Pelatro Plc Share Price (PTRO)

... why buy these?

I was fortunate to sell a fair slice of my core holdings at the end of Jan [why oh why couldn't the government AND the DoH see what was obvious to a rubbish ex-biologist who dropped it 43 years ago over the moon to get a 2.2???] and have been topping up bits and bobs that I hope will not be too badly affected when what I guess is the true economic situation becomes really apparent. Trying to keep some in hand for that possibility. I don't know how that comes across as a stratagem!

Why PTRO? I'm no accountant but am happy to see Simon Thomson and Rivaldo - both of whom I listen to (and ST was recommending it at 49.5: it's down a long way) - positive on it. I'm amazed at the institution list, though I note Rathbones sold down a tad in mid-April. I note that I've spent most of the last few weeks staring at my phone. I've bought my food online for the first time: like many others I am shielded - but can you find a slot?! I tried Waitrose and they were booked up as far as I looked, nearly into August! I've got used to using the phone for far more, and I think others will have too. This may be a road of no return, our phones may really become essential to us now for more than just calls, as opposed to being just useful. The world is changing. So I'm wondering if anything that helps companies get and retain that elusive and precious customer will become essential. Pelatro.

Plus I hate little red things on the list, down huge percentages and worth very little. Sell, or top up? I hate to sell a company I believe in, especially when a comparatively small input will almost double the number of shares. I can't compare it with 200 other possibilities... and don't want a portfolio of 200 anyway... How's that for strategy?

This is what the company said in their March Covid-19 update: "It is not yet clear how widespread the virus will be, how long the pandemic will last and what the short to medium term effects of this pandemic will be on the behaviour of our customers; however, [SELF PROTECTING PREVARICATIONS, NOW THE MEAT:] the Directors believe that the telecommunications industry is likely to be less affected by any economic downturn, whether local or global, than most, particularly as certain telecoms activities tend to increase in "stay at home" periods such as end of year holidays and festivals such as Christmas and Ramadan, generating more user spending and more targeted marketing. At present the message we are getting from our telco customers is very much "business as usual"."

Bit the bullet.

the tech looks promising
shame about the fcf (I feel I've seen this movie before)

Cheers Fredr.

The new Finncap note is 17 pages long and well worth a read.

A couple of nice extracts:

"Final thoughts The financial results do not truly reflect what a good year FY 2019 was for Pelatro. The switch from large upfront licences to smaller recurring-revenue contracts while scaling up for global sales and a managed services offering, has impacted the financials, but if we look beyond the headline numbers this is a company showing consistent growth in; customers, regions and offerings. By deepening its relationship with its customers, PTRO is building a secure base of recurring revenue and which made its name in developing regions but now beginning to challenge US market leaders in their own backyard."

"Valuation view From highs of near 100p, the share price has slipped steadily over the past 12 months as the company undertook its transition from selling upfront software licences over to recurring contracts. The lower revenue growth and the reduced earnings from the required investment made investors nervous. This has been exacerbated by the sudden impact of COVID-19 on the market leaving the stock deeply undervalued. The share price, along with the market in general, has rallied since mid-March lows.

The business currently trades on a forecast P/E of under 14x and an EV/EBITDA of under 6x both far too low for the growth and profitability the company has demonstrated. To that we can now add the security of starting the year with half of the expected revenue already secured under recurring revenue contracts. We continue to target 125p in the longer term as the stock and the market recovers."

The list of major shareholders is stellar:

Shareholders %

Bannix Management LLP* 39.9
Chelverton Asset Management 6.6
Rathbones Investment Management 5.4
Herald Investment Management 4.8
Artemis Fund Management 4.7
Killik & Co LLP 3.8
Hargreaves Hale Ltd 3.2
Maven Capital Partners 3.1

*Bannix is the investment vehicle of Kiran Menon, Varun Menon and Sudeesh Yezhuvath."

Tipped in IC today by Simon Thompson

'A reassuring trading update from Aim-traded Pelatro (PTRO:40p),a company that makes its money by providing telecoms operators with precision marketing software, has confirmed that the business has been unaffected by Covid-19, a point that makes the de-rating this year completely unwarranted. '

Moreover, Pelatro started 2020 with US$4m of recurring revenue already secured (a mix of support and maintenance, managed services and gain share contracts), and an effective annual run-rate of $5m. Add to that conversion of at least some of its last reported US$15m contract pipeline, and potential for higher demand from contracted work (existing customers account for a third of the bid pipeline), and finnCap’s 2020 revenue estimate of US$8m, up from US$6.5m in 2019, should drive a strong rebound in pre-tax profits and EPS to US$2.2m and 5.6¢ (4.9p), respectively. A 2020 PE ratio of 8 fails to capture that growth. Buy.

Zooming up today....