BULL POINTS:
■ Robust demand for mobile banking technology
■ Well placed to exploit developing markets
■ Big cash pile
■ Shares aren't demandingly rated compared with peers
BEAR POINTS:
■ Profits unlikely until 2013
■ More fund raisings possible
It wasn't long ago that paying bills or transferring cash would have meant joining long queues in a bank. These days such things are often done online but, in future, it looks increasingly like mobile phones will be the medium for such activities - and that's where specialist telecoms player Monitise comes in. Demerged from software group Morse in 2007 and floated on Aim, Monitise's Mobile Money Manager product allows bank customers to check account balances, get overdraft alerts, and even make payments through their mobiles.
| IC TIP RATING: | |
|---|---|
| Tip style: | Speculative |
| Risk rating: | High |
| Timescale: | Long-term |
Monitise is certainly progressing fast. The company has already signed agreements with cash machine specialist Link, as well as Bacs, which manages payments between bank accounts. What is more, Monitise has signed-up most of the major UK and US mobile network operators, almost every UK high street bank and about 230 financial institutions in America - including credit card giant Visa. Future growth opportunities look impressive, too. At present, there's about 4bn mobile phone users worldwide but, in 2008, only 20m were using mobile banking. However, according to financial technology consultancy, Finextra.com, that's set to grow to 913m by 2014.
That growth is helped by ease of access to the product. Customers sign-up for mobile banking with their branch and get a free phone application, making it a simple process. Crucially, Monitise takes a fee for each sign-up. All major handset makes are compatible, too, and Monitise signed-up its two millionth user in April this year, with sign-ups running at about 100,000 per month.
| ORD PRICE: | 18p | MARKET VALUE: | £97m | |
| TOUCH: | 18-19p | 12M HIGH / LOW: | 25p | 6p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 1.6p | NET CASH: | £9.5m** | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 0.47 | -8.68 | -3.80 | nil |
| 2008 | 1.49 | -14.0 | -5.50 | nil |
| 2009 | 2.66 | -13.1 | -4.00 | nil |
| 2010* | 6.70 | -13.3 | -2.88 | nil |
| 2011* | 16.0 | -10.2 | -1.88 | nil |
| % change | +139 | - | - | - |
NMS:20,000 MARKET MAKERS:6 BETA:0.13 *Piper Jaffray estimates **Excludes fund raisings of £15.8m during 2010's first quarter | ||||
Such rapid progress in the UK and US means Monitise is now eying ambitious expansion in the developing world as well. Microfinance specialist, CGAP, reckons more than 1bn people in the developing world have access to mobile phones and that one in five is likely to access their money through a mobile in the future. It's an enormous opportunity for a company in this space and Monitise looks well placed to exploit it. In fact, joint ventures mean that the group is already strongly positioned in parts of east and west Africa and the Middle East, while, in May, it launched a joint venture with Visa in India. And the group is already moving into parts of Asia-Pacific.
True, it's still relatively early days for Monitise - the group is eating through about £10m-£11m in cash per year and isn't forecast to come to close to making profits until 2013. What's more - and even after bringing its cash pile up to a healthy looking £25m after raising £15.8m earlier this year from shareholders - such a cash-hungry business could leave investors being tapped for more cash in the near future.
