Pelatro Share Discussion Threads

[masurenguy] 12/4/2021 15:13

Thanks for posting the Broker Note Riv.

[rivaldo] 12/4/2021 15:04

Cenkos say Buy and summarise as follows:

"Growing visibility leads to upgrade

The business model has been transformed by the focus largely on recurring customer engagements. The higher quality revenue base is accompanied by very strong growth prospects in both core and new markets. Increased revenue visibility means that we are upgrading our FY21E forecasts. Buy.

Robust FY20A. FY20A revenues of $4.0m (-41% YoY) were in line with January's trading update. The YoY contraction represents the move away from selling licences towards recurring engagements which defers revenue into future periods. Adj EBITDA of $0.4m (-85% YoY) was ahead of expectations and the movement similarly reflects the absence of profits from any licence recognition.

ARR +35%. The move towards engaging with customers on a recurring basis has led to very strong (+35% YoY) growth in run rate annualised recurring revenue (ARR) to $5.4m as at January. Total revenue visibility for FY21E now stands at over $6.0m.

Working capital improved. Net working capital was positive last year with an inflowof $2.1m versus an outflow of $1.1m, reflecting the changing customer engagement model.Trade and other receivables ended the year lower at $3.3m (-37% YoY). Placing proceeds of $2.6m helped cushion the net cash outflow pre financing activities of $2.3m. Net cash ended the year at $0.4m with gross cash balances standing at $1.8m.

Advertising opportunity. Pelatro has internally developed a product for the mobile advertising market based on its current data analysis and segmentation capability. We believe this supplementary market opportunity could be as material as that for the core business. This is a developing market and is not yet reflected in forecasts.

Upgrade. Revenue visibility of $6.0m, 46% above this time last year, supports an upgraded revenue forecast. We are conservatively moving our FY21E revenue forecast up 3% to $7.2m, with 83% visibility over this figure. Higher revenue and capitalised development costs this year produce a 38% EBITDA upgrade to $2.9m.

New FY22E forecast. With a conservative 12% growth forecast in for FY22E, the fixed cost nature of the business produces a 19% increase in EBITDA to $3.5m and, notably, a free cash flow neutral position which de-risks the investment. We forecast gross cash to end FY22E at $1.2m (net cash $0.4m).

FY21E growth. Rapid ARR growth, conservative forecasts and supplementary market opportunities underwrite the investment case. With free cash neutral position in sight and the stock trading on 3.5x EV/ARR in FY21E we are Buyers."

[sphere25] 12/4/2021 14:02

Ok so some positive movement on the results (+6%), but nothing to suggest a bullish market stance as yet. Price still range bound and well off the highs with a notable 239,500 exchanged at 39.2p.

This follows some of the prior notable trades:
200k @37.5p
300k @38.25p
315k @37.75p

The trade today just shows there are still sellers in size who want out regardless of the news here, even if it appears to be a new positive chapter for PTRO. The noises they are making suggest the future is bright and alot brighter than my small positioned risk averse stance here.

Clearly buyers in size are coming in to pick up these blocks of shares so an interesting one to keep a tabs of, to see if a demand imbalance can be caused at some point, and indeed if the improved outlook does transpire.

These are the main shareholders (as at 12th Jan 2001):

Bannix Management LLP* 12,993,553 35.09%
Chelverton Asset Management Limited 1,725,000 4.66%
Rathbones Investment Management 1,615,626 4.36%
Herald Investment Management 1,561,986 4.22%

It is only Chelverton who have moved via RNS in 2021 to cross 3% and hold 4.66%. Surely someone is going to cross another threshold with all these noteworthy blocks being exchanged.

As far as I can see it looks like Killik are the ones who have mainly been responsible for the selling here and were down under the disclosable threshold to 944k recently. Possibly all those need clearing out? I'm just speculating on who the main drag might be here.

Clearly the market in its entirety has been apprehensive, but if these buyers keep coming into pick up large blocks, it does become more and more interesting.

And now we wait to see if anyone with a mahooosive following does a bullish write up!

All imo
DYOR

[masurenguy] 12/4/2021 08:41

Results as largely expected. The key factor is their transformation from one-off to recurring revenue, which has now largely completed. It's now all about their readiness to exploit the future potential !

The Business

Mobile phones are ubiquitous and the significant penetration of smart phones (in developed countries as high as 80%, and in Asia for example currently about 50%) has opened up a new channel for advertising, namely mobile advertising. This segment is growing at a frenetic pace and currently accounts for about $100 billion globally. Communication Service Providers or CSPs are in a unique situation in this market as they hold the maximum amounts of data about their customers (who may number tens of millions and even hundreds of millions in some countries). This data, with appropriate consent and anonymity, can be shared with B2C players in financial services, retail, travel & hospitality, FMCG and brands to enable the latter to engage in targeted marketing of their products across advertising, campaigns, surveys, loyalty programmes etc. Such targeted campaigning will be contextual, relevant, personalised and real time. Pelatro's platform mViva, which handles such marketing for telcos using the vast quantity of data that it collects and processes applying AI/ML and other analytical techniques, is uniquely positioned to provide access to the segments mentioned earlier for mobile advertising and related activities.

Pelatro's strategy and readiness

Pelatro is now seeing various opportunities by partnering with its telco customers to enter this huge market. To start with, we have already identified six large markets where we have several telco customers using our software collecting and processing the data of about 700 million mobile subscribers. Out of these, about 350 million i.e. 50%, have smart phones. Our technology can help brands and B2C companies to target these 350 million subscribers and mViva's AI/ML capabilities will help us to differentiate our offering from that of the competition by enriching the data through deep analysis. Pelatro's strategy is to partner with our telco customers and sell this access to data to ad agencies who will in turn on-sell to their customers, who are the brands and B2C companies. These end customers will pay based on their usage (i.e. number of campaigns sent, targeting parameters used, number of people targeted etc.). This revenue is then shared by the ad agency, Pelatro and the telco, with a large portion being retained by Pelatro. This strategy therefore builds on our relationships with our telco customers, underpinned by the expansion of our existing business and with clear synergies between the two.

Looking forward

Your company has come a long way since its inception in 2013 and the IPO in December 2017. Apart from winning several Tier 1 telecom companies as customers in 17 countries, we have also built a strong foundation for the future. We will continue to build on this strong foundation to deliver superior results and shareholder value in the coming years.
Subash Menon, Managing Director, CEO and Co-Founder

Outlook

We ended 2020 in a much stronger position, with a substantial order book and good visibility over revenues for the coming year. Our mViva platform has been successfully stress-tested to the extreme in being implemented across a network of over 400m subscribers without any losses or fall out. We have been successfully selling our enhanced offering out across our customer base and reaching out to new customers. The start of the second phase of our journey into the mobile advertising space is particularly exciting as an area complementary to our existing operations. We have every confidence in meeting our customers' requirements, growing our business and meeting financial expectations for the year.
Richard Day, Chairman.

[rivaldo] 12/4/2021 08:33

That's a shame - I was hoping the MMs would mark it down on opening....

I was pleasantly surprised with a historic positive $0.4m EBITDA, and the outlook for 2021 looks most agreeable, with recurring revenues rising fast to a likely 80% this year and already not that much revenue needed to at least meet forecasts as paleje says.

The new mobile advertising product also looks like it has huge potential.

Cenkos have retained their Buy, and see $2.9m EBITDA this year rising to $3.5m nest year.

[p1nkfish] 12/4/2021 08:29

Requires a write-up. The wrong headlines from someone quickly scanning the results without thinking about it could do some damage. Certainly appears to have a positive business trajectory and ready to deliver.

[paleje] 12/4/2021 08:07

2020 numbers were never going to impress but they already have contracted revenues for current year of 6m, 5.2m of which is recurring so they're almost up to Cenkos' forecast for the full year with another 9 months to go. And a pipeline of ~16m.

Could do with an update from Cenkos or better still ST.

[sphere25] 07/4/2021 08:55

All gone quiet here.

315k mopped up at 37.75p, about 1% of the company with that print. Clearly the previous significant exchanges weren't enough to clear the sellers.

Any more for any more?

It's all about the results, anytime now:

"We anticipate releasing our results for the year ended 31(st) December 2020 in late March/early April 2021, although this may be subject to change given the disruption caused by local lockdowns."

Higher risk play at this end, but stable results and then it's a wait and see if ST tips it.

All imo
DYOR

[boadicea] 19/3/2021 21:18

More block movements of 100k and 200k before hours. May be internal II transfers between funds before quarter end or perhaps more significant?

[masurenguy] 19/3/2021 16:37

Yes - nice rise into the close after the recent doldrums !

[sphere25] 19/3/2021 16:28

No problem gleach23

Shifting on nothing buying now with the price popping 5.6% into the close.

One more post to come and then sleep through the weekend ha

All imo
DYOR

[gleach23] 18/3/2021 14:50

Thanks sphere - great points re ST, especially if it is October since he last did a write up.

[sphere25] 18/3/2021 14:35

They are coming in to buy in size because they clearly believe in a change in company prospects and a valuation that hasn't priced that future in.

There are some sellers selling the move higher atm. It's a nothing move so surprising. Looking abit deeper here, another interesting angle for a much bigger return could be on the back of Simon Thompson.

Note the comments on a "similar rally" in the previous write up on the 12th October last year:

"House broker Cenkos is maintaining forecasts that point towards 2020 revenue increasing by 10 per cent to $7.4m to deliver flat cash profit of $3m (£2.3m). Deduct forecast year-end net cash of $3.4m (£2.6m) from Pelatro’s market capitalisation of £15.5m, and its enterprise valuation equates to less than six times cash profit. That’s hardly an exacting rating for a company boasting a bumper bid pipeline and one that now processes data for 19 telecom operator clients around the world with more than 800m subscribers.

After I last suggested buying the shares at 50.5p the price subsequently rallied by almost 50 per cent to 73.75p before succumbing to profit taking (‘Six small-cap buys’, 22 June 2020). I feel that a similar rally could be on the cards, making this a repeat buying opportunity. Buy."

The reason that rocket ship type of move (June 2020) didn't repeat is because of these larger sellers who have been holding the price back. Since October last year, PTRO hasn't seen the types of volume exchanges it has in recent days to clear these sellers.

Now that we are seeing the clearing of these sellers, ST's comments on a "similar rally" come more to the fore.

If these sellers aren't going to be in play or have a much reduced impact, one good write up from ST could easily cause a surge in buying now that sends the shares north in a rather interesting way.

That could be the more rewarding exit point.

All imo
DYOR

[p1nkfish] 18/3/2021 12:54

Catch-up of price to high probability positive outcome.

[dunns_river_falls] 18/3/2021 12:27

5% of the company now traded in 3 days,.. what is going on here then?!

[kadvfn1] 18/3/2021 11:44

would be nice to see 60p

[sphere25] 18/3/2021 11:29

It looks close to breaking out. There is another two delayed prints from today at 10:16 of 100k each at 37.5p.

Glaringly obvious to see with all these blocks, buyers in size are coming in to pick up good chunks of the company (300k block alone is near 1% of the company) in the past few days on the back of that update.

It appears to have changed the picture with those stale bulls who were selling and causing a big wall with three market makers on the offer at 39p now having been cleared.

All imo
DYOR

[rivaldo] 18/3/2021 11:20

A sudden move up....

[sphere25] 18/3/2021 10:38

Market might be sleeping here so I'll post.

Nibbled a few as a speculative higher risk play.

Movement on that 300k block at 38.25p. There was 136k picked up at 39p yesterday too.

Volume over the last few days has tallied to become significant.

Wondering if the sellers are close to being done with all those blocks picked up by buyers

All imo
DYOR

[gleach23] 17/3/2021 18:05

Thanks masurenguy...interesting (although obvious when you think about it) point made about the pandemic improving the impetus behind digital engagement.

I would suggest the interviewer looks up his name if she's going to use it so much :)

Nice late reported trade of 136k @ 39p this evening - hopefully sets us up well for the morning

[masurenguy] 17/3/2021 16:29

Pelatro's growth plan 'builds on recurring revenue base, now up to almost 80% of revenue this year'

[sphere25] 17/3/2021 10:51

37m shares in issue so a 200k block is significant, particularly relative to normal daily volumes.

It looks like a 25k block buyer this morning and two further delayed 100k prints just hit at 37.5p.

This is the kind of interest I'm looking for here to change the whole complexion from apprehension/bearish stance to more bullish.

Still doesn't appear to be enough but watching closely for more. I'm sure folk can keep an eye on it and any price moves if they happen. Don't need to keep posting here. All the information and setup is above.

All imo
DYOR

[boadicea] 17/3/2021 09:56

With a 200k trade and 3.7m shares in issue I calculate that there is a 54% probability for each that either the buyer or seller will cross a 1% threshold, a 29% chance that both will and a 21% chance that neither will. That leaves a 50% chance that one will and the other won't, (all figures rounded to nearest whole %).
Whether this results in a holdings statement depends on the threshold lying within a reportable range and assumes completely random starting positions.

(A slightly esoteric calculation perhaps but helps relieve a boring morning!)

PS: We seem to be having a 25k pass the parcel game this morning.

[sphere25] 16/3/2021 15:46

200k delayed print at 37.5p - meaty one for PTRO. Volume now 541k but still not enough to move the dial.

Any more for any more?

All imo
DYOR

[crispfin] 16/3/2021 11:31

Thanks Rivaldo.

It’s the point around the operating leverage that’s of most interest to me. I also don’t ever see anything about “land and expand” mentioned with these guys which I think also could give some nice upside. This could fly if things fall in place.

I’ve also not really seen a share where the management seems to be so universally disliked! I’ve seen all the stuff about cars etc which is definitely shady, but I still feel like there is enough incentive for them to want to make it work for equity holders (although its easier to say that when buying in at 38p be those that have been in for a few years!)