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Earlier this year I noted that Progressive Equity had published End User Spend for 2019 being 2.6 times that of 2018 while the revenue increased by 60% yoy. I sent an email for explanation to the author Gareth Evans but got no reply so I raised this at the AGM. I suspected I knew the answer. Rachel replied that the extra EUS was down to migrations which would have a lower conversion rate from EUS to sales. Mentally with some assumptions I worked out that the migrations would add at least £3 million to profit in 2019 and moved onto the next question.
The Trading Update was much later than expected. Reading between the lines there is no justification for the delay in the RNS. Bango has confidentiality agreements in place with several of its customers which limits its ability to reveal their names. None of the customers mentioned in the RNS would justified the delay. In the end Bango published with the statement end user spend would be 'significantly' higher in the second half of the year than in the first. There is some major announcement on the horizon.
Given the majority of Indians do not have credit cards, Amazon probably needs Bango. https://www.businesstoday.in/current/corporate/amazon-india-valuation-16-billion-e-commerce-flipkart-market-share/story/277375.html
Of course the statement I attributed to Ray is taken out of context and may even not have been reported accurately. The results reported a year ago were good. They were followed by Simon Thomson from IC recommending Bango as a buy with a price of �3. Simon makes his living from recommending people to buy shares in thinly traded companies. He has a following which I suspect consists of many naive individuals who believe the stock market is a place to get rich quick. These people pile in to the share causing it to rise disproportionately. The naive shareholders' belief in their tipster is enhanced by the rise but they generally do not sell at this stage. Reality sets in and a fewt people start to sell. The shares are again thinly traded and so the fall in share price is rapid and overdone. People look for reasons and people to blame,other than themselves, or some action or event that they could not have foreseen. Rarely do they blame their own stupidity. Too many people learn the hard way that the stock market is not a place to get rich quickly. The Audiens investment was a smart move as it fills a hole that is created by GDPR and the clampdown on the use of cookies in the States. Data collected and presented by Bango is not linked to identified individuals so is not caught up by the new regulations. The reality is that the long term fundamentals of Bango are in my opinion good. I believe a fair price for Bango is around �2.20 but this could change on news. Declining margins are likely to be more than offset by higher volumes.
One thing I should add is that Ray said he could not understand the recent share sell-off.
On Amazon Japan just a statement that Amazon Japan is going better than expected.
I went to the AGM and asked a few Questions. My conclusion was there is nothing to worry about, I asked about the March 2018 PERL forecast which projected a doubling of EUS spend this year and a further increase by a factor 2.6 the following year. So the EUS for FY 2019 would be more than 5 times that for FY 2017. I was told that the increase was down to migrations, i.e. of Google Play. I then asked about Bango in India. Amazon and Google use confidentiality agreements to protect their commercial interests so little concrete was said but my strong belief is there is something brewing. For those not well informed the following article may be helpful. https://economictimes.indiatimes.com/tech/internet/amazon-vs-google-a-battle-to-capture-the-indian-ecommerce-space/articleshow/64238190.cms. I also asked about Latin America and was told there were developments and Anil was going out to Brasil this weekend. So a reasonable conclusion is that there could be a fairly significant boost in EUS beyond the five fold increase for FY 2109.
Nimrod, In Just over two weeks BANGO's AGM will take place. Typically just before this some good news will be announced. How does your charting take this into consideration ? About 60000 shares have been bought or sold today so perhaps 30000 sales and 30000 purchases. Are you sure that you can draw statistically significant conclusions from such low volumes ? Are you sure you are a master of your subject ?
After 24 weeks all but one of the boys eligible to continue after 48 weeks had signed up. 'After completing 48 weeks of treatment, all trial participants have the option to enroll into an extension phase of the trial. To date, 18 of 19 eligible individuals have enrolled into the extension phase, through which investigators are collecting long-term MRS, functional and safety data on ezutromid.' https://strongly.mda.org/ezutromid-shows-potential-to-treat-dmd/
I invested in Monitise and made a lot of money. Timing is important and I came to the conclusion that Alastair Lukes was neither smart nor intellectually special but was good company. The banks were looking at Monitise's software and concluding that, considering the effort required to build an interface, they might as well replicate Monitise's software. To help the shareholders who were being sucked in I posted my reasons for getting out. I cannot see Amazon developing the equivalent of Bango's software. I was a big investor in Arm and had a chat with Mike Muller, one of the founders and CTO. Incidently he came to our meeting on his bike even though his remuneration package is about �14m per annum. I asked him why companies like Qualcomm did not eliminate Arm. I got a very good answer which included the fact that the royalty per chip was so small it would not be worth their while. The same is true of Amazon. Amazon's focus will be on extending their sales regions rather than worrying about the one percent or less that goes to Bango. Good luck to you BadAdvice.
What evidence have you that there is a gagging order in place. There would appear to be a confidentiality agreement in place so that commercially sensitive documents which R1 has produced to support its case cannot be disclosed to third parties. This is normal.
Frank Pao was Company Secretary. R1 only needs one Company Secretary and retained the services of the Yume Co Secretary. This is all part of the synergies that R1 planned and it is good news. Those of us who are not imbeciles would expect this change.
There are many things in the results and Perl reports which are positive and none negative. The EUS for the first six months of last year was �92.31 million. The EUS run rate for the first six months of 2018 will not dip below �400 miilion per annum so a doubling Y.O.Y. for the half year will easily be achieved. The PERL analysis is performed by PERL and Bango pays to make this available to the public. This arrangement gets around regulations but if you believe PERL have the knowledge time and expertise to produce forecasts worthy on Bango paying to make them available then you may be a bit gullible. An interesting element is the forecast for EUS in 2019 which is 2.6 times 2018. Something significant is going to come on stream. The PERL forecasts are typically set at a level where they are beaten. Amazon and Bango have been working on India. The Indian Government has been making serious efforts to reduce corruption. As part of this they have severely restricted DCB and regulated Mobile Wallets so that there are a few attempts at wallets but there is fragmentation in the market. In January 2018 Bango and Amazon launched Bundling of Amazon Prime in India. https://news.bango.com/2018/01/15/bango-launches-resale-technology-with-amazon-in-india/ However there is more to come. In August 2017 Amazon had obtained a licence to operate its own digital wallet in India. https://timesofindia.indiatimes.com/companies/amazon-digital-wallet/articleshow/60034277.cms . I feel sure that by the end of 2018 Amazon, through Bango, will be selling physical goods in India with the costs charged to Amazon Pay. It is a huge market.
In my opinion the most interesting reading so far with respect to the results is the Progressive Equity Report which was out before 8.00 a.m. This contains the company's authorised but unofficial forecasts. It shows End User Spend Doubling in 2018 and more than doubling in 2019.
One thing you can be certain of - They would not be doing this if they were not getting positive results from Phase 2.
Or the Bango Blog highlighting what a big deal Bango DCB is in Japan. https://blog.bango.com/2018/02/28/7-things-you-need-to-know-about-the-japanese-retail-market/
End user spend for the second half of 2017 was twice that of the first half. As long as this level of growth is maintained margins can go quite a bit lower and profitability will still be rising. End User Spend is misleading as the margins will vary from country to country and merchant to merchant. Overall gross profit is far more important than EUS and overall gross profit is rising for Bango at a healthy rate. The figures that are discussed, in my opinion, are conservative. I would not be surprised if for the first half of 2018 the EUS is twice the EUS for the second half of 2017 and the figures double again in the second half. This boils down to EUS for the year increasing by a factor 4.
Slowburner, I believe Bango has not previously done anything with MTN with respect to Mobile Wallets, MTN is a South African Company which is huge in Africa. Mobile Wallets are normal. https://www.edelman.com/post/africa-mobile-wallets-mean-business/ You may have come across the MEF Interview with Herman Singh which was sponsored by Bango. https://mobileecosystemforum.com/2017/12/06/executive-insights-carrier-billing-global-outlook-opportunities-herman-singh-mtn-group/ Assuming this is the first of several MTN implementations the news is very significant.
As Ray explained when talking to Perl, Bango cannot make an announcement before the customer does so. This is normal. There will be an RNS tomorrow.
The Perl Note does tie in with slowburner's information which explained that seasonality had resulted in difficulties in calculating an EUS annualised rate for December. I think I worked out that for Bango to be "EBITDA positive on a run-rate basis entering November 2017" , the EUS rate had to be about �460 million. I would expect it to have increased from the beginning of November. This all makes the Cenkos (Bangos House Broker) forecast 2018 of �913 EUS seem on the low side even though it is again double the previous year's figure. Time will tell and I would expect Ray and Team will clarify matters on the 24th January Strategy day.