IT and mobile solutions group on the rise

By Graeme Dickson
Updated: 13:56 EDT, 23 March 2011

Keep an eye on one of Europe's top growth companies, in the form of IT and mobile solutions group Globo (GBO) over the next few weeks:

The company should be releasing its preliminary results within the next month (it should be April 20) which may act as a catalyst to push the shares closer towards its house broker Daniel Stewart's ambitious target of 87p.

Globo is building the business to be less dependent from its initial operations of supplying software solutions to banks and providing wifi hotspot operations in its home market of Greece.

Instead it is focusing more towards mobile phone technology in the international markets, with its business model partly centred on doing deals with Mobile Network Operators (MNOs) in particular with focus on revenue sharing agreements.

One of the attractions of Globo's offering is its 'CitronGo!' service which allows consumers for example to access emails, share calendars and mix on social networking websites in pretty much the same way as you can on a Blackberry or iPhone for a fraction of the cost of a typical smartphone.

This is particularly appealing to those in emerging markets, where the cost of say an iPhone or a Blackberry is prohibitively high against low average earnings, let alone the costly monthly fees.

CitronGo, in a recent deal with a South East Asian MNO, charges the end user just Euro 2.7 per month for unlimited data usage of the CitronGO! service, which less the cost of data of 30 cents is split 50/50 with the MNO, earning Globo Euro 1.2 per user per month.

Given that the margins are extremely high, yet the cost of the service is highly appealing to the end user, it seems like a genuine win/win for end-consumer, MNO and Globo alike.

Most recently, Globo launched its GO!Enterprise Server, which enables employees to access company applications, files and emails on any mobile device, across any network and platform, including iPhone, Blackberry, Android, Windows Mobile, Java ME, Symbian and WAP.

Many businesses seem fixed on the type of phone its employees use, particularly Blackberry users. This will allow other employees who use other phones to access business data without possibly having to get the business to pay for a second business phone.

Globo raised £17.5 million in January at 15p a share (Optiva Securities clients also participated in the placing), which wiped off all the debt, saving the company Euro 1.2 million in interest and more importantly not at the mercy of Greek banks, who in turn are at the beck and call of the various credit rating agencies and international money markets.

Daniel Stewart forecast 2.85p a share in earnings for 2011, which at 17.25p, yesterday's closing price, puts the company on a price to earnings ratio of just six times: a tad too cheap in my view for a company with zero debt and bags of potential.

Update

Optare (OPE) – tipped as a buy at 3p, the stock closed yesterday at 3.25p after Greater Manchester awarded a further 22 hybrid buses valued at £4.3 million to an existing contract. Continue to hold.

Rheochem (RHEP) - tipped as a buy at 15.13p the stock closed at 15.25p. Sit tight for now as we await further news regarding Athena and its other 10 exploration licences.

Evolution Group (EVO) – tipped as a buy at 78.5p the stock closed yesterday at 75.5p. Hold on as we await its preliminary results out this Friday.

OMG (OMG) – tipped as a buy at 43.75p, the stock closed yesterday at 40.75p: not ideal and like many stocks that have had a good run, are susceptible to the odd bit of profit taking a we approach the end of the tax year. In the meantime the company is announcing good deal flow that should prop the shares up over this period.

ZincOx (ZOX) – tipped as a buy at 60p, the stock closed at 50.75p. Continue to hold as the company trades at the same level of cash it has in the bank and attributes no value towards its flagship Korean project.

Pendragon (PDG) - tipped as a buy at 23p - it closed at 22.5p. Continue to hold and keep the stop based on a close below 20p.

Cyan Holdings (CYAN) – suggested to buy at 1.325p, the stock closed at 0.95p.Very disappointing but hold for now as we await developments.

GB Group (GBG) – suggested to buy at 36.75p, the stock closed yesterday at 34.375p.Keep the stop based on a close below 32p

SocialGo (SGO) – suggested to buy at 3.55p, the shares have drifted to 2.4p. Very disappointing in the short-term but Bell Pottinger, a leading PR agency, are working closely with SocialGo to get the latter more exposed in the media and other circles.

EMED (EMED) – suggested to buy at 12.25p, the stock closed yesterday at 16.375p. Continue to hold as we await mining permits and the company to reinvigorate its copper concentrator before production starts.

Active Energy (AEG) – suggested to buy at 6.13p, the stock closed yesterday at 2.875p. The stock has been the worst performance to date. Although appalled by the performance, at £3.2 million the company looks over-cooked on the downside, although I have still yet to get in touch with the Active Energy to find out what is happening.

Edenville (EDL) – mentioned as a buy at 1.195p, the stock closed yesterday at 1.38p. Having already suggested to sell one's investment stake out at 2.51p, The Times yesterday mentioned that the company has beaten a rival company in winning another coal asset in Tanzania. Continue to hold.

Weatherly International (WTI) – suggested to buy at 8.1p, the shares closed yesterday at 10.75p. The stock seems to have steadied out after the recent weakness and perhaps will benefit from a rising copper price as investors start to factor in the rebuild in the affected areas of Northern Japan.

Toumaz Holdings (TMZ) – tipped as a buy at 8.625p, the stock closed at 7.125p. The stock is scheduled to release its preliminary results next Tuesday so perhaps this will be the catalyst to rerate the shares?

Renewable Holdings (REH) – tipped as a buy idea at 16.25p, it closed yesterday at 15.5p. The stock may ultimately benefit from the recent detractions of nuclear energy while its discount to its Net Asset Value will appeal to investors looking for a safer haven. Hold for now

Bowleven (BLVN) – tipped as a buy at 177.25p, the stock closed at 326p yesterday. Suggested 12 weeks ago to sell half after an initial 102.8 per cent gain, the balance should be retained as we await further progress from its Sapele-1 drilling campaign, the Etinde permit and its interim results scheduled for this Monday.

Tissue Regenix (TRX) – suggested as a buy at 16p, the stock has picked up from its lows and is now trading at 11.25p. Keep holding as we await trial results from its NHS trials, while its recent European patent application for the preparation of tissue for knee meniscus implantation should help the shares going forward.

The material for this report comes from Sharescope and a meeting with Globo.

The writer does not hold any shares or derivatives in the above mentioned companies except EMED, Globo, SocialGo and Weatherly International.

Some clients of Optiva Securities may hold shares in the above named mentioned companies.