Tue 18 Mar 2025 - Paul Scott's Small/Mid Cap Value Report

MrC snapshot up at 07:46. Jon's quickies - FNX, YU, BOKU Premium: PEBB, STEM, BIG, CBG, HAT, ZTF, CCC, BYIT, HWG, MAB1, LIT

Good morning from Paul, Dave, and Alun! We might have a few bits from Jon too, as he’s got some spare time today and wants to get involved ready for his official start next week.

Right, we’re about to get going with the 7am RNS. St Mary’s Parish Church here in Dingli has done its 20 bongs, so we’re ready to go! Likely to be very busy today.

I’m recording another podcast with Chris Gillespie of H&T today to discuss its results, so that will be up as a premium post by about lunchtime. My previous H&T podcast is now available to all subscribers, including free ones.

---

Jon has sent through his quick views on Fonix, YU, and BOKU - he’s not charged for these trial run comments, so I’m happy to share them in the free section -

Fonix (FNX)

192p (last night) - £189m

H1 Results (12/2024)

• Adjusted PBT + 5.4% to £7.8m

• Adjusted EPS +.8% to 6.2p

• Net Cash £11m (£11.2m)

• Interim Divi +12% to 2.9p (was a 3p special earlier in the year too)

• Confident in meeting FY expectations

Brokers

Cavendish conservatively re-iterate f/c's and 300p Price tgt. - EPS 24A 10.7p, 25E 10.9p & 26E 11.3p

Jon's Quick View

Down -20% or so this year and on a PER of 17+, although the 5%+ yield is attractive, probably about fairly valued here at best, keep an eye out for upgrades.

NOTE: Now mkt leader in Ireland (1 yr after launch, but could be potential regulator (gambling) issues there?

Paul adds: I’m more bullish on Fonix, so will stick with GREEN. It’s demonstrated an excellent track record since listing, generates loads of cash which it pays out in divis. Plus growth potential from new international markets. It’s not clear why the shares have sold off recently.

---

Yu Group (YU.)

Down 3% (08:35) to 1,405p - £225m

FY Results (12/2024)

• Rev. +40% to £645.5m

• FD EPS +11% to 210p

• Net Cash £80.2m (£32.1m), increase mostly due to a new hedging agreement

• Total Divi +50% to 60p

• Strong start to this year, expects to be in line with mkt expectations

Brokers:

Panmure re-iterate 2050p Price tgt - EPS 24A 210.4p, 25E 213.6p, 26E 228.1p

Jon's Quick View

Shares down -25% or so this year, on a PER ~7 & a ~5% yield, looks decent value as that yield looks well covered. Although growth has certainly slowed from 40% CAGR to low teens now, still perhaps fits both GARP and Income investors, Panmure target seems quite reasonable to me.

Paul adds: I last looked at YU on 21/1/2025, concluding - “very good numbers, but my worry remains that bumper profits from the energy crisis might not have longevity. Bull case is that competition thinned out.” As Jon says above, the PER, yield, and cash position are all very good. I’m not convinced bumper profits are necessarily sustainable long-term though, so will stick at AMBER.

Major multibagger more recently, but a chequered history prior to that -

(chart courtesy of ShareScope)

---

Boku Inc (BOKU)

Up 5% to 166p (at 09:21) - £517m

What Does It Do

A payment technology company with a global network of localised payment solutions "on the path to becoming the world's best localised payments partner for global commerce"

FY Results (12/2024)

• Rev's +20% to $99.3m (+24% CC), looks like a slight beat

• Operating profit down, at $6.2m ($9.7m) - FX, Share based payments (and share price) cited

• EPS comes in at 1c (3c)

• Boku's Net Cash +10% to $80.2m - Debt free

• 2025 started strongly, expects 20%+ Rev growth & to significantly exceed current consensus expectations with an Adjusted EBITDA margin 30%+

Brokers

No new notes available - But would expect the next one to reflect upgrades, due to the "significantly exceed" mention here and the fact the last broker note had revenue growth of just 13%

Jon's Quick View

EPS is 1c vs 3c LY and Edisons 7c f/c (23-Jan-25 note), only reasons I can find for this miss is mention of potential dilution from share options, RSUs, and warrants, which Edison must surely been aware of!

However the Rev. growth & EBITDA margins look solid here - The Edison note mentioned above has $112.2m Rev. f/c for 2025 so I would expect their next note to reflect upgrades. On an EPS valuation, not for me, on an EV/EBITDA valuation ~20 it's still not for me"

Paul adds - I’ve never properly understood BOKU, nor felt able to assess its future prospects. As Jon points out, the shares look pricey, and rely on it achieving the high forecast growth. Balance sheet looks OK with c.$80m NTAV. Overall BOKU has to be filed in the “don’t know” tray. AMBER.

(chart courtesy of ShareScope)

End of free section.

---