Pelatro Investors - PTRO

Pelatro Investors - PTRO

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Pelatro Plc PTRO London Ordinary Share GB00BYXH8F66 ORD 2.5P
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 42.50 08:00:25
Open Price Low Price High Price Close Price Previous Close
42.50 42.50 43.85 42.50
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Industry Sector

Top Investor Posts

bookbroker: I think the peeps have known this was looking at a fund raising for some time, hence the drag on valuation. But you have to wonder why part-timers like Day and Hellyer do not add confidence in this company. I think they are pretty useless at investor relations. day was meant to be a bigwig at Arden Partners, it goes to show how poor the quality of outside directors have become. Still one must try and look ahead, but it’s disappointing nonetheless.
rivaldo: A reminder that there's an InvestorMeet presentation at 2.00 today: Https://
sphere25: Just the 30% pop higher with the ST effect then. Hmmmm... ... ... ... Oh go on then, I'm sure we'll take it! :-) Abit of a delay but it has played out. Well done if you caught this one. Long termers must surely be pushing for this company to get out there more and present and try and attract the investors. Surely if you're making these bullish noises, particularly relative to what appears to be a low valuation then it makes even more sense. All imo DYOR
boadicea: Sharw, the figure I used was based on 2019 accounts (the latest whole year available) as summarised on advfn. However, on examination it does look like advfn have confused cents for pence so I think their quoted p/e figure is wrong. That said, the 'adjusted' earnings for 2019 were 4.2c (about 3.2p at an averge conversion rate.) As with many companies transitioning to saas, there is a consequent period when one-off (but lumpy) contract revenue is sacrificed for the benefit of forward steady income and things should subsequently stabilise. The real penalty from the operational point of view can be the temporary effect on cash flow. From the investors pov the perceived dip in a companies fortunes can provide an opportunity in those companies managing the transition successfully.
rivaldo: I had a relatively small holding here and have also been topping up at these levels. At a £12.9m m/cap: - PTRO are forecast to have $3.4m net cash at this year end - they have almost $5m recurring income - they've stated that COVID has only had a "minimal" effect, and trading is in line with expectations - COVID has enhanced trading for all the telcos and likely those supporting them, like PTRO - $3m EBITDA is forecast for this year and $3.5m for next year - investors now can buy at a large discount to the 47p paid by institutions - the shares are tightly held and volatile, so any good news should have a decent effect (the converse is also true of course!)
rivaldo: The new Finncap note is 17 pages long and well worth a read. A couple of nice extracts: "Final thoughts The financial results do not truly reflect what a good year FY 2019 was for Pelatro. The switch from large upfront licences to smaller recurring-revenue contracts while scaling up for global sales and a managed services offering, has impacted the financials, but if we look beyond the headline numbers this is a company showing consistent growth in; customers, regions and offerings. By deepening its relationship with its customers, PTRO is building a secure base of recurring revenue and which made its name in developing regions but now beginning to challenge US market leaders in their own backyard." "Valuation view From highs of near 100p, the share price has slipped steadily over the past 12 months as the company undertook its transition from selling upfront software licences over to recurring contracts. The lower revenue growth and the reduced earnings from the required investment made investors nervous. This has been exacerbated by the sudden impact of COVID-19 on the market leaving the stock deeply undervalued. The share price, along with the market in general, has rallied since mid-March lows. The business currently trades on a forecast P/E of under 14x and an EV/EBITDA of under 6x both far too low for the growth and profitability the company has demonstrated. To that we can now add the security of starting the year with half of the expected revenue already secured under recurring revenue contracts. We continue to target 125p in the longer term as the stock and the market recovers." The list of major shareholders is stellar: Shareholders % Bannix Management LLP* 39.9 Chelverton Asset Management 6.6 Rathbones Investment Management 5.4 Herald Investment Management 4.8 Artemis Fund Management 4.7 Killik & Co LLP 3.8 Hargreaves Hale Ltd 3.2 Maven Capital Partners 3.1 *Bannix is the investment vehicle of Kiran Menon, Varun Menon and Sudeesh Yezhuvath."
rivaldo: The MMs marked the share price straight down to around 47p even before a share had been traded. This would have been based completely and superficially on the fall in EBITDA/EPS and their scant knowledge of the company, without knowing the detail re the transition to SaaS etc when this was already known by investors - and in fact today's figures slightly beat the revised forecasts. Since then the share price has only dropped a further 1p-1.5p or so. Hopefully this means the share price will stabilise around here, and at some point as the market values the recurring revenues and prospects the share price may bounce. I note that Finncap have reiterated and left unchanged their 125p target price. EDIT - mfhmfh, you beat me to it whilst I was writing!
rivaldo: Excellent recovery. I can see the share price actually rising quite nicely as investors realise the true picture here. Finncap retain their 125p target price. They now see 4.1c EPS for this year, rising to 5.6c, i.e 4.3p EPS for next year (2020). They also note that "management seems confident that the finances can sustain the changing business model", and note "management will consider various lease financing or similar options to match costs with revenue over the >5 life of the contract and preserve cash reserves".
outlawinvestor: So will the MMs take the above and the big contract win into account, or mark the price down much further? Good question! I dislike the practice of MMs pricing up news before investors have actually had a chance to buy or sell. They all too often get it wrong and kill off fair value. Anyway, I guess given the trading volumes over the last two weeks some investors were anticipating some news.
penpont: Text of ST comment in IC yesterday: Pelatro second-half weighting spooks investors Simon Thompson Simon Thompson Investors were clearly unnerved by today’s half-year results from Aim-traded software company Pelatro (PTRO:55p) after the company guided shareholders to expect a heavy second-half weighting to this year’s results. The shares lost over a quarter of their value, dropping below my recommended buy-in price of 78p ('Pelatro: Big data, big profits', 4 Feb 2019). I feel they have grossly overreacted as the board has not changed its sales nor profit guidance and still expect to deliver the step change in profits that house broker FinnCap is predicting this year. Analysts are forecasting full-year forecast of $10.5m (£8.5m), up from $6.1m in 2018, to underpin a rise in annual pre-tax profits from $3.1m to $5.7m and a 50 per cent-plus hike in earnings per share (EPS) to 15.4¢. Moreover, both chief executive Subash Menon and finance director Nic Hellyer gave me an insight into how the company’s contract pipeline is progressing, and one that is very supportive of hitting analysts' forecasts. Big data analytics drives contract momentum Pelatro’s mViva software uses 'big data' analytics to study live streaming end-user customer data to reveal patterns, trends, associations and behavioural traits of telecom customers. These data-driven insights are then used in precision marketing so that telecom operators can be more customer-centric and not product-centric in their approach. Based on this analysis, relevant offers are then made to end users through a variety of channels such as SMS, email and apps. The offering of five software solutions offers tangible benefits to clients, boosting their retention rates, average revenue per user and share of spend from customers, so it’s not surprising that Pelatro is winning new business. In the first half, five customers in the Asia Pacific region signed contracts to use Pelatro’s contextual marketing platform including Advanced Info Services, the largest mobile network operator in Thailand, and a member of the Singtel Group, which has 1bn subscribers across its global operations. The AIS acquisition highlights how Pelatro is winning business in other territories from large telecom operators as it now serves two of the seven markets of the Singtel Group. Pelatro now has 18 telecom operators across 17 countries. The company is also monetising the data it analyses; Tele2, the Central Asian subsidiary of a Western European telco, which has more than 6m customers, signed up for the company’s data monetisation platform in the first half. It’s worth noting that of the aforementioned six new contracts, four are recurring in nature and have a contract value of $5.4m (£4.4m) over the next three years. The other two contracts are licenses which will contribute $1.9m of revenue in 2019. Moreover, of the $2.7m revenue reported in the first half, three-quarters was repeat business from existing customers (change requests, revenue gain share contracts, managed services, and support), thus highlighting the shift towards an annuity style business model. In the first half of 2018, recurring revenue only accounted for a third of the total. So why the share price drop? The reason why the share price was marked down is because Pelatro needs to book $7.8m of revenue in the second half to hit house broker FinnCap’s full-year forecast of $10.5m, up from $6.1m in 2018. The second-half weighting clearly increases execution risk. That’s because having ramped up investment in the business, mainly additional headcount, Pelatro’s profits are operationally geared to rising sales. To put this into perspective, and after factoring in a slight decline in operating expenses in the second half as the directors forecast, then first-half adjusted operating profit of $200,000 on revenue of $2.7m surges to a second-half operating profit of $5.6m on revenue of $7.8m, given that a high proportion of incremental revenue will be converted into profit on relatively a fixed cost base. Bearing this in mind, the $7.8m second-half sales target, Pelatro has booked a further $2.5m of revenue in the third quarter, and has visibility over $1.1m of additional revenue. This leaves $4.2m of revenue still to book from a near-term pipeline worth $9.2m, split $3.7m across three new customers and $5.5m from eight or nine existing customers. Mr Menon told me that all of these existing customers are repeat customers’ already, which clearly improves the chances of landing new contract work with them. It also explains why the directors remain confident that they can book the $4.2m of outstanding revenue needed to deliver on FinnCap’s full-year forecast. If they do then the shares are simply too lowly rated on a price/earnings (PE) ratio of 4.5. Furthermore, around 50 per cent of Pelatro’s revenue is repeat business, and the directors are targeting contracts with more than 20 new customers worth $9.2m in additional sales opportunities, excluding the $9.2m near-term pipeline. Conversion of only a small proportion of that pipeline, in addition to the growing repeat revenue stream, would set the company up for another year of growth in 2020. The directors’ optimism looks justified. Buy.
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