FINDI (FND) Indian ATM and Fintech business

[Joshuatree]

Sure has created uncertainty about the final approval being given.That prior announcement now feels a bit cart before the horse and premature.Holders have had a near perfect run up till now👍.

[Sideshow Bob]

Expect the worst, hope for the best........

[Rawz]

If it was bad then why would you need such a long trading halt..? its not like they have provided guidance relying on the license and need time to backtrack it and recalculate?
If it was declined you would think they would say it, flush the dunny then move on.. no need to wait so long.

I wonder if it is an announcement confirming the license is granted and an acquisition at the same time? This is something they have spoken about in the past. The balance sheet is ready for it. This could be the reason for the long halt..?

Just thinking out loud. Ive got a lot riding on this lol.

[Sideshow Bob]

I see more of the Hot Copper team reckon its positive rather than negative........some guy over there mentioned $6.50.....!!

I'm just naturally pessimistic.

[Rawz]

I see more of the Hot Copper team reckon its positive rather than negative........some guy over there mentioned $6.50.....!!

I'm just naturally pessimistic.

$6.50!! that guy is crazy

[Sideshow Bob]

$6.50!! that guy is crazy

Completely crazy, but hope for his sake he is right!!

[Sideshow Bob]

Nothing through before opening this morning.

If bad news then think they would have ripped the scab off......??

[Rawz]

Nothing through before opening this morning.

If bad news then think they would have ripped the scab off......??

Yes you would have thought so aye.. like no need for such a long halt if its a decline. Leaning towards positive announcement.

[Sideshow Bob]

Yes you would have thought so aye.. like no need for such a long halt if its a decline. Leaning towards positive announcement.

What's that guy saying on HC today....?? Probably saying the same thing???

[Rawz]

From DMX. DMXCP_March_2024_Investor_update.pdf (mcusercontent.com)

Findi (ASX:FND)

FND has experienced a significant re-rate in recent months, with its share price moving from ~50c in October last year,to trade above $3 during March. When we first invested in FND in early 2022 via underwriting a capital raise, it had a market cap of less than $5m, and was seeking capital to fund the buyout of the 75% of its Indian ATM and fintech business that it didn’t currently own. At the time, the stock was very much under the radar and misunderstood, and, as a result, in our view, was fundamentally mispriced relative to its potential future earnings profile, offering significant upside.

In our December blog article we discussed the FND opportunity and our $3 valuation target: Findi - A potential multi-bagger - DMXAM. During March, FND’s market cap reached $150m, while liquidity has gone from non-existent two years ago, to $1m+ of stock trading daily over recent weeks. We have been selling into this increased liquidity over recent weeks as our price targets were met.

While our thinking around FND’s expectations and valuation hasn’t changed much from how we viewed the FNDopportunity two years ago, the passing of time has allowed new investors to get more confident with management and execution, which has been strong over the past two years. While various operational and regulatory risks remain, as highlighted in the table below, FND’s ~20% revenue growth, and operating leverage, over the past two years has led to strong growth in EBITDA from ~$6m to ~$24m. FND’s balance sheet has also strengthened and we expect FND to finish its financial year with ~$30m net cash, following the recent option conversion.

We believe FND to be a good example of what we are trying to achieve and highlights the opportunities available to usin supporting mispriced, under the radar companies with attractive fundamentals, that are currently being ignored by the market because they are too small, illiquid and out of favour to generate market interest.

The last couple of years has been a difficult environment for this strategy. Certainly, execution issues amongst some of our portfolio companies hasn’t helped, but in this risk-off environment a significant challenge has been just the lack of investor interest and liquidity to generate new buying to clear the overhang of sellers in order to drive multiple re-rates and sentiment changes amongst small stocks.

Across the portfolio, we own various other companies that share similar characteristics to FND when it was very much under the radar: profitable, very low market cap, tight illiquid share register, unloved, ignored and in-efficiently priced by the market, but with the ability to capture market interest to drive a strong re-rate at some point. In recent updates we have talked about a number of portfolio companies that have been beaten down by the market to very low EVs that now offer substantial upside on the back of improving execution and sentiment from low bases. With more supportivemarket conditions, we are hopeful of more of these types of opportunities playing out.