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Mobile Streams (MOS LN) Possible use of blockchain | SDL (SDL LN) Re-classification of segmental profits | Sigma Capital Group (SGM LN) Driving deployment in The PRS REIT: site sale, £240m deployed to date | The PRS REIT (PRSR LN) Acquisitions: 3 development sites and a completed Manchester site
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Mobile Streams has announced a gross subscription of £105k at 1.15p per shares to help fund product development and investment in growing the paying subscriber base. This looks likely to be applied to India where the business has been developing its business model and is now seeking to scale profitably.
Mobile Streams Plc
Mobile Streams (MOS LN) Subscription from existing investor | Sigma Capital Group (SGM LN) Acquires 3 sites on which 214 PRS homes to be built for REIT | Summit Therapeutics (SUMM LN) Dosing in PhaseOut DMD completed: on track for Q3 data release
MOS SGM SMMT
Mobile Streams issued a trading update on Friday. Revenues for H1 indicate a decline to £1.85m vs £3.6m in the prior comparable period. While we had expected a reduction, this is greater than expected and reflects (i) the reengineering of the Indian marketing process previously flagged and (ii) weakness in Argentina. The EBITDA loss for H1 is expected to be c£0.7m. Marketing costs are guided to be dramatically lower as well, so while the revenue movement is large the profit impact is more modest. The Company therefore expects that the EBITDA loss in H2 will be lower than H1. The FY18 EBITDA loss seems more likely to be around £1m instead of the £0.7m we had forecast. The level of Cash is indicated to be £1.4m at end of December 2017. Following this update we are suspending our forecasts. We will review this when we reach the interim results stage and can gain a clearer picture of trading in the Argentinian and Indian businesses.
Mobile Streams has issued an AGM statement that rounds up developments in India and confirms that Argentina has, encouragingly, been stable for the last few months. In India the group confirms its direct carrier billing arrangements with five of the six leading Indian telecom operators. All but one, which is in integration phase, are up and running. The Company confirms it is working on the optimisation of its marketing to ensure that customer acquisitions are profitable and have a positive life time value. In Argentina the focus is on moving customers to premium subscriptions which will help improve overall revenue share. The tone of todays’ update suggests that MOS has improved focus on growing profitably in India despite the market volatility caused by competition between operators. It is also a major positive that Argentina is stabilising. We expect further positive updates on Indian growth in 2018.
Carador Income Fund (CIFU LN) US CLO new issuance reaches three year high | Mobile Streams (MOS LN) AGM statement
Mobile Streams Plc Carador Income Fund
Following the recent full year results MOS has announced that it has secured another direct carrier billing agreement with a mobile network operator (unnamed) that has over 100m customers. This increases the total number of these agreements to five in India and gives MOS potential reach of over 850m customers. This is welcome news and should help support our forecasts that we expect to maintain pending review after the full year results.
BCA Marketplace (BCA LN) Strong H1 trading and bright growth prospects | Gooch & Housego (GHH LN) Another year of strong progress | Mobile Streams (MOS LN) MOS extends operator arrangements | mporium Group (MPM LN) New commercial agreement with agency | Sanderson Group (SND LN) Improving sales prospects support positive outlook | UDG Healthcare (UDG LN) Solid prelims, market environment still supportive
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The Company has issued a trading update flagging the continued impact from new compliance processes with its key Argentinian partner. In addition the Company has experienced some unexpected problems with one of its three partners in India. Its experience with the customers of the partner simply doesn’t conform to those with its other two partners or the experience gained in testing. The market is at an early stage of development with a fast changing smartphone and operator environment. The consumer issue is aggravated by an aggressive new entrant in the Indian market (not an MOS partner at present) taking share from the other operators and additional compliance measures introduced by one partner creating transaction friction and reduced conversion. The Company has adjusted its investment accordingly.
Mobile Streams has issued its results for the first half (6m to end December 2016). These essentially reflect the recent trading update confirming the strong subscriber progress in India (now over 175,000 active subscribers). Revenue (£3.6m) and EBITDA loss (£0.7m) are in line with N1Se expectations. Cash at the period end was better at £2.8m. We are expecting activity to continue to ramp up based on the program of investment in India. We expect the launch of the HTML5 browser based games recently announced to be material in helping boost the attractiveness of the MOS offering to Indian subscribers, given the prevalence of less sophisticated smart phones in the market. We look forward to the next subscriber growth update.
Rainbow Rare Earths has published a prospectus. It has raised $8m to fast-track fully permitted high grade Gakara ‘rare earths’ project to production in Burundi. Intends to join the Standard List of the LSE. Impact healthcare REIT— Intends to float on the main market. Seeks to raise £160m to acquire a portfolio of up to 58 care homes. Expected Admission 7 March. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
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Big Sofa Technologies— Schedule 1 from the b2b technology company providing video analytics at an enterprise level. Seeking to complete RTO of unlisted HubCo investments. Raising £6.1m. Target date 19 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Creo Medical Group - UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
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The Company has confirmed revenue of £12.8m for FY16 and a small loss. Cash stands at £1.35m. Development progress continues in India albeit execution is taking longer than expected. The four billing relationships give access to 750m mobile users, and while not absolutely necessary, the Company continues to pursue additional arrangements to expand the potential further by seeking another 3 or 4 operators. The Company will be looking to increase marketing in India once it completes its test phase which is examining various price/format/subscription structure offerings. Price competition in mobile between operators is helping sharply reduce the cost of data to consumers, which will help with take up of services. Further improvement is expected as Reliance Jio enters the market and becomes the ninth operator and more spectrum becomes available. The HTML5 based gaming offering also helps avoid the data price issue to a large degree in the near term. Further regulatory activity is likely to drive further improvement in this as well. After the impact of increased regulation (“double opt in”) the Argentinian market (still responsible for c90% of group revenues) has largely stabilised. Group revenue run rates are broadly around £1m per month and the business is broadly trading at breakeven. This is driven by a mix of profit in Argentina and early stage losses from the Indian investment. At this stage FY17 the likely financial outcome for FY17 is hard to call given the phase that the Indian business is in and we therefore leave our forecasts suspended.
The Company has issued its interim results today and essentially confirmed the key items that were announced in the January trading update. Encouragingly the Company has seen conditions stabilise in Argentina, its largest market, and the business is likely to breakeven in H2. Perhaps more importantly no further cash drain is expected despite the product and markets launch program. The new Indian business is performing in line with expectations and the Company believes it will have enough KPI data in the middle of the year to assess its likely economic potential. MobileGaming.com launches in India, Argentina and the US have been followed up with by a Mexican launch and Columbian and Brazilian launches are expected shortly. The service has been improved with multiple languages and advertising options have been increased to further optimise value. At this stage we keep our forecasts under review and look forward to an update on the Indian and additional market launches of MobileGaming.com.
MOS has released some headline unaudited results for the 6 months to December period. The company has also provided a business update on strategy which is centred on launching subscription based and ad-funded Mobile Internet Services in emerging markets. The launch of services in India is now taking priority over Nigeria. The Company has now secured 3 billing contracts that will help support services and provide an accessible market of c600m mobile users. With respect to the ad-funded product offerings being launched, the range of markets has been expanded from India, Argentina and the US to the UK, Australia and is expected to launch in Mexico where the Company has an established subscription business. At this stage we keep our forecast under review pending detailed updates on the launch progress.
The company has issued a trading update covering the impact of the Argentine PESO decline. It fell c25% in December due to the relaxation of currency controls. The Company indicates that given the previously indicated revenue run rate and the PESO impact revenues would be “much lower than those reported for the previous year”. It goes on to say that the “impact on profits will be less as much of our operating costs is incurred in pesos”. Our forecasts are suspended pending the full trading update that the Company intends to issue later this month. The update should include comments on the new ad-funded products and new markets, such as India.
Further to the company’s recent update another update was issued yesterday. This helpfully clarifies the expected revenue trend in H1 at the equivalent of c£1.5m per month and reiterates that the Company believes it will be around EBITDA breakeven for the full year based on cost reductions and the change in the Argentinian business. With respect to the latter change we note that premium subscriptions, which achieve twice the margin of basic subscriptions, are around 90% of all new subscribers and now make up more than 40% of the subscriber base. There is no assumption of any potential of the Indian business being realised highlighting conservatism in guidance. The Indian business is set to launch in the coming week and we may see a very early stage update when the company holds its AGM on the 17th November. We keep our forecasts under review at this stage.
The Company has announced better than expected EBITDA for FY15. Following the trading update on FY16 trading in late August we will be looking to re-set our forecasts that were put under review pending the results update. Cash has reduced to £1.7m on the back of the investment program signalled. The company has confirmed that live mobile internet subscription services have been launched services in India and Nigeria.
We last commented on the full year numbers to June 2015 in a note on 21st July and today the company has indicated that EBITDA for the current year to June 2016 will now be around breakeven. Accordingly we place our forecasts below under review pending a further update in due course.
Today’s trading update shows that the group has traded in line with revised expectations for FY’15. Looking forward the group’s moves to diversify the business geographically are progressing with expansion in Brazil, India and Nigeria being made. The range of products and revenue streams is also being expanded with the launch of premium products targeting higher margins and customer retention (browser based games and high definition video streaming). The company is also launching new advertising supported services in games and social networking. The combination of premium and advertising supported products is expected to help with development in the new geographic markets.
