NetComm Wireless Ltd

                NTC Details
 
Agreement with a USA based telecommunications carrier and impressive performance: NetComm Wireless Ltd (ASX: NTC) has surged about 454% year to date (as at November 24, 2015) and is again in the news with the announcement of signing a Master Purchase Agreement with a USA based telecommunications carrier whose name has not been revealed. This is in relation to the supply of NTC’s wireless’ fixed-wireless devices needed to connect households and businesses to a fixed-wireless rural broadband network to be built by said carrier. This also comes under the purview of the company’s growth strategy for regional broadband. Results for FY 2015 were impressive with growth in revenues of 15.1% and in EBITDA of 39.8%. The company has been working for a while with Ericsson and the NBN to deliver Fixed Wireless broadband connectivity to businesses and homes in regional areas where it is impractical to use fibre, copper-based VDSL or cable. Since then, there have been good outcomes on a number of fronts and, as well as being the world’s largest 4G Fixed Wireless regional broadband project, the Ericsson-NBN rollout is also the most successful. According to Ovum report, the new product is technically superior to its peers offering high download allowances and speeds compared to other wireless products. The size of the rollout has been expanded substantially so that volumes increase and this is resulting in strong growth in revenues and earnings. The service has been very well received by end-users and can be considered to be a success story.
 
The Boston Consulting Group estimates the size of the Regional Broadband market at US$ 80 billion and so this represents a tremendous market opportunity for the company. Based on the experience from the Ericsson-NBN project, the company is well positioned to win another Fixed Wireless Regional Broadband tender, this time with a major US carrier, and the outcome is expected shortly around Christmas. The Fixed Wireless Regional Broadband capabilities are important in terms of national connectivity. By the year 2022, the average household would have a range of devices which rely on connectivity so governments all over the world are pushing forward with national connectivity plans for which the company is ready to provide a world leading solution. Fixed Wireless Regional Broadband is an integral part of company strategy for growth and significant investments are already being made which will increase over the next year both in terms of capital and people.
 

M2M Portfolio (Source: Company Reports)
 
Wireless M2M is driving substantial changes throughout the world. It has local teams based in the US, Japan, Europe and the Middle East allowing it to work closely with partners and customers. It engineers Edge devices which are the critical communications component of the overall solution and competition is limited in the targeted areas. Because of its focus on the future, it saw early that the world’s 2G (GSM) networks would transition to 4G and Telstra will decommission its 2G network next year while US carriers such as Verizon and AT&T will follow suit. Because of this, the company estimates that 80% of M2M devices will need to be upgraded and this represents a great opportunity because the company is already delivering 4G M2M devices to customers where large-scale shifts are in the process of taking place.
 
We believe that the company’s technical capabilities and its record of innovation make it well suited to take advantage of the forthcoming growth and development in the wireless world. We recommend a buy for the stock at the current price of $3.49
 
 
NTC Daily Chart (Source: Thomson Reuters)
 

Mobile Embrace Ltd

           MBE Details
 
Future prospects and Litigation Update: Mobile Embrace Ltd has surged about 75% year to date (as at November 25, 2015). The company perceives that coping with the rapid shift to mobile seems to be the challenge for global business. Global direct carrier billing is estimated to grow from $ 14.5 billion in 2014 to an anticipated $ 24.7 billion by 2019. Customer conversion is 1X for credit cards but 6X for carrier billing. App downloads which were 102 billion in 2014 are expected to reach 269 billion by the year 2019. Online sales on mobile are expected to outstrip sales on desktops by 2018 as mobile usage is expected to grow from 85 times a day on check phone to 5 hours per day on mobile Internet and apps. Internet access for mobiles is expected to touch 2 billion versus 1.8 billion for desktops. This company expects to take advantage by delivering an easy and seamless customer engagement and transaction experience on any mobile device enabling it and its partners to reach and acquire customers on a large scale. Typically, the company earns revenues from business partners and customers. Business partners may be businesses who want to reach high volumes of customers on any mobile device and mobile operators looking to increase their average revenue per user (ARPU). The company has built a unique world-class integrated digital marketing and direct carrier billing infrastructure.
 

Highlights FY15/16 (Source: Company Reports)
 
MBE’s revenue in the first half of FY 2015 was $ 14.1 million and is forecast to be in excess of $ 27 million for the first half of FY 2016 (~92% up). Underlying EBITDA is expected to touch $ 7.5 million by the first half of FY 2016 and reported EBITDA should exceed $ 3.5 million by that year compared to $ 1.7 million for the first half of FY 2015 (i.e., 105% surge).
 

Revenue Growth (Source: Company Reports)
 
The company has devised a three year strategy for its business. In direct carrier billing, it will launch in addressable markets in south-east Asia, Europe and other target markets with a size of more than 1 billion with a simple seamless customer engagement and transaction experience. In terms of marketing channels, it will increase ownership and diversity expanding customer reach and scale. In terms of performance marketing, it will launch into new markets to target, measure and grow large customer databases. Finally in terms of technology, it will enhance technology assets to further strengthen its competitive position. A new proprietary billing platform will accelerate carrier integration from eight weeks to a few days, scale rapidly with increased speed, increased commercial robustness and quality assurance.
 
With regards to the litigation update by MBE, the claim by GBD has been reduced to $3,500,000 from $4,000,000, however, MBE on the other hand is trying to defend the claim. We believe that the company has established a strong leadership position and competitive edge in the still infant mobile advertising and payments business and the business is expected to grow strongly in the short-term future. As such, we believe that the company has great prospects and recommend a speculative buy on the stock at the current price of $0.375
 
 
MBE Daily Chart (Source: Thomson Reuters)

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2014 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.