Australia's largest stock trading and investment forum Australia's #1 stock forum

XSO

Click for more information

0.08%

3,201.7 s&p/asx small ordinaries

The Brains Trust - 2016, page-13953

First 13953 Last

Share
Profile

Follow
Galba

2,342 Posts.

39

01/12/16

14:01

Post #: 21029276
Share

Originally posted by Orwell ↑

MKB – Moko Social Media. Current SP $0.004. Market Cap $6.6m

I went to their AGM yesterday (very worthwhile to do for those that don’t normally attend these). This is a company that’s worth a bit of discussion here. I assume a few are still involved as it was a Pisces pick around 15months ago although he suggested a while back he’s no longer involved.

The story is that they had a high-spending entrepreneurial CEO who burnt huge amounts of capital and goodwill chasing too many pie-in-the-sky business ideas with bad execution. But amongst all the rubbish was a piece of gold in their US College recreational sports app. Over the past year an impressive turnaround strategy has been in place, I assume driven by some major shareholders.

They are now a focused business in the US college sector and their core mobile platform is finally getting traction. It’s not some rubbish NOR or TV2 no-hope tech but a serious platform with a dominant position in one of the most attractive sectors there is for marketers and/or a good buy out opportunity for big US businesses trying to access the college space. The CEO and Board have entirely changed with now highly committed management and strategic focus strongly aligned to getting some shareholder value out of this. Cost have been stripped out, the company accounts cleaned up with goodwill writedowns etc, executive and Board remuneration is modest and low. The Board all got big option packages signed off at the AGM with strikes of $0.0125, three times current price before they are in the money so they are incentivised. Basically all tidied up and ready for sale or a strategic partner to step in.

Although there is inherent value in their product, they burnt all their capital under previous management and now need a major partner to come in or takeover for someone to monetise the platform and capture this value. They have been out in the market shopping themselves around since January, with big potential players in this sector that could swallow this out of petty cash. At the AGM in answer to questions from the floor the Chair said they couldn’t disclose commercial discussions, but seemed to suggest active dialogue at least. With Xmas here I assume first quarter next year before any possible deal could be announced.

In the meantime, they continue to cut costs down so must almost be approaching a shell type company but with a handful of staff and a key asset. They’re basically treading water, trying to survive on current funds long enough for some corporate transaction to take place. A Xmas break means cash would be getting very tight for them.

In my view these guys will get taken over, or they’ll be forced to raise some cash to buy time and then they get taken over. Either way given the share price for new holders, as long they can raise and stay solvent, then some dilution if it occurs isn’t going to be an issue, as it would have to be at current price anyway or not worthwhile doing, and the company will be trying hard to avoid it. But upside if any deal comes through should be a good few bags from here.

Don’t do what I’ve done and back the truck up, but a very interesting opportunity to review for a spec buy with some punting money. It’s not for pip trading, but position trading on a 4month view to end of next quarter and see how things unfold.

The TA chart position is excellent. I will post separately on that.

Expand

Great information to share there Orwell. There are just so many players that are trading udnerwater in what I see as this early adopter mobile tech play. There's obviously MBE, CM8 and to a lesser extent IVO, hey maybe there's a few more I can metion, NET, VPC, RFN, 1PG etc etc. They all seem to be undervalued on the surface, or have majorly burnt people on the way down, or racked up the excessive salaries. What they don't have and I'm sorry if I've lumped MKB into the lot, is a re-rate event or a white knight to come in and change the outlook.

Anyway I've probably digressed a little. There's just such a gap between the ones that are attracting a lot of attention (IAM, CR8) and the one's that aren't (already mentioned)

I might try and put a techy list together over the quieter holidays period if I feel motivated. Good food for thought though
9 Upvote

0 Great analysis

Reply

Top Stories

Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump's Bessent tied to Dem donor

HotCopper Highlights: Your most watched stocks for Week 48, 2024

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

There are more pages in this discussion • 605 more messages in this thread...

First 13953 Last

Add XSO (ASX) to my watchlist