Member Info for iWantThatOne

So what are expecting once the Jetstream#2 drilling ends and is communicated? I assume Sproule won’t immediately be updating resource estimates, that’ll be wrapped up in the PEA. Shouid still give the SP a nudge, but I’m desperate for a quick and dirty estimate of how much the resources will have increased….

Boku is focused on alternative payment methods now rather than DCB alone, and has no DVM-type proposition. It is quite a different beast from Bango.

Pensioner, who is the person you think might replace Anil, and why?

I won’t link to the Singer report, but yes, at the end of 2023 BGO was expecting to deliver $12m EBITDA, with further strong growth in 2024 (Singer expecting EBITDA to be high 20’s and setting a 340p price target). At the time the share price was 180p. However they missed the 2023 target, delivering $6m, so 2024 has been a catch up - though performing better and being more advanced than one year ago. Unfortunately the market reaction was brutal, and 2025 doesn’t seem to be promising as much high growth as Singer expected a year ago. Having said that, many (including me) seem to think Singer’s 2025 forecast is too conservative - in fact I think they’ve got some figures wrong and I think $20m EBITDA is more realistic. That’d put the shares on a forward EV/EVITDA of about 5. That’s far too cheap. I can only think that some investors want “spicier” growth and want to look elsewhere, with perhaps some concern over low cash levels (despite company reassurances).

Who knows? There seems to be a lot of similar-sized sells that makes me think it’s mainly a few larger holders who are offloading a bit.

On the “other board” there’s a fair bit of fume about Singer’s forecasts, which do seem odd (extra £7m revenue for only +$2m EBITDA in 2025). Per PrivatePunter’s note here, the Board does seem to think their forecasts are cautious. In fact I write to the author of the Singer note this pm, his expense figures just look wrong. Cannacord’s forecasts are much more bullish (possibly too much).

One point worth highlighting - the transactional payments in H2 were 15% up on H223 - partly due to the “Global Tech Leader” having initiated its first few telcos?

I’ve only just caught up with the news that Cannacord Genuity has initiated coverage with a 244p price target. They argue that the company’s DCB business alone might be worth more than the current mcap. As of today the mcap is 2.9x DCB sales, which is still significantly behind Boku’s valuation.

Singer’s estimates are, for FY24, 25 and 26:

Revenue: 53.4, 60.1, 65.6

EBITDA: 15.2, 17.1, 19.0

EV/EBITDA: 7.2, 6.3, 5.5

These seem very cautious to me. Their ARR figures, which have increased by $3.8m and $5.2m in the last two years, increase by only $3m in 2025 and 2026. This is counterintuitive as you’d expect continued growth from existing business (ARR if $14.0m) to be at least around that figure by itself (ie increased by the NRR). They note that there is good visibility of 2025 DVM figures just from the existing ARR.

They note there is an expectation of an increase in gross margins but there are exceptional costs associated.

They note the valuation gap to Boku, which is trading on 5.4 EV/sales compared to BGO 2.1x.

Overall they think the results are very reassuring, provide a good foundation for growth and there is potentially material upside to their 220p price target.

Singer has produced its 2025 forecasts and has a 220p price target with material upside. It specifically references the valuation gap between BGO and BOKU.

EBITDA up 137%, continued good growth across both transactional payments and DVM, net debt almost down to zero….looking good.

Enjoyed the interview. After losing big time on a gold miner it’s so refreshing to discover that - unlike minerals - helium only needs a few holes drilling to prove up the resource, the plant won’t be outrageously expensive and timescales to production are not too long.

The analysts all remain very happy, with price targets variously of >700p, 800p and 865p - none of which take into account cross-selling and cost reduction opportunities.

Is it just me thinking the resource increase is a bit…meh? It’s based on an assumed higher gold price - hence larger pit shell - and a lower cut-off. And after that it’s merely a 10% increase.

I’m not sure it’s Liontrust still selling - on 23rd October they dipped below 5% and we’ve heard nothing since. As I understand it they must report dropping below 4%. Perhaps ennui has set in, some investors have gone away and others just haven’t cottoned onto the potential here. Delivering close to market expectations will give an EV/EBITDA of just 6, and when Singer produce their 2025 expectations I firmly believe it’ll be a forward EV/EBITDA of around 3.5 (In support of which, gross margins returning to 90-95% post route-migrations instead of the 80.8% at the half year will, by itself, add >$5m to EBITDA).

As an example, the company expects gross margins

G_G_G, I don’t disagree on the attractive metrics and I am still a holder here awaiting the offer to be accepted. But when Edison and also Zeus both forecast virtually no top line growth (or EBITDA) through 2025 then I am comfortable in calling that “flat”. Revenue and EBITDA both increase fractionally so technically 2025 would indeed be a “record year”. EPS does improve more markedly due to the reduction in net debt and finance charges assumed by both analysts.

Also Edison’s update post-Q3 said “we now expect earnings to remain broadly flat in FY24 and FY25” and they have revenue at $852.6m compared to $850.7m for this year. However they do go into say that “The FY25e P/E rating of 5.6x with a 20% free cash flow (FCF) yield looks overly discounted”.

G_G_G, the comment about a flat 2025 was made in the Q3 presentation from memory but without going through it all again I couldn’t say precisely at what point.

I think it’s very optimistic to think the company will exceed their prior guidance for Q4, or indeed that there will be a positive growth forecast for 2025. It’s only two months ago that they set expectations for Q4 and said 2025 will be flat. Things just don’t change that fast. I think the best we should expect is to deliver $97m EBITDA as guided, and with the OM environment as stable as possible. The remaining bidder will have been aware of all this when making its offer, I see no reason for them to withdraw if Q4 has been merely in line with forecast.

Well if we have the same weighting of revenue in H2 as we saw in 2023 then we can expect £129m for the year plus about £3m from BCA and £5m from CSi. That £137m would be comfortably ahead of market expectations in the high £120m's. However I'm less concerned about exceeding financial expectations and more just hoping that the recent acquisitions have bedded in well - there's a lot of change going on at the moment and the potential for the odd thing to go wrong. 2025 is when things really ramp up, so a solid start from CSi and BCA would be great.

Maybe this is just a return to a fair valuation, that’s all. With an mcap of £18m and forecast EBITDA of £3.5m, it was hardly over-valued.

Sorry if asked before but does anyone have a feel for the capex involved with helium fields to get to production? Strikes me it’s probably quite modest.

Back to 100p, now we’re talking!

I’m seeing a lot of news about the unattractiveness of the UK market, continuing outflows and the risk of low ball private equity offers (such as TIG yesterday). I admit this - rather than operational performance - is my concern here. The sooner BGO’s valuation reaches sensible levels the better.