Company presentations don’t normally take place in glitzy West End night clubs.
Other Small cap news...
Roxi strikes more oil
Roxi strikes more oil
- Small cap oil explorer, Roxi Petroleum (ticker: RXP), has announced that its NK22 well has encountered 12.8m of net oil pay. The well was drilled to a total depth of 2840m to evaluate Middle Jurassic potential on the block.
- This is the sixth consecutive oil well drilled by Roxi in the past 14 months.
- Roxi’s chief executive, David Wilkes, said the oil appeared to be a satellite accumulation to the North-West Konys field at Galaz. He said output to the field could be added to pilot production from the contract, expected in the second quarter of this year.
- To discover my top penny share oil pick, click here: What could 11 billion barrels of oil do for investors in this unnoticed tiddler?
But recently I attended one interesting product launch. And the company behind it chose to meet analysts in one such club.
Picture the scene. Flashing lights, fizzy drinks, pony-tailed waiters and cutesy little canapés. And amongst it all, the top brass from penny share hopeful, Synchronica (ticker: SYNC). It provides messaging software for mobile operators.
The men at the top were there to sell their story… and hopefully excite investors about their company’s new product.
Not knowing much about Synchonica, I asked chief financial officer Angus Dent how the company had served its investors over the years.
This was an embarrassing question as it turned out.
Its share price has fallen from over £5 in 2005 to just 3p today. But long-suffering shareholders take note. You can now pin your hopes on Synchronica’s new MessagePhone.
This handset is just $99. It’s designed by Synchronica but made by Korean partner KC Mobile and distributed worldwide by the giant Brightstar. The target is the emerging markets. This is where the growth is.
African and Latin American countries have little in the way of a fixed line telephone network and PC penetration is low as well. So they can jump straight into the world of mobile communications and are fast in doing so. Western markets are now saturated, with everybody who wants a mobile having one if not two or three. But the same is not the case in emerging markets…
To take Africa as an example, industry consultant Informa, expects the number of handset sales to increase from 100m in 2009 to 147m in 2014. Synchronica reckons that the MessagePhone can take a slice of this.
It’s all about the price
According to founder and chief executive Carsten Brinkschulte, what matters is price and functionality. Although the MessagePhone will be sold in local currencies, the sub-$100 price point is clearly important.
As Brinkschulte pointed out, emerging market consumers will not pay a month’s salary for a mobile phone. But at $99 this should be within reach at least of business users and professionals. And he expects them to buy the MessagePhone.
You see, it’s more than just a good basic phone and camera. MessagePhone also offers instant messaging, access to e-mail, access to the internet via a web browser and access to social networks.
It can display video clips, has a talk time of five and a half hours. Its battery stand-by time is seventeen days. All this comes in a palm-sized device, complete with screen and keyboard, and fast access to email.
It is an impressive piece of kit for just $99, and Synchronica expects it to be popular with mobile operators. They are faced with declining revenues from voice calls and ‘churn’ from one provider to another.
This is a particular problem in Africa. By placing their own name on the device and by offering value-added services, the mobile operators could win the battle for ‘ownership’ of the user.
The gap in the market for Synchronica
Thanks to low PC penetration across Africa and Latin America, Informa agrees that there is a gap in the market. One ‘from which mobile operators can benefit as mobile internet is poised to become the main internet connection of the future’.
The question for investors, though, is whether Synchronica will make much money out of it.
At $99 there cannot be a huge amount of profit in it. And for sure Synchonica is not the only company to be homing in on emerging markets. In an independent analysis of the MessagePhone, Informa compares it with similar products from industry giants Alcatel, LG, Motorola, and RIM. But these come in at $133-$158 and do not have the same ability to receive streamed videos as the MessagePhone.
So based on this market opportunity and the very competitive price of the MessagePhone, Informa describes Synchronica as ‘well positioned’. Analysts are predicting a rapid escalation of revenues and profits.
But this is a tough area, and Synchronica may not stay ahead of the game for long. As Informa notes, Nokia is in the midst of launching a portfolio of handsets in Africa. Also ‘Samsung has plans to challenge hard in Africa.’
Synchronica is a small fish in a pond full of sharks. But, frankly, having got this far Synchronica’s shareholders now have little left to lose.
It’s an interesting story and one that I’m happy to stick on my watch list. But I’d certainly need to look a little deeper at the numbers before jumping into this one.
Right now, there are far more exciting share stories for me. And none more so than the “abandoned oil” play I told you about yesterday. If you already receive my Red Hot Penny Shares letter, you already know all about this company. And I wrote about it in Penny Sleuth yesterday and this morning.
If you missed that, you can read all about it here. It’s an incredible story… and one that could make you substantial returns. As you’ll see, a gain of 2,044% is not beyond possibility.
Sound attractive? Then you should take a look at this “Abandoned Oil” share now
Red Hot Penny Shares is a regulated product issued by Fleet Street Publications ltd. Forecasts are not a reliable indicator of future results. Commissions, fees and other charges can reduce returns from investments. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Penny shares can be relatively illiquid and hard to trade. There can be a large bid/offer spread so if you need to sell soon after you’ve bought, you might get less back than you paid. This can make them riskier than other investments. Please seek advice if necessary. 0207 633 3600.
Good investing,
Tom Bulford
For The Penny Sleuth
P.S. This stock is going for pennies right now. And the MASSIVE potential still hasn’t been priced into the stock. But don’t expect that to last. When the market wakes up to this brilliant opportunity, I expect the value to make a giant leap upwards.
Get in before that happens and you’ll be looking at one of the biggest profit plays of your life.
Click here for your exclusive ‘Abandoned Oil’ report.
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