Newsphone Hellas SA – HY 2016

ATH:NEWS – 0,22 EUR

1kr50öreNewsphone Hellas SA is a Greece-based company engaged in the telecommunications industry. The Company offers three ranges of services: Value Added (VAS), E-government and Thematic Portals. VAS are targeted to end users and businesses, and are divided into four segments: Interactive Media, offering interactive services to special client categories, such as mass media, consumer products companies, and mobile telephony companies; Mobile Marketing, which designs and implements mobile marketing programs, such as games and quizzes, for companies in different sectors; Informative, which offers live, recorded, Internet and teletext message information services, and Entertainment, which develops a range of entertainment services for mobile phones, such as ringtones, real tones, and Java games. E-government includes the development of online information services for the Greek state to the citizens. Thematic Portals includes the national directory assistance service 11880 and vertical portals. – Financial Times

1. Adequate margin of safety (criterion a) or b) must be met): 

a)

  • P/NCAV < 1x
    • 0,40x 

&

  • EV/Operating earnings(5y&10y) < 3x
    • 5y =  2,0x 
    • 10y = 1,3x 

b)

  • P/NCAV < 0,76x
    • 0,40x 
  • NCAV-burn rate  > -25 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 = +10,6 %
    • Qx – Qx-1 = +2,3 % 

2. The risk of permanent loss is low:

2.1 The risk of bankruptcy is low (criterion a) or b) must be met):

a)

  • Debt/Equity < 25 %
    • 12 % 

b)

  • Z-score ≥ 3
    • 1,6 X

&

  • Debt/Equity < 50 %
    • 12 % 

2.2 The company’s business model is not totally unprofitable (criterion a) or b) must be met):

a)

  • Positive retained earnings:
    • 10,2 M€ 

b)

  • Positive aggregate operating income for the last ten years:
    •  51,5 M€ 

3. The risk of share dilution is low (criterion a) or b) must be met):

a)

  • Share dilution < 2 % for Qx – Qx-4 and Qx – Qx-1
    • Qx – Qx-4 = 0 % 
    • Qx – Qx-1 = 0 % 

b)

  • The company has net repurchased shares during the last ten years:
    • NEWS has net repurchased shares during the last ten years. 

4. The risk of fraud is low (overall assessment on the basis of the answers below):

  • Today’s management has not historically been linked to fraud:
    • I have not found any historical indications of fraud from NEWS current management.  
  • The company is not mainly Chinese (business and/or majority shareholder):
    •  Greek company and shareholders. 
  • Company data exist for the last ten years:
    • Yes. 
  • The company has repeatedly allocated capital to shareholders (dividends and/or share buybacks):
    • NEWS has continuously paid a dividend for the last ten years. I haven’t checked further back in time. 
  • The CEO and/or insiders have ownership incentives (worth of shareholding / salary + bonus > 3x)
    • = N/A, I haven’t found the figures for CEO/insiders salary + bonus. X

Other notes:

MoS

Disclosure: The author is long ATH:NEWS when this analysis is published.

3 thoughts on “Newsphone Hellas SA – HY 2016

  1. Great find! Somehow this company did not show up in my screen. I ran Greece last week. Odd…

    Have a look at this guy, he does net-nets, mainly in the service sector:

    There is an hour long interview of him on the Manual of Ideas podcast, that might give you some ideas.

    Like

    1. Thanks 26!
      Jeroen is a big inspiration for us net-net investors 🙂 You want to read his book: Deep Value Investing: Finding Bargain Shares with Big Potential. I truly recommend it!

      Like

  2. A, you knew him. That is awesome! Thanks mate for the tip. I ordered it when I started digging deep into net-nets after reading your blog and the tweedy browne paper . Now I am even more excited. It will take until the end of the month to get here (Australia). Looking forward. Cheers mate!

    Like

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