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Globo: 29/10/13 update: Holding Sold; Stop loss hit!

Thursday, Jan 31 2013 by
4

Globo (LON:GBO) (32.75p and 2.2% of JIC portfolio) I attended a brief presentation by Costis Papadimitrakopoulos, the Founder and Chief Executive of Globo on Tuesday. I left with a greater understanding of what the opportunity is for the Company. It is all about "BYOD", or" bring you own device". Increasingly people are using their own smartphones for personal and business use.

Globo's principal product, launched last year, is Go!Enterprise which allows a company to control what an employee can access on their smartphone; emails, spreadsheets etc. As far as the individual is concerned it is just another App on their smartphone. The other most important aspect of this product is "containerisation", which means that the corporate keeps its information secure on its own servers with the administrator deciding what each employee can access; all good for security.

Currently there are about 700m smartphones in circulation or c. 15% of the total number of phones. By 2016 the number of smartphones is forecast to rise to over 1bn with 200m employees expected to BYOD. For the 3.5bn "ordinary" phones in circulation, Globo has a product, Citron Go which when downloaded transforms an ordinary phone so that it gains many of the characteristics of a smartphone.

The main driver of Globo should be the take up of Go!Enterprise. For the largest companies the route to market is through partners such as McKinsey and ATOS, the mid-market will be served through mobile network operators, distributors and channel partners and Globo has a solution for the massive SME market which it should be revealing soon.

The Company says that its main aims for 2013 are to increase its market footprint in BYOD, increase its exposure in the UK, US and Western Europe, sign up new distributors and partners and execute selective acquisitions of technology firms that operate in similar fields of the mobile market, focusing on the US & UK.
Conclusion: I wrote about the Company last week following its trading statement including some valuation metrics. The statement went down well as the share price has risen some 15% since then. I was impressed with Costis Papadimitrakopoulos and with the prospects for the Company . Despite the 50% rise in the share price since I purchased the holding on 28th December I am not tempted to sell. In my view the shares still look good value and although they struggled at this level last April it now looks like there is some momentum in the business. Happy Holder!

The presentation is available on the Company's website and is well worth a look. www.globoplc.com 

www.JohnsinvestmentChronicle.com


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On 1st January 2012 I set up the JIC portfolio with £151,110 cash.Under "Transactions" you can see how it has been invested, "Portfolio" shows the current portfolio and my approach to investing is described under "About Me". A history of all my postings can be found under "Company Blogs". Most… ...read more or visit website »


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"The investments and any other products mentioned in the johnsinvestmentchronicle website should not in any way be considered advice to buy or sell anything. Any information on the website is given in general terms and does not constitute personal advice to any individual. Readers are responsible for developing and applying their own strategies based on their personal circumstances and furthermore readers should obtain independent financial advice from an FSA regulated intermediary before investing money. Information or views in older blogs may become outdated and should not be relied upon unless confirmed by recent comment." "johnsinvestmentchronicle takes every care to ensure that the factual information on its website is accurate but cannot guarantee this."


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Globo plc is engaged in the provision of telecom, mobile software products and related services, as well as developing and operating broadband wired and wireless networks. The Company operates in two segments: Mobile products and services and Telecom services (S.a.a.S). Its Mobile products and services segment in sells its own mobile software products and services to its clients. Its Telecom services (S.a.a.S) segment combines telecom services with its own software products (e-business and WiFi services) that are then sold on software as a service basis. The Company’s WiPLUS consists of a managed service provided to hotels, airports, marinas and similar locations with Globo receiving revenue from venue owners. The Company’s GO!Enterprise is a platform for development, deployment and management of secure mobile apps. In June 2014, Globo PLC acquired services division of Sourcebits Inc. more »

Share Price (AIM)
49.86p
Change
0.0  0.0%
P/E (fwd)
6.6
Yield (fwd)
n/a
Mkt Cap (£m)
185.9



  Is Globo fundamentally strong or weak? Find out More »


23 Comments on this Article show/hide all

jjis 2nd Aug '13 4 of 23
2

Hi John,
Hope you are well. Been researching this one as it looks cheap & seemed to remember that you held it. However, the comments from Paul Scott on Stockopedia have put me off. So maybe it is cheap for a reason. I think I'll monitor it for now.

http://www.stockopedia.com/content/small-cap-value-report-25-jul-ipel-vnet-hibu-ssy-hrn-gbo-75546/

http://www.stockopedia.com/content/small-cap-report-8-apr-ind-gbo-vlk-mec-sncl-fdl-ghh-eck-ssy-72300/

Regards
Jamie

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johnrosier 5th Aug '13 5 of 23
1

Hi, I have taken Paul's points on board and agree that the accounting has been less than conservative! However, I would expect that as the new Go!Enterprise product sells that you would start to see the cash flow on what should essentially be a high gross margin product with recurring "support" revensues. So I will eagerly await sales figures for the second half and an improved cashflow when we see the 2013 accounts. In the meantime it does have cash on the balance sheet which gives some security and it is on a low rating. One of my higher risk holdings but also I think one with considerable upside. I have been wrong before! DYOR etc.

Website: JohnsInvestmentChronicle
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johnrosier 27th Aug '13 6 of 23
1

Globo (55.5p and 4.7% of JIC). It has announced that it has achieved “Advanced Membership of IBM's PartnerWorld Program for enterprise mobility solutions”, a development which Costis Papadimitrakopoulos, Globo's CEO, decribes as “a major coup”! It goes on to say that “advanced membership provides Globo with a framework to collaborate with IBM executives, sales teams, and other business partners for strategic initiatives and market specific solutions, with Globo's enterprise grade mobility expertise being incorporated into IBM's broad range of technology services.”


Conclusion; The share price has resumed its upward progress, rising from 40p to 55p during the last month and hitting new highs. This has been on optimism that sales of its GO!Enterprise BYOD (bring your own device) software product would accelerate in the second half, especially in North America. Today’s announcement is a feather in the cap for Globo and is an endorsement of GO!Enterprise. The shares are valued at 9.7x current year consensus earnings forecasts for 28% growth and 7.5x 2014 forecasts for a further 29% growth. On the basis that these earnings figures are achieved then the stock continues to look good value. Very Happy Holder.

Website: JohnsInvestmentChronicle
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johnrosier 23rd Sep '13 7 of 23
1

Globo (61.5p and 5.0% of JIC Portfolio) has issued its half year results for the 6 months ending 30th June. There were no real surprises as the Company issued a comprehensive trading statement on 25th July. The highlights were; revenue increased by 52% to €32m, gross profits were up 40% to €17.1m, operating profits increased 73% to €14.53m and earnings per share increased by 58% to €.041.


Its latest product, GO! Enterprise made good operational progress with sales up 132% to €10.2m in 16 countries. It won well-known names such as First Data, Coral, Dixons, Estee Lauder, European Reliance and Mercedes Benz as new customers and has signed a North American distribution agreement with Ingram Micro. The benefits of this agreement should start to be seen in the second half as sales start to ramp up. Furthermore, it says, that with numerous reselling agreements in place in UK, Germany and Australia it is even more confident of achieving its targets.


Conclusion; The non-executive Chairman says “The potentially substantial contribution from Enterprise Mobility in a Box and Go!Enterprise 247 cloud offering and the positive trading so far in the normally strong second half, have increased our confidence in achieving market forecasts for the full year." If this was a very highly rated company this might be seen as being a little disappointing as it implies that full year forecasts should not be moved upwards. It achieved, however, earnings per share of 4.1€cents in the first half and with, as it says, “Positive trading so far in the normally stronger second half” it looks like consensus forecasts of 6.6€cents for the full year are too low! Anyway, on existing forecasts, it is valued at 10.9x December 2013 consensus earnings forecasts at 8.4x 2014 forecasts. This seems cheap to me for 30% earnings growth in each year. Happy Holder!

Website: JohnsInvestmentChronicle
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johnrosier 23rd Sep '13 8 of 23
1

Globo (64.5p and 4.0% of JIC Portfolio). I have sold the 4240 shares I bought on 25th July at 41.2p. This has reduced my holding by approximately 20% to 4.0% of the Portfolio. Risk Control! (see transactions)

Website: JohnsInvestmentChronicle
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johnrosier 26th Sep '13 9 of 23
1

Globo (71p and 3.0% of JIC Portfolio) I have this morning reduced my holding in Globo to 3.0% of the Portfolio thus booking a profit of £2443. The stock has had a tremendous run over the last few weeks and although I still expect to make further profits from the holding a pause for breath seems likely. The latest results showed excellent top line growth but one area that is slightly concerning is the lack, as yet, of cash generation. So a cut to 3% seems prudent and has the added bonus of increasing my cash back up towards 5%. (See transactions)

Website: JohnsInvestmentChronicle
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Monty9 29th Sep '13 10 of 23
1

I topped up in Jan 13 to add to my original purchase in March 12. Average cost is below 30p and I have traded on a spread bet a couple of times when the price looked stupidly low - it used to dive after each set of decent results, I supposed as other punters collected profits. Interestingly this time the dive was very muted and the price has taken off again. I still hold the lot and now feel a little nervous because some of the investors I respect highly remain cynical (including Paul Scott, Ed Croft and Marben).

On top of that some of the ratios PE, P/Sales, P/EV are at least looking fair whereas they had previously been on a miserable rating. Classically I should top slice now but have not yet. As I have not, I should study the balance sheet in depth (I am a bean-counter) and try to guess what it would look like under my own accounting policies. However in a company such as this it changes so fast its hard to know how last month's accounts will affect the next six. My analysis is reduced to:
1 - are sales achieving what I hoped for when initially investing... Yes, indeed more so
2 - is operation largely self funding? Mmmm - well, yes since a little over a year ago
3 - are earnings (after deducting amortisation of development capitalisation) growing well.... Yes
In fact 1 & 2 astonishingly well.

So I still hold because it remains good fundamental value to me and the Ingram and other distribution channels could enable massive further growth for modest marginal cost.  Any material hiccough in the growth story would prompt a rapid change of heart but for now I still hold the lot.

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DJLJ23 30th Sep '13 11 of 23

GBO todays RNS stated
"As a result of the amendments to the Takeover Code that take effect today, Globo announces that with immediate effect it is a company that is subject to the Takeover code"
Any body know what the key changes are, and why gbo is subject to the code?

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jon9999 30th Sep '13 12 of 23
1

Hi David,
New changes to the takeover code stipulate that all companies that have their registered office in the UK – even if they are managed abroad – will now have to comply. Previously, the test focused on where board members resided. Briefly In the event of a takeover approach GBO will have to appoint an advisor, and communicate with shareholders. Further details in link

http://www.thetakeoverpanel.org.uk/the-code/download-code

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johnrosier 3rd Oct '13 13 of 23
1

3rd October 2013


Globo (79.75p and 3.3% of JIC portfolio) Globo has announced the acquisition of Notify Technologies, a Silicon Valley based company, which “enables organisations to define, simplify and implement their mobility strategies, including the management of mobile devices.” Globo is paying a cash consideration of $5m for a company whose 2012 unaudited revenue was $6.1m and EBITDA was $1.6m and is therefore expected to be earnings enhancing in its first full year.


Conclusion; On the face of it this seems a sensible acquisition at a reasonable price which the Chief Executive expects to “strengthen Globo’s position and accelerate growth in the US”. It shouldn’t be a surprise as in the interim results announcement on 23rd September we were forewarned of the likelihood of acquisitions. Since I reduced my holding to 3% of the portfolio last week the share price has continued to rise but on consensus forecasts, that have been upgraded since the results, of 7.5 €cents for the year ending December 2013 and 9.2 €cents for 2014, the shares are on a PE ratio of 12.6x this and 10.2x next for 23% growth. I know there are concerns about the balance sheet and the cash flow, (lack of), but for now I shall let the share price do the talking and will hang on with the aim of re-assessing at the next balance sheet date!


I will endeavour to listen to the conference call tomorrow afternoon.

Website: JohnsInvestmentChronicle
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lightningtiger 10th Oct '13 14 of 23

I am into this one, my kind of share, huge potential. Another micro chip going into action. I have held ARM for a number of years and taken profits several times. Also have had TEP for a while. It has more than doubled for me and at last is up around £14.00 mark where it should be. Cheers from Lightningtiger

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johnrosier 17th Oct '13 15 of 23
1

Globo (LON:GBO) (73.5p and 3.2% of JIC Portfolio) The Company has announced this morning that it has raised £24m through a placing of 38.8m shares at 71p with new and existing shareholders. The money raised will be used to accelerate the roll out of GO!Enterprise in the US and Western Europe.


Conclusion; A lot is riding on the success of GO!Enterprise. Thus far Globo seems to be doing all the right things with its recent acquisition of Notify Technologies and its North American distribution agreement with Ingram Micro. Some commentators are concerned at the lack of cash generation, I guess in some part necessitating today’s cash raising exercise. For now, I am prepared to give them some time whilst they ramp up sales but would expect to see an improvement in cash generation as we move into 2014. In the meantime the shares continue to look good value to me and now this placing is out of the way I would hope that the weakness in the share price over the last week or so will be recovered. Happy Holder!

Website: JohnsInvestmentChronicle
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johnrosier 28th Oct '13 16 of 23
1

Globo (67.5p and 2.8% of JIC). Last week the share price was very volatile and fell over 10%, with concerns about the lack of cash flow and some of its accounting practices being voiced by some commentators. This culminated in a lot of tittle tattle on bulletin boards and the revelation that Simon Cawkwel, aka Evil Kneivel, had shorted the stock.


This morning the Company has announced that following its successful placing of new shares at 71p, to raise £24m, it had been in meetings with institutional investors in which questions had been asked about working capital and clarity had been sought over the mechanics and impact of the sale of 51% of its Greek subsidiary in December 2012.


In a welcome announcement this morning, it says that it expects to publish, on its website, further analysis into working capital movements and the mechanics and impact of the disposal of GT in order to enable investors to gain a fuller understanding of the Group accounts. It expects to publish the report on Thursday 31st October, if not before.


Conclusion: This announcement has to be welcomed. It is good to see management of a company listening to concerns from its shareholders and reacting in a positive manner. Of course we have to await the report which hopefully will restore some confidence but ultimately further success from this investment will depend on it achieving its growth targets for GO! Enterprise and from an improvement in both cash flow and working capital movements. I have a 2.8% holding which I intend to hold onto for the time being, whilst being aware that it is pretty close to my trailing stop loss!

Website: JohnsInvestmentChronicle
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extrader 28th Oct '13 17 of 23

Hi John,

I read with pleasure and interest your measured response both to portfolio allocation and to news, good or bad.

Re GBO, I wonder whether you've seen the attached analysis/critique from Matthew Earl

http://lordshipstrading.blogspot.co.uk/2013/10/globo-gbo-wake-up-and-smell-houmous.html

and would be interested - given your former life as a fund manager ? - whether this is likely to be given any credence by institutional investors ?

ATB

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johnrosier 29th Oct '13 18 of 23

Globo (58p and 0% of JIC) Discipline, Discipline! I have, this morning, sold my holding in Globo, locking in my substantial profits, as it closed yesterday below my trailing stop loss. The bears of the stock are clearly in the driving seat and whilst ultimately I think they will probably be proved wrong, I have to acknowledge that in the short term the price action is not looking good. The stock is taking up far too much of my time so I will now watch from the side lines. Time to move on! (See transactions)

Website: JohnsInvestmentChronicle
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lightningtiger 31st Oct '13 19 of 23

Panic not, it is springing back.

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Jam7 31st Oct '13 20 of 23

Discipline or have you falling into the scam of the shorts?

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johnrosier 31st Oct '13 21 of 23
1

Time will tell and there is nothing to stop me buying back when all the excitement has died down. I'm sure it will continue to be volatile. I invested a total of £7073 for JIC and sold for a total of £14,272. I'm happy with that and have moved on. There are plenty of other fish in the sea where there is not so much market emotion involved!

Website: JohnsInvestmentChronicle
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Jam7 31st Oct '13 22 of 23

Showing 70% revenue growth?
Pray tell.

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lightningtiger 1st Nov '13 23 of 23

That is a great trade, well done. Hope you do not get clobbered with CGT. I am in a similar position with TEP & have top sliced once this year already, because of safety in number of holdings. Thankfully all of my stocks are in the ISA wrappers. Not sure whether that was a good decision or not to top slice. Had a good double with OXIG last year, I think ,when it started to drop.

A couple of goodies, look good to me are AVO & INL. No screens fit but it is a buy from me.

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About johnrosier

Johnrosier

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In September 1984, I left university with a degree in Zoology and started work in the City of London. Over the next twenty five years most of my time was spent managing UK equity portfolios with Fleming Investment Management and Henderson Global Investors, for company and local authority pension schemes as well as the reserve fund for a well known charity. During 2009 I left full time employment and decided to take time out to consider the next stage of my career. In the meantime I have been putting my years of experience to good use investing the family savings. I have thoroughly enjoyed the freedom of investing from home and despite some tricky periods during 2011 it has been a rewarding experience. In January 2012 I set up www.johnsinvestmentchronicle.com in which I record my trades and the reasoning behind them. more »



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