More and more of us are using our phones to log on to the internet. Businesses, unsurprisingly, are keen to profit from this trend and one way is to market goods and services via handhelds. To be sure, traditional media – TV, radio, newspapers – continues to command the lion's share of global advertising and marketing budgets, but companies are quickly waking up to the benefits of pushing their wares through phones and other mobile devices.
The forecasters at ABI Research, for instance, expect mobile marketing and advertising spending to swell from about $1.6bn in 2007 to nearly $29bn in 2014. Global mobile entertainment revenues, music, games and videos are also forecast to show strong growth, with ABI expecting them to rise from under $30bn last year to above $47bn by 2013. Of that, video services are expected to command 38 per cent of total revenues.
This is where Athens-based InternetQ comes in. This morning, the internet marketing company will unveil plans to list on the Alternative Investment Market (Aim). Over the past few years, InternetQ has invested about €15m on its technology platform, which gives its customers access to mobile subscribers, a valuable avenue to promote their businesses on smartphones. The company focuses on Poland, Turkey, Brazil, Russia and other CIS economies. This year, it also entered the fast-growing South African market and made forays in the Middle East.
It is cash-flow positive and last year generated €1.2m in earnings before interest, tax, depreciation and amortisation on revenues of €17.2m. The company's customer base features telecoms groups and media companies, and include the likes of Vodafone, Orange, Sony Ericsson and the MTV Network.
With the listing, InternetQ is seeking to raise between £10m and £12m and is aiming for a market capitalisation of about £40m to £45m. The chief executive, Konstantinos Korletis, said going public was the next step for the business. "The rapid adoption of smartphones and [the] potential to penetrate emerging markets is an exciting stage of development, and I am confident we can generate value for shareholders," he added.
Quarto publishes upbeat update
The specialist publishing group Quarto, which issued a quarterly update near the end of last month, has had a good run since the beginning of last year.
In fact, if you'd bought in at the end of 2008 (not too long after the Lehman Brothers bankruptcy) you would have more than doubled your money by now. Such a performance understandably prompts questions about whether it is worth buying in at this stage, particularly in light of what remains an uncertain macroeconomic outlook.
Edison Investment Research is minded to side with the bulls. Its analysts reckon that, despite the gains in recent months, Quarto remains undervalued and saddled, they claim, with a "miserly" valuation. The label certainly has some merit, as Quarto trades on multiples of about five times forward earnings. This is despite a forecast yield of 5.6 per cent. Why? Edison pins the rating on debt. The publishing group's net borrowings stood at just under £58m at the end of June, and the company has a market capitalisation of about £27m. The stock market, Edison argues, looks at figures such as these and "draws its own conclusions".
Fiona Orford-Williams, an analyst at Edison, argued in a recent circular: "The group has considerable headroom in its banking facilities (which run to 2012-14) and the focus on improving working capital ratios is easing the covenants." She added that the recent update also pointed to further improvement in the company's net debt position despite heavier investment in new titles.
US ethanol policy drives GTL ahead
Investors in the ethanol producer GTL Resources must be all smiles. A few weeks ago, the US government approved a 50 per cent rise in the amount of ethanol in petrol for newer cars. The green light means producers can raise the amount of ethanol in a gallon of petrol for cars made in 2007 or later to 15 per cent from 10 per cent. Industry groups are also expecting the US Environmental Protection Agency to approve a request for a similar rise for petrol used to power older cars produced between 2001 to 2006. That would be a major shot in the arm for producers, because about two thirds of cars on American roads fall in that group.
All this is clearly positive for companies such as GTL, which is due to publish its half-yearly results this month. Investors familiar with this sector will know that a variety of factors, including corn prices and the ups and downs of the commodity markets, can colour ethanol prices – and thus the performance of producers – in the medium to long term. But in the short term, AIM-listed GTL looks all set to draw strength from changes in US policy.