Cellcast Share Discussion Threads

[21simthy] 15/12/2009 17:01

Would not mind funding TA so long as we get a slice of the action.

[the analyst] 15/12/2009 16:55

So, it's a balance between the risks listed above and the possibility that both the UK and the Asian business could grow and (just maybe) be bringing in £2m each for Cellcast in the 2012 financial year (results that will be released sometime in 2013)

If that were to be achieved (it's long-shot, but possible), then imo we could be looking at 32p (PE of 6x) right up to 96p (PE of 18x) when the results in 2013 are released

[the analyst] 15/12/2009 16:52

I am optimistic, but at the same time well aware of the following risks:

Firstly, the possibility that they don't manage to find solutions to the last few issues regarding ofcom, that would affect the freeview offering

Secondly, that the costs of investment / IFRS rules may lead to a fund-raising and some dilution


[from the trading statement: "costs of this investment will be recouped from revenues in the second half of 2010 but will have a negative impact on the Group's second half 2009 performance to the extent that such costs cannot be capitalised under current IFRS rules"]

[21simthy] 15/12/2009 16:19

TA.

I know from BGT you are very conservative so when you say the following
it does give me confidence.

"In my eyes, the Asian growth means that the risk in investing in Cellcast has dropped considerably.

As a result, I now think the company is hugely undervalued. I would suggest a price of around 8p would represent fair value prior to some data being released with regard to the actual figures involved. Mid-term I am looking for 16p

Long-term, if they fulfill potential, then much more than 16p is possible. Let's say they do incredibly well and manage £2m profit from the UK business and another £1m from their share Asian business in three years time (totalling £3m pa) - an 8x PE valuation would see a share price of 32p"

[21simthy] 15/12/2009 15:30

100k + 50k buys at 14.51pm at 3.5p explains the bid size.

[21simthy] 15/12/2009 15:26

TA/others

Getting size accepted at 3.1p so either there has been a big buy or
the mm's have a buy order in the system.

A very large 375,000 dummy sale gets 3.1p.

I'm with you TA, i think this to me represents the best penny stock
on the market and have been steadily moving most of my money in it,
i'm prepared to take the gamble.

150k max buy at 3.5p offer.

[the analyst] 15/12/2009 15:13

You are correct - my thoughts is that between them, they would take 29% of the placing (so as not to go over the 30% threshold), and the rest would go to friends, family and hangers-on

Keeping the important people around you sweet always pays a dividend...

All just wild speculation, of course!

[zangdook] 15/12/2009 15:05

Thanks

I thought the directors were a concert party and just under 30%, or have things changed / I got it wrong?

[the analyst] 15/12/2009 15:01

Hi zangdook,

The sceptic in me wonders if we will see a placing whereby Directors, their friends, family and hangers-on fill their boots at low prices prior to some spectacular growth in revenues and profits

They have sneaked all the good news out and at the same time, warned about the amount the amount they have invested recently, so they would be clear to give themselves some new shares, should they wish to

[zangdook] 15/12/2009 14:12

"Even then, by choosing late on a Thursday to release it, they limited the impact (presumably on purpose)"

I don't question this, but what's their game? Is it just that they don't want to raise expectations?

[the analyst] 15/12/2009 12:53

Then we have the UK business

The UK business has undergone a real transformation over the last 12 months and is continuing to progress

The new channels should see the UK business becoming a strong cash-cow in 2010. We need time for the Freesat channles to embed and gain popularity but I expect that H2 2010 should see the UK business making £500k (i.e an equivalent rate of £1m pa)

I can see this profitability rising to £1.5m for the 2011 year and £2m in 2012

Obviously, there have been big upfront costs in securing the deals for channel space and bandwidth. This probably means they have maxed-out on the bank overdraft and maybe even topped up on the Headstart loan, so that is something to be cautious of.

The fact they are confident that they can pay back the investments made in H2 2010 is a big hint with regards to the growth and expectations for profit

Finally, we have the recent deals with major US adult video companies and the integration into Cellcast's sites. I wonder if in a couple of years we will see one of these US giants coming for us? Once we get final confirmation of the ofcom editorial decision, it will leave us open to offers and I think a UK business would be very attractive for a company like Vivid Entertainment

[the analyst] 15/12/2009 12:35

So, looking at the announcement, the surprise news is the progress being made at Cellcast Asia

The speed with which the Asian business has grown is astonishing.

Not long ago, the company announced that Cellcast Asia were looking for more funding. Hence, most of us thought that our 37.5% would be diluted. However, we now find out they have grown so quickly (and profitably) that this new funding is no longer needed. That is news that none of us here had anticipated, especially during what has turned out to be one of the worst world recessions in living memory. Great stuff

I feel that this time around, rather than wanting to ramp, the Directors have been 'forced' into coming out with this trading update. Even then, by choosing late on a Thursday to release it, they limited the impact (presumably on purpose)

Valuing the Asian business is difficult without numbers

As Sage mentioned, the best we can do is probably to base any valuation on the way the South American business developed, despite some differences in the businesses

When the Brazil business unexpectedly collapsed (due to reasons out of our company's control?) it had reached critical mass and was continuing to grow incredibly quickly. It had gone from zero revenue to a rate of over £10m pa in no time at all. The fact that the Indian market is far bigger than Brazil's tells us what the potential is here. So, if things progress well, I could easily see them doing £50m+ in revenues and £5m+ in profits in a few years time. Obviously, that will mean retaining their market lead and running the business efficiently. The new management are strong, focussed and ambitious, so I expect them to do well

In my eyes, the Asian growth means that the risk in investing in Cellcast has dropped considerably.

As a result, I now think the company is hugely undervalued. I would suggest a price of around 8p would represent fair value prior to some data being released with regard to the actual figures involved. Mid-term I am looking for 16p

Long-term, if they fulfill potential, then much more than 16p is possible. Let's say they do incredibly well and manage £2m profit from the UK business and another £1m from their share Asian business in three years time (totalling £3m pa) - an 8x PE valuation would see a share price of 32p

[the analyst] 15/12/2009 12:27

Judging by the reaction to the trading update, I think it's pretty obvious that most investors haven't picked up on the story here.

The timing of the announcement must have been partly at fault for that, being released at the end of a trading day when very few people bother to look at the announcements being made

In addition, as sage mentioned, there may also be investors that saw the news, but are not yet willing to believe the management after previous failures. Many investors will not believe the story without seeing solid figures

I know that the Directors are very wary of not over-hyping the story here, following the 'bad luck' with Brazil, the 'bad luck' with the EPG reshuffle a few years back and the 'bad luck' that was the collapse of video sharing site valuations just as they were about to sell sumo.tv

So in reality, the hidden asset that is Cellcast Asia remains an undiscovered secret to the majority of the AIM-investing world.

The most important thing for us long-termers is that progress is being made.

Whether the share price responds over the coming weeks or months or in 18 months time, when they (hopefully) begin to deliver with real profits is not too important. The important thing is that they continue to grow and that they do deliver the results we are hoping for

[21simthy] 15/12/2009 12:06

47k sale knocks the price.

Absolutely no patience in this market, that seller will have to
tell me what better value there is with those funds with a current
market cap of 2.64 mil.

Looking at Pinn, now valued at 10 mil, it's unreal how some have
crazy valuations and have miles worse fundamentals and promise ?

[21simthy] 15/12/2009 09:43

Excellent header TA, can see you are impressed.

Thought the price might get cheaper.

Currently 3.45p to buy so a great price again, if i can free
up funds i will have a top up later on.

[the analyst] 15/12/2009 00:31

Hi everyone,

Have updated the header, hopefully will have time to comment on the trading update tomorrow....

[21simthy] 13/12/2009 14:06

Found this from website about CAH but this was in August 2007.

"Cellcast will retain 37.5% investment in Cellcast Asia - a holding now valued at US$5.1m"

So with it now profitable and turnover apparently going through the roof and
growth is amazing what valuation will it have next year ?

[21simthy] 12/12/2009 18:34

TS.

Thanks, i agree with others that it might take a while for reality to
sink in and the profits to flow because of the increased investment
elsewhere but the CAH stake is indeed the potential jackpot, time will
tel.

Interesting you hold 1%, quite a few large % holders here, a few more and stock
again will dry up, seems the mm's play with just say 500k max, a few decent buys and it becomes impossible to buy so you cant pick and choose when to
get size, should be some on Monday though, they might even drop the offer to
allow some cheaper too.

Neil Craven 14,287,391 18.92%
SMS Media Limited (note 1) 10,680,062 14.14%
Atlas Group of Companies 8,645,635 11.45%
Harkness Trading Limited (note 2) 6,687,500 8.86%
MTouche Technology Berhad 4,500,000 5.96%

[thesageofsaint] 12/12/2009 17:45

I don't often post, neither time nor inclination I suppose, however, I keep a very close and keen eye on my investments, which includes CLTV. I first bought at 10p and last 100k at 0.6p. Overall, I own >600k (@1%) at ~2.5p a share. I must agree with recent bullish posting that the CAH interest is extremely significant. Up until 18 month ago, the non UK holdings were reported within the company's turnover – this gives us some indication of the contribution this asset was providing. I have applied some simple maths and I estimate that the Asian base turnover in 2007 could not have been less than £4m (difficult to be precise due to the South American revenue). Assuming that this grew conservatively to @£6/annum by Jan 09, then current pro rata CAH turnover is ~£24m. We know it to be profitable, assuming a conservative %8 nett margin than CAH is generating £3m/year in profit. We know that CLTV's management's exit strategy is to sell the company and related stakes. If CAH were to be sold at current profitability, we can assume @10 times earnings (which are extremely low for such a high growth industry) then CLTV's stake is worth £11m. This equates to 15p a share without even considering the UK business. It will take another 6-12 months for this to become clear, however, those who hold are potentially in possession of a share the finding of is that which motivates us each day to expend our energy on investing. I am holding for no less than 15p a share or to me £90k return.

The Sage

[21simthy] 12/12/2009 10:55

More info...tell you this stake is worth multiple's of current share price

Cellcast Interactive India is the pioneer in developing integrated participation content in the fast-growing Indian mobile and interactive TV market. We use traditional media like TV, News Paper & Radio for customer acquisition and new media to enable customers to pay-and-participate. We have successfully executed its unique business model in India and are experiencing rapid revenue growth. A good example is one of our product Bid2Win, which has already received 30 million responses from 2.5 million individuals in a span of 1 year.

Cellcast's content is distributed on new as well as traditional media with real-time participation enabled through SMS, IVRs, Web, WAP & 3G. With TV as mass medium and Print, Internet & Radio too used extensively, Cellcast's content has strong revenue generating capabilities. The Cellcast India has already created a strong track record in this arena. Cellcast India has rapidly growing operations in several countries like Sri Lanka, and Malaysia.


Canaan Partners to invest $5.25 million in Cellcast Asia
exchange4media Mumbai Bureau

Canaan Partners have announced an investment of $5.25 million in Cellcast Asia Holdings, a subsidiary of UK-based Cellcast Plc, for developing, producing and distributing participative digital content in the whole of Asia, excluding China. Cellcast Asia Holdings, an Asian digital media house, has been created by Cellcast Plc by injecting 100 per cent holding in Cellcast Interactive India Pvt Ltd and 50 per cent holding in Cellcast SEA Ltd.

Alok Mittal, Managing Director, Canaan India, and Maha Ibrahim, General Partner, Canaan Partners USA, have been appointed to the board of directors of the newly established Cellcast Asia Holdings (CAH).

CAH will reportedly have a mandate to develop, produce and distribute participative digital content in the whole of Asia, excluding China. "CAH will be using this investment to enhance the use of interactive and 3G content, by leveraging TV as a contextual programme in a fragmented consumer environment transformed by new media technologies," an official note stated.

Mittal, said, "With mobile phones becoming a general-purpose, interaction device for nearly two billion consumers worldwide, demand for and use of interactive digital entertainment is on the rise. Cellcast has unlimited potential for growth and we are thrilled to help drive the company's expansion. With a direct presence in India, Canaan is rapidly expanding its early-stage investments in the region and we are thrilled Cellcast is joining our portfolio as our first mobile entertainment investment in India."

Pankaj Thakar, CEO, CAH, said, "There is an evolving use of mobile phones to provide a personal entertainment experience. We at Cellcast strive to match the needs of broadcasters and end consumers by producing live interactive pay-to-play programming, aggregating and distributing an extensive portfolio of mobile and participative TV applications."

"This partnership with Canaan Partners will enable us to accelerate growth through investment in new formats, applications and the expansion of our management team to support our regional initiatives. With this venture we will share a common vision of bringing to the Indian and Asian markets next generation applications and formats, reaching millions of customers in the fastest growing mobile market in the world."

Canaan's recent investments in India include BharatMatrimony; iYogi, an outsourcing start-up; and techTribe, a career networking portal based on the referral model.

[21simthy] 12/12/2009 10:12

zangdook.

Yes i used to post as that name, wish i could remember the password
and i still would :-))

Morning Lyon.

There has to be something wrong when you cant be bullish on a stock
you hold even if it has been only about a month or so, anyway never
mind this doom and gloom, the chart always tells a story, the shareprice
closed at a 18 month high yesterday so i dont think CV is on the button
when he says the price will go nowhere, it jumps about a bit the uptrend
is firmly there.

It's that Cellcast Asia stake, it's got to be worth multiples of the market
cap after last weeks news, it went profitable in last results and the growth
and profits are jumping in a market where 10 million people are subscribing
a week...wow jeez wow...what more can you ask for, and the rest of the company seems to be doing very well too and then Ofcom lend a helping hand.

All looks fine to me but i respect stale holders right to be cautious or even
negative, i bet i have done the same in the past, i still think CV gambled by
selling a big chunk and is only negative because he wants them back cheaper.

[lyonst5] 12/12/2009 09:52

Simthy, I would say RV has made valid points and anybody going to invest in CLTV should know first. You have to to look at CLTV in the cold light of day, its a high risk play, i would recommend first reading though some/all of posts on this thread and other CLTV threads to fully understand the issues there are. With a mkt cap of £2-3m its a absolute steal but only if they can deliver, and they seem to be on the cusp of it now, but we've been in the same situation before only for it to escape us. The big problem at the moment is trust, they had when they started out at 70p but ebbed away due to failing to deliver, result being share price of 0.5p and not knowing if they would call it a day or take it private, which they have'nt and that has surprised me.
So we're building up the trust again, the directors have been putting their hands in thier pockets and buying a few shares the past year or two and they hav'nt taken it private. And they do seem to be making headway in getting back into profit asap. I fully believe the turn around could be huge but we're currently still haunted by the past.

Edit. And £1 by Christmas (thats so you don'nt call me a deramper)

[zangdook] 12/12/2009 02:54

Simthy, are you sure you're 8trade?

[21simthy] 12/12/2009 00:07

Lets face facts eh !

Nobody with a decent position in this stock would talk it down repeatedly.

You really must think that anybody reading this thread are idiots if you
think that we believe you have any kind of holding in this stock.

"locked in"....i'm so happy at being locked in this having bought numerous
times sub 3p and 3.25p and 3.5p and today at 3.75p.

I really dont care if anybody reading this believes me or you CV, i've talked
to some friends with a few pennies and i'm prepared to build a good position
in this stock while it remains so cheap.

Anybody holding size that wants to get out please contact this thread, i
will give you mid price for it ?

[recto verso] 11/12/2009 19:50

Yep, you are also locked in Smithy, welcome to the club !!