held back by a decline in charity TPV which is much lower margin anyway.
And the outlook is extremely confident:
" Outlook:
With high levels of repeating revenue, a strong run-rate entering the new financial year, recent tier 1 wins in the UK and Ireland as well as a growing pipeline of client prospects across all sectors and markets, the Board continues to be confident in the growth potential for Fonix going into FY24 and beyond.
Rob Weisz, CEO, commented:
"We are delighted to announce another year of strong profitable growth. We started the financial year with an ambition to be a market leader in a second territory within two years of launch and have achieved that feat in the first year. In recent months, we have announced significant new contract wins in both the UK and Ireland, underpinning our growth expectations for the year ahead and furthering our aspiration to be the world's leading provider of interactive services.
As well as clear growth opportunities in our existing markets, we now also have a proven template for success in international markets, which we will look to replicate and announce as and when other new territories are making a meaningful contribution to our growth."
Https://uk.advfn.com/stock-market/london/fonix-mobile-FNX/share-news/Fonix-Mobile-PLC-Trading-Update/91609131
Trading update next month.
continuing the upward trend since ipo in 2020 and bouncing off the, erm, recent *****uple bottom :o))
That's the music to my ears.
Glad to see FNX's EBT planning to buy in up to 250,000 shares.
I like the sound of:
"The directors believe that conducting a small buyback of shares is a good use of the Company's large and growing cash balance"
Https://uk.advfn.com/stock-market/london/fonix-mobile-FNX/share-news/Fonix-Mobile-PLC-Share-Buyback-Programme/91099261
which explains most of the early markdown.
Interesting that in their new presentation ro analysts on Research Tree the CEO talks about international partnerships in Austria and Germany - I was unaware of (or had forgotten!) the latter.
And in addition to the two "tier 1" clients who've now gone live in Ireland, one more should go live in the next 12-18 months which would leave FNX "dominant in that space".
Investors Champion are also very keen on FNX - subscription only though:
Https://www.investorschampion.com/channel/portfolio/an-exciting-new-fast-growing-arrival-on-aim
"Mobile payments specialist continues to impress
13/03/2023
Fonix Mobile (FNX)
This fast growing mobile payments specialist has announced excellent interim results. This business has delivered fabulous returns since arraiving on AIM in 2020. With an enticing dividend yield, on top of the strong growth potential, it remains an exciting one to follow as you can discover below.
Founded in 2006, with a track record of strong growth and profitability, Fonix Mobile (LON:FNX) is a UK focused mobile payments and messaging company.
For its last full financial year ending June 2022 (over a period when many businesses struggled) its small team of 40 or so talented individuals based in London grew revenues 12% to £53.6m and profits by 16% to £9.7m, resulting in an attractive operating margin of 18% and an even more compelling 120% return on equity. It has the added attraction of an extremely cash generative operating model, which we cover in more detail below....."
Newly tipped tonight by the IC's Simon Thompson (I suspect he's following me around my favourite companies as yesterday he tipped MWE too!):
Https://www.investorschronicle.co.uk/ideas/2023/03/14/a-cash-generative-tech-company-offering-a-repeat-buying-opportunity/
OT : cheers magictrades, appreciated. I suspect the uptrend here will be resumed quickly given the level of institutional support FNX seems to attract.
I've been a lurker on here for a while. The posts by you Rivaldo are very good and its clear you are well researched. I was impressed by the numbers today and I too have confidence that Fonix will beat expectations this year. The company since their IPO in 2020 has performed strongly and has put in a nice base before breaking out of £2 and running up to 245p. I have noticed the last two weeks are amongst the weakest since their IPO and have recorded 7 consistent down days, which is a bit concerning. This is all in the run-up to their earnings which is a bit strange as normally stocks tend to increase before earnings, especially when the expectations are high. The last two days have been bad days for the market given the SVB situation which has hit the tech sector particularly badly. I cannot find any other reasons why the price has declined other than standard profit taking. My hope is that the long term trend resumes and the earnings drives the stock higher because in my opinion, Fonix satisfies many of the criteria that William O'Neil and Mark Minervini look for in growth stocks that go on to be superperformers