Fonix Mobile Share Discussion Threads

[rivaldo] 14/3/2022 12:18

Hi APAD. Maybe subdued markets in general for obvious reasons, maybe a seller out there, maybe profit-taking from the pre-results run-up. I note the initial response was to mark the share price up 9p, which kind of supports these theories.

I'm not really bothered as FNX still looks good value and I see a long-term potential bagger or three from here.

I note that FNX's m/cap is now £153m, so institutional interest should increase following these impressive results.

Good to see buyers now paying the full 155p offer. Hopefully a sign that the supply of stock is limited or small.

[apad] 14/3/2022 11:21

riv
Do you have a view on the market's subdued response to the interims?
apad

[rivaldo] 14/3/2022 10:38

Finncap have retained their 230p valuation and prior forecasts, but note that those forecasts are conservative. Here's their summary:

"In our unchanged forecasts, we conservatively include Fonix’s investment into new verticals and geographies, but do not include any impact on its gross profit from expanding into these areas. Combined with today’s outlook that H1 22 is likely to be slightly larger than H2 22, our gross profit split of £7.0m in H1 v £6.0m in H2 highlights that our forecasts are likely to be conservative.

The interim DPS of 2.0p is amply covered by £4.8m of underlying EFCF in H1, and we reiterate our target price of 230p based on 20x FY23 EV/EBITDA.

At 149p, Fonix is trading on 12-month forward multiples of 13x EV/EBITDA, 5% EFCF yield, and 4% dividend yield, and we look forward to further updates through H2 22.

- Fonix’s robust investment case –

As we explain in depth in our 23 September report, Fonix is focused upon leveraging its highly scalable, cloud-based platform to expand with existing clients and win new clients as mobile commerce and mobile payments continue to scale. The structural strength of its platform is demonstrated by it experiencing no churn from major customers in six years, and it is diligently expanding its market-leading technology outside of the UK when it is led by its existing clients.

The successful execution of its strategy has driven Total Payment Volume (TPV) to £233m in FY21 from £125m in FY18, adjusted EBITDA to £8.8m in FY21 from £3.3m in FY18, and underlying EFCF to £7.3m in FY21, as management explained in more depth at the FY21 results.

We conservatively forecast adjusted EBITDA growth of +15% and +10% in FY22 and FY23, and we expect that any upside to our forecasts will be returned to shareholders through Fonix’s dividend payout ratio of 75% of adjusted EPS."

[rivaldo] 14/3/2022 07:21

Excellent H1 results as flagged in the "ahead of expectations" trading statement.

FNX continues to look cheap:

- on track to meet and perhaps beat expectations of 7.9p EPS with 4.4p EPS in H1
- current year P/E at 148.5p of 18.8 based on 7.9p EPS to 30th June
- will soon be on a P/E of 16.9 to 30th June'23 based on 8.8p EPS
- £6.3m cash pile, with £7.2m expected at 30th June
- 6p dividend is a 4% dividend yield
- Finncap have a 230p valuation

The outlook is very bullish - "the business is showing strong momentum going into the second half of the year".

And "Record levels of business were achieved in November and December".

Good to see FNX achieving these numbers despite an evident step up in investment for the future.

And this is all domestic growth - imagine what can be achieved from the international expansion, which won't be short-term but where the groundwork is being laid.

[brucie5] 14/3/2022 06:43

Well done.

[crazycoops] 13/3/2022 23:15

Thankfully I exited POLY at the end of Jan Bruce, replaced with GDGB - no dividend but responds to the gold price.

[brucie5] 13/3/2022 19:10

Excellent site, Crazycoops, congratulations. Though I notice you held POLY, as I did until recently, in last published version of your folio. I imagine you've now sold?

[crazycoops] 13/3/2022 11:51

Thanks rivaldo. I find the Twitter UK investment community to be very useful, although you have to be careful who to follow. I tweet as @BrilliantLeader which is now the same as my Stockopedia name. I am an infrequent visitor to BBs which I find increasingly less useful, although your contribution is good and tends to crop up on several stocks that I hold (which is why I asked my original question).

[rivaldo] 11/3/2022 10:08

Hi crazycoops, yes, I am Twitter embodied in physical form :o))

I do have a Twitter account, but only use it very occasionally and not for any investment stuff or as "rivaldo". There's more than enough bb stuff etc to research, and monitoring Twitter etc all day would deprive me of having a life! I do keep tabs on a few Twitter investment accounts though, i.e Private Punter.

How about you?

Looking forward to Monday - as you say, FNX's results and especially the outlook should read extremely well after the "ahead of expectations" trading update.

[crazycoops] 10/3/2022 16:02

rivaldo, are you Twitter?

[crazycoops] 10/3/2022 12:14

Interims on Monday - TU suggests they will be very good.

[rivaldo] 10/3/2022 10:30

Surging again today - and someone's just bought 7,427 shares at 146.99, way above the 144p offer price. Very keen.

[starpukka] 08/3/2022 11:47

Yes Rivaldo, it does. I bought back in @ 123p yesterday; and I've added more @ 125p today.

[rivaldo] 08/3/2022 11:05

Looking very cheap now:

- current year P/E at 124p of 15.7 based on 7.9p EPS to 30th June
- will soon be on a P/E of 14.1 to 30th June'22 based on 8.8p EPS
- £7.2m and rising cash pile expected at 30th June
- 6p dividend is a 4.8% dividend yield
- Finncap have a 230p valuation

[km18] 17/2/2022 18:16

...from last year...

Company overview:
Fonix Mobile plc is a United Kingdom-based company providing mobile payments and messaging services for clients across various sectors, like media, telecoms, entertainment, commerce and enterprise. Their portfolio of clients includes some blue chip companies like ITV, Bauer Media, BT, Global radio and others. Fonix Mobile’s specialty is providing clients with a direct connection to all UK carriers. The company is proud by its client retention of 100% and almost same percentage of income from a repeating nature, increasing the visibility for its earnings. Last year, they have managed to reach 18 million unique users and add 34 client contracts (FY21 ending in June).
Acquisition free Cashflow statement confirms the organic nature of growth adopted by the management. Financials, although limited in timeframe (only back to 2018), look very solid. Revenue CAGR is around 30%, and the EPS one is swelling to 37%. ROCE is flying high at 134% and gearing is non-existent, as the company sits on a pile of cash. There are also divis sweetening the deal, at 5.2 for last year.
The company has released an AGM statement where the trading update is hidden. The company had a positive start of the financial year which is in line with managements forecasts. New contract signed with Venntro Media Group brings another client on board and the management is confident in the growth prospects of the company during the financial year. We like the stock due to its strong FCF over the past year supporting the dividends in the long-term, creating solid returns for investors. FinnCap has pencilled 7.6p EPS, which would suggest a PE somewhere in the low 20s, which is at an attractive discount compared to its peers....from WealthOracleAM

[rivaldo] 11/2/2022 11:53

FNX have a new major shareholder - Charles Stanley have been buying and are now above 5%, with 5.23m shares:

[igoe104] 31/1/2022 08:34

Good to hear that the fight between Tyson Fury and Dhillion Whyte is on BT box office, should generate alot of transactions for FNX....

[rivaldo] 26/1/2022 08:28

Good to see Investors Champion are very keen in their AIM market update this morning:



"Fonix Mobile: upgrades

Mobile payments and messaging provider Fonix Mobile (AIM:FNX), which we covered previously in our premium report here: ‘Fast-growing arrival on AIM from 2020 is still looking good’ issued a positive update bringing an upgrade from its broker.

Gross profit and adjusted EBITDA for the 6 months to 31 December have grown ahead of management's expectations with gross profit up 20% to £7.0m with adjusted EBITDA similarly higher at £5.5m.

This business has a very attractive cash flow model, as our note highlights, and with continuing strong cash generation, Fonix now intends to pay an increased interim dividend in March 2022.

Total payment volume of mobile payments grew by 12% to £138m with 116 (H1 FY21: 105) active customers at the period end.

Fonix remains the leading provider of charity telethons, including ITV's Soccer Aid, BBC Children in Need, Comic Relief and The Ruth Strauss Foundation, and has added several new clients in the period.

In response to the latest update the Group’s house broker upgraded their June 2022 and June 2023 adjusted EBITDA by +5% to £10.1m and £11.1m – given recent performance those still far too low to us. Their target price has been upgraded to 230p from 200p, well above the current 160p share price.

We aren’t big fans of the fairy tale ‘adjusted EBITDA’ measure and prefer to focus on free cash flow. In the case of Fonix this is even more compelling with the forecast free cash flow yield for 2022 a highly attractive 4.6%.

Its resilient business model should appeal to investors worried about current events."

[apad] 25/1/2022 12:41

Nice point, Asagi. I hadn't spotted that as a possible explanation.

Lord protect me from encouraging announcements 😊

apad

[asagi] 25/1/2022 12:33

Interestingly the job advert is for a Ruby on the Rails (open-source website development software) programmer.

might this be for customer 'dashboard' offering i.e. see your campaign/charity donations as they come into Fonix etc rather than the core technology.

The lack of long-promised international sales has also given me pause but today's announcement is very encouraging indeed and I am surprised that the shares are not higher.

Asagi (long FNX)

[apad] 25/1/2022 11:22

It's finnCaps revenue growth estimates that concern me. The overall tenor of the report is good as befits a good little business. I don't see the sort of growth that befits a business in a seemingly burgeoning market (at least internationally in countries where the credit card does not dominate).

Interestingly the job advert is for a Ruby on the Rails (open-source website development software) programmer. I was a touch surprised - made me realise that I don't know enough about how Fonix' system works. Anyroadup, doesn't look at all like they are embarking on a big software spend. 😊

I want to see the 'going abroad on the back of our existing customers' argument delivering 20%+ revenue growth.

apad

[rivaldo] 25/1/2022 10:57

Indeed - and Finncap say those upgrades are "conservative". Certainly FNX are rather undervalued against their peers given the relatively low P/E and the very high dividend yield of around 4%.

I like FNX's extremely understated methods. They seem to like to underpromise and then overdeliver, even though they have a number of avenues for growth.

Finncap conclude:

"Fonix’s robust investment case –

As we explain in more depth in our 23 September report, Fonix is focused upon leveraging its highly scalable, cloud-based platform to expand with existing
clients and win new clients as mobile commerce and mobile payments continue to scale. The structural strength of its platform is demonstrated by it experiencing no churn from major customers in six years, and it is diligently expanding its market-leading technology outside of the UK when it is led by its existing clients.

The successful execution of its strategy has driven Total Payment Volume (TPV) to £233m in FY21 from £125m in FY18, adjusted EBITDA to £8.8m in FY21 from £3.3m in FY18, and underlying EFCF to £7.3m in FY21, as management explained in more depth at the FY21 results. We conservatively forecast adjusted EBITDA growth of +15% and +10% in FY22 and FY23, and we expect that any upside to our forecasts will be returned to shareholders through Fonix’s dividend payout ratio of 75% of adjusted EPS."

[dixies] 25/1/2022 10:24

It's Finncap who have upgraded to 230p from 200. also upgraded eps to 7.9 from 7.6 and 8.8 next year. Divs 6 then 6.6

[apad] 25/1/2022 09:59

I'm not so convinced. It's a scalable platform but the revenue increase is poor. Decent business and some good financial metrics.
The apps solution seems to have the decision makers in thrall. My daughter has half a dozen apps on her phone including a car parking app. She doesn't think twice about it and the council doesn't seem to mind the cost.
The finnCap report does not anticipate strong revenue growth in the next couple of years.
They have one vacancy for a software developer.

rns: "The business continues to make good progress on the launch of international services and hopes to announce significant developments later in the year."
This has been tantalising for a long time now.

I have FNX as a hold until there is some revenue growth news.

apad

[rivaldo] 25/1/2022 08:51

I gather there's been a broker upgrade today to a 230p target price.....

Pateince keenwil, we're only 50 minutes in and are already 9.5p up :o)) Plenty still to come.