Member Info for Simon_Said

Come on now, these internecine warns between RBD and UJO are beyond stupid. The interests are so heavily aligned, and so many people hold both companies. As a courtesy to one another can we all just be positive? These are great times for anyone with significant interest in West Newton. Reabold is certainly my preferred vehicle but that's quite sufficient.

Lol luckyman I like your sarcasm!! Clearly just admin and earth moving sort of 'delays'.

To the person below suggesting seismic interference, again, they would have been compelled to inform the market if that were a factor. None of RBD's wells were affected.

If anything really serious had happened, the NOMAD would have forced them to update the market. Furthermore they wouldn't dare not do so, as FCA offences are very serious and why would they gamble their careers over something like that!

It'll be something along the lines of funding or permissions delays. These are the only conceivable things that wouldn't force announcement to market.

You can also be sure that the institutions that took part in the recent placing will have asked about this delay and must have felt satisfied with the answer. It would be a bonkers lack of due diligence to not have asked.

The other thing I'd bear in mind is that California isn't priced in right now, we all know the price momentum is about West Newton. That's why the Reabold vehicle is so cleverly designed: bad results have very low impact, but good ones make it fly. California and Parta are thus that bit more exciting, as they're not priced in yet and are both massive when considered in their entirety.

Finally, as rsproson discussed below, the Californian play is itself highly diversified. The worked-over wells continue to pump out HCs, along with the bigger projects. There's no chance of the entire thing suddenly going dry across all these various wells!

RBD is a hedged, diversified play on every level, and that's why I am confident holding such a relatively oversized position here compared to the proportion of my PF that I'd usually allocate to a single 'company'. As many here know, Reabold was originally going to be a fund, but the CEOs were attempting to fundraise when the oil price was on its arse and couldn't get enough interest, so they acquired the Reabold vehicle and did it as an AIM company. That's why this feels like a fund sometimes!

Good stuff trader. Here comes 1.10 so lets see what happens! Welcome to the TA brigade.

He sold at a smidge over a penny saying he'd buy back at 0.9, which never happened. This was after spending months saying the share was going down to 0.5p and lower and making hilarious comments misunderstanding the company.

Presumably he reads this and looks at the SP daily hoping for a dip so he can say 'told you so'?

These trolls never acknowledge when they're wrong.

42trader - massive thanks for sharing the Finncap report. Did it have any share price targets?

The physical goods things is interesting. IIRC the revenue-per-transaction is higher, because physical goods tend to have higher ticket prices than digital ones, but the transaction rate has to be a bit lower because with larger amounts the transaction fee could make the sale less attractive for the customer. So it's an interesting example of where margin degradation for Bango is actually a good thing, since the net profit is still larger!

Sure, digital! Shareholder alignment in the BoD is one of the absolute top factors I look at when assessing AIM companies. CEO's that take large paycheques but hold little equity have little reason to work toward the sorts of goals that matter to shareholders. Bango is very definitely the opposite case. Alongside Ray's 9.36%, co-founder Anil Malhotra also holds 3,982,371 shares, 5.65% of the company.

The biggest clue for me was last week when Ray plonked down his entire ISA allowance on yet more Bango shares...

The previous highs were in a different context. First of all, tech companies were enjoying higher SP multiples back then. The transatlantic crunch in tech stocks is well written-up elsewhere, so all I'll say is Bango wasn't immune. Additionally, there have been shares printed since then, so the value of individual shares is thus diminished.

I don't make SP predictions by policy, but I certainly feel it's in good buy territory down here. A very large proportion of Bango stock is held by the BoD and II's (around 70% when last reported in April), with many more held by employees to whom they are granted as incentives, so only a small proportion of the shares are publicly traded and can be considered liquid. Thus the share price swings quite wildly.

I speak to Ray Anderson quite regularly and he's extremely switched-on, very hands-on, and most importantly, enormously shareholder-aligned. This is not just because he holds 6,593,725 shares (9.36% of the company), but also because he has incentivised options which are around double the current share price.

It's hard to value Bango, because to work out an appropriate Premium-to-Book value for a tech company is never easy, especially given the sector's perturbations of late, and the difficult task of correctly determining the true value of their assets and liabilities. But a good way to start is to look at pace of growth. Given Bango's growth is very-literally exponential, and in profit terms will now swiftly accelerate thanks to the fixed-cost nature of the business (as well as the robust safeguarding of margins that Cenkos fatally underestimated), it seems appropriate to me to apply a significant multiple along with the best of the growing young tech firms. With this in mind, a return to previous share price highs, and even beyond them, doesn't look at all implausible to me, for a company who will soon be reporting fiscal throughput numbers using billions.

My eyes will be closely on the retention of margin as they scale up customers (again I know Ray and the BoD are very conscious of this too - it's not success any any cost), and on seeing the fruits of their huge investment in the data business pay off in what out to be extremely high-margin data product delivery, which should show enormous net profit given much of the investment is already done, and the product itself is digital.

Stellar writeup from Simon Thompson on the IC website. Some snippets:

'The confidence of Bango’s management has merit. That’s because having doubled total end-user spend (EUS) to £558m in 2018, and exited 2018 at an annualised EUS run rate of £772m, then I feel that today’s trading update is supportive of Bango booking £700m of additional EUS in 2019. The transactional business generated a revenue margin of 0.94 per cent in 2018 and that margin is unlikely to be materially different this year, albeit Bango would clearly offer a discount to lock in a massive contract win. The last reported near-term pipeline of EUS spend being targeted from 45 potential customers was in the region of $6bn (£4.8bn). Importantly, there are no financial concerns as Bango ended 2018 with net cash of £3.8m and is now operating on a positive cash flow basis.

Bango’s board sensibly parted company with former house broker Cenkos Securities at the end of last week, undoubtedly a consequence of the brokerage’s misconstrued earnings downgrade at the time of the annual results which I covered in detail (‘A misconstrued earnings downgrade’, 19 March 2019). New corporate broker finnCap has yet to publish forecasts, but in any case Cenkos would have had to raise its profit forecasts materially if Bango continues to win new business at close to last year’s revenue margin.

The bottom line is that Cenkos’ now withdrawn forecast that suggested Bango would only report a cash profit of £2.7m and a pre-tax profit of £200,000 on revenues of £12.5m from EUS of £1.26bn in 2019 look woefully short of the mark. I expect the company to beat Cenkos’ withdrawn estimates handsomely. This is a company that has passed the inflexion point where operational gearing is set to kick in big time. That’s because with a stable fixed cost base and the business generating cash, a high proportion of incremental gross margin earned on rising revenue is set to convert into profit.

And that’s simply not being priced into the company’s enterprise valuation of £60m. If Bango can maintain the current EUS run-rate then it will be generating in excess of £2bn of EUS in 2020. Moreover, with a stable cost base and a stable revenue margin, operating profits should soar and warrant a target market capitalisation more than double the current level.'

Correct sugardaddy, and this is further emphasised by their tax position. This is the gem that many investors miss. Bango is carrying (if I recall correctly) over £30m of prior-year offset-able tax losses. This means maiden profits will be considerably unburdened by tax bills. It's a huge rocket-boost for early profits (which indeed is the whole idea of that aspect of the tax system).

I don't know crates, in this case it was pretty effing hilarious. It's certainly of note when these so-called share 'commentators' make such fundamental boo-boos. Reminds you that they in fact have no expertise and often owe their following solely to the loose-lipped individuals who leaks sensitive information to them.

He appears to have confused a trading update (optional company announcement) with a proper period results announcement. He has also confused EUS-to-revenue with revenue gross to net, which betrays a lack of familiarity with how Bango uses the term 'revenue' (a well-worn topic for more familiar Bango investors.

EUS to revenue would never be 100%, that doesn't even make sense. Can you not see what you got wrong?

Yep Badger you called it! For anyone wondering what he said...

'If they reclassify the £25,301k share premium as a distributable reserve, it would be added to the existing distributable reserves - a P&L loss of £11,745k - to give a net of £13,556k.'

Oh just to add - regarding the small director buy - if you look at the amount, I'm pretty sure it's his ISA allowance!

Ray's main shareholder alignment is his options, which are all at literal multiples of the current share price. The BoD are more motivated to get the share price up than even most PI's, which is rare on AIM and one of the things which helps me keep the faith.

WhichWayNow great analysis, thanks for that.

I have been speaking to Ray Anderson and though he's very tight-lipped and careful around what he is and is not allowed to say, he's sounded very positive recently and I get the strong impression we have some cracking results ahead.

Cenkos last update was pretty stunning for a 'house broker', as they misunderstood the business model in a significant enough way to suggest the person compiling the report simply failed to make even the most basic enquiry of the board. The information that was wrong, regarding margin tolerance, was not even market-sensitive and could have been acquired by any private investor - indeed it was, by me, and by Simon Thompson of the IC, in short-order.

I suspect the switch is being made just in time to get the new results coming up to be followed swiftly by a fresh research note from new house broker Finncapp, who will doubtless be given a fuller picture of the Bango plan, plus will have the benefit of an extra half-year's data to show Cenkos' major mistake for what it was.

Was about to say the same thing SB! Fireworks here.

This kind of partnership is great for Bango. It's all just utilising proprietary software that Bango has already delivered, and thus a huge amount of the revenue falls straight to bottom-line. This is why the BoD puts such emphasis on the data business. Very encouraging.

That is from 27th June, not really an 'update' anymore!

Thank you for your correction, Badger.