First Global Data (FGD.V) has been covered here before. For previous articles see here and here. Looking back we believed that the bottom was near at $0.40-$0.45 cents. Yes, we were wrong! The correction to $0.195 cents yesterday morning demonstrates an important lesson in filling the gap.
The company went from $0.25 to a $1 in 2 months and took 6 months to get back down to $0.195.
Since our last update, the following developments were announced by the company.
Jun. 12 - Returns to China to advance current initiatives in the works.
Jun. 14 - Signed an agreement with LianLian Pay on the WeChat Platform. Pilot project ("Happy Transfer") will enable users from a US State to send funds to be disbursed to a recipient's bank card/bank account at any bank in China.
Jun. 20 - Launched the LianLian Pay Pilot Project in the State of Illinois with other states to follow in the next 10 days . Working on a full US roll out within the next 120 days. Other updates provided included over 500,000 downloads of VPayqwik app to date.
Jun. 22 - Agreement for deployment of mobile payments in Bangladesh. FGD.V to "White Label" its mobile wallet technology and launch services jointly with Aamra in Bangladesh under the Aamra Pay brand.
Jun. 27 - Announced the launch of FintechUnion with Selectcore' a joint venture (JV) with the purpose of targeting large enterprise client.
Jun. 28 - Launched Artificial Intelligence Unified Chat Interface for mobile payments and received money transfers. Also announced the granting of a money license for the State of Michigan.
Jul. 5 - Letter of Intent (LOI) with AnalytixInsight Inc. (AI) - FGD to "white label" its platform in AI's product. In return, FGD.V to include stock trading AI app on their platform. AI also has access to Samsung and Intesa Sanpaolo (Italy Bank).
Jul. 25 - Secures two new US State licenses (Pennsylvania & Rhode Island) and announced AGM date set for September 21, 2017
Aug. 24 -Announces re-scheduling of AGM (from September 21, 2017, to October 26, 2017). Also secured two additional US State licenses; Tennessee and West Virginia.
Aug. 30 - Announced Earnings for Q2, 2017: Revenue were $ 3.4M USD as compared to Q1, 2017 of US$ 3.29M. Income: Q2 2017 was $ 232K USD vs. as compared to Q1, 2017 of US$ 418K. Capital on hand - not reported but is debt down to $4M.
Sep. 14 - ImpalaPay (Kenya Based) mobile wallet under the brand "Comet" is launched. The addressable market is roughly 50M+ subscribers.
Also, secured three additional US State licenses: Indiana, Wyoming, and Alabama. Reported to have money licenses for 29 US states.
Sep. 18 - Update on Litigation between FGD.V and Fountain; Fountain seeks $8M in damages and FGD.V is countering with $20M.
We have been critical of the way the company uses news release to inform the market. As listed above, the first six releases from (June 12 - July 5) in 4 weeks were unsuccessful at mitigating the sell-off occurring during that period. In fact we believe they had a negative impact on the stock price. We suspect that the market did not support the releases as they were not tied to actual revenue and we too frequent and at times lacking in context.
However, the stock re-surged in the week of August 17 from $0.29 to $0.40 on potential rumors of positive news on earning (speculation) but return to the $0.32 mark. After the earning were released, more sell off occurred to the mid-twenties level. Earnings, seems to be below the market's expectation but we consider them "fair" given that FGD.V is still in the process or just launched multiple initiatives that have yet to be fully monetized.
Monday's release (Sep. 18) drove the stock down to $0.195 yesterday. These legal issues put some selling pressure on the stock price, accentuating the last 6 month trends. As such, we believe the company could have better managed the issue by communicating with shareholders ahead of time and including them in an update especially when the AGM was postponed.
However, despite the recent bearish trend, we continue to be very bullish on FGD.V. According to a recent report by PWC, Emerging Market: Driving the payment transformation, 60% of the "fund transfer & payment" sector is likely to be disrupted within the next five years (see Figure 4, page 8).
FGD,V is well positioned to become a major player. They have an innovative platform which is "white labelled" and have a strong international presence in Canada, USA, India, China Bangladesh, Indonesia among other countries, The company currently has over 14 different partnerships:
1) Vijaya Bank (India)- powers mobile transactions for 12 million potential bank customers.
2) Hidase Telecom (Ethiopia) - powers mobile transactions for 20 million potential users.
3) SelectCore (Canada)- Created a joint venture for Canada (FintechUnion).
4) Aamra (Bangladesh)- Agreement for mobile wallet and ecosystem for 14 potential local banks.
5) eGTCP.com (China)- MOU to provide mobile payment services >15,000 potential vendors.
6) Dill Capital and IBS (Nigeria) - build mobile payment services for 10 million potential users.
7) Zoompass (Canada & USA) - LOI for check processing services and loading mobile wallet.
8) Telkash (Canada, USA, UK, Philippines, Vietnam) - Partner to enable remittance and payment
9) Payability (Canada, USA) - Partner to enable remittance and payment.
10) Mobile Lads (USA) - Partner to enable remittance and payment (FGD,V has 29 US state licenses.
11) LianLian Pay (China) - Co-Branded Cross border remittance (Canada, US, to China) via WeChat.
12) Avenue Payment (India) - Agreement to provide remittance and payment via Avenue Payment.
13) AnalytixInsigth (AI) (Canada) LOI for inclusion of AI product and access to Italy and Samsung.
14) ImpalaPay (Kenya) White Label mobile wallet with addressable market of 50M users launched.
India, especially is not to be underestimated. The move to a cashless society has been initiated earlier in the year and the transformation is ongoing.
In fact, Google India just launched Tez which "lets Android and Apple users send money from their bank accounts or receive it via a simple interface that resembles a chat app and works in seven Indian languages" according to the Wall Street Journal. The WSJ article also reports that: “Google is late on this thing but they can easily scale it up,” said Tarun Pathak, an analyst at research firm Counterpoint.
Moreover, Google reports that it is not charging users or merchants for the service.
Hence, the supports the case for FGD.V is strong. The company is already monetizing the space not only in India but in countries around the world. Below is our forecast for the week. We believe that accumulation roughly in the "Lo 80 confidence interval" as sensible. Hopefully, $0.195 is the bottom.
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