AIM-listed SyQic has good programmes



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When the markets are riding high, familiar concerns regarding a potential overheating inevitably resurface. While caution as ever certainly needs to be applied, the ongoing low-inflation, low-interest rate environment may yet provide further solid support for equities.

Although many investors will continue to be on the lookout for some decent income from relatively high yielders, so too will growth remain on the agenda, which can also, under the right circumstances, include some stocks at the more speculative end.

One company which has caught my eye and which appears to be in a spot that may deliver tangible results is AIM-listed SyQic, a fast growing business operating in live TV and on-demand video content across mobile and internet devices.

Even though its headquarters are located here in the UK in Buckinghamshire, the company’s revenues are derived away from these shores, with Asia, Europe and South America providing the £4.7 million of sales delivered in its last reported full-year results.

SyQic boasts three distinct and complementary products, the jazzily-named Cool2vu, Yoonic and Yoomob.

Cool2vu is a wholly-owned and operated video streaming website offering on-demand Korean themed entertainment TV shows along with movies and news, which was launched across south east Asia as recently as January of this year.

Available in seven different languages and targeting a customer base of 3.1 billion people, it is set to include a subscription service to support the current advertising-driven model.

Yoonic is a powerful mobile video streaming platform developed in-house by the company which boasts a catalogue of licensed content of more than 20,000 titles, providing access to about 70 live channels.

Last but not least is a third aspect of the business in the shape of Yoomob, which is described as a telco-oriented solution that has been developed to assist the requirement for video streaming services to play videos at the most optimal level of data delivery, retaining a top-quality performance.

Given the vast markets and space it is operating in and the potential for wider adoption of its products and services, the company would appear to be very well placed for substantial growth over the coming years.

In September SyQic delivered its interim results, which actually made for impressive reading, as revenues of £4.6 million were delivered, almost equalling the total for full year 2013.

Importantly, pre-tax profits jumped from just £35,000 to £960,000, which led broker Allenby Capital to pencil in a full-year 2014 figure of £1.86 million and EPS of 7.4.

That suggests SyQic possesses all the hallmarks of an exciting growth prospect, which under the usual circumstances would invariably see such a stock trading on a pretty punchy PER. Not so this company, where at the current 49p the forward PER stands at under 7, which looks incredibly good value in comparison with peers and the wider sector.

Indeed, the same broker, at the time of the interim results, was looking for a further hike in revenues for full year 2015 of £14.6 million, with £3.9 million pre-tax profit and EPS of a thumping 14.3p.

Such apparent value is seldom discounted to that extent and if it is, there are usually sound reasons as to why investors may be taking a more cautious approach.

One reason for some unease here has been the regions in which it operates, where regulations have previously presented a possible negative impact, although those have largely dissipated.

Perhaps of more concern in terms of investment confidence have been some worrying issues over the company’s receivables balance, where outstanding monies looked on the high side and were potentially long running.

That situation has, however, seemingly improved with outstanding numbers not only being reduced, but the company stating that invoices were being paid on schedule.

The problem has been compounded by SyQic’s heavy reliance for some 60% of its business from Indonesian customer PTNP, which had proved to be a particularly slow payer.

Although clearly a difficult situation to grapple with and to pacify investors, SyQic has to a degree recently de-risked this element, having earlier this year announced an agreement with GlobeTel relating to the launch of a streaming service to Filipinos in the UK. This follows an announcement made at the end of last year relating to the launch of a similar offering in Myanmar along with a new gaming channel.

More latterly, the company has announced further service agreements including an extended contract with Singapore based Viki for the launch of SyQic’s Cool2VU platform across Europe, South America and Central America.

And just last week, further positive news was forthcoming when the company received an offer for a £3 million working capital facility to support growth which was also boosted by SyQic revealing that its cash position had also improved following payments received from telecom partners.

Although the speculative tag as yet remains, the company appears to be making the right deals, capitalising on growth prospects, widening its client base thus positioning itself to de-risk the business as it moves ahead.

The preliminary results are due out next month and no doubt more detail will emerge of both current trading and prospects across all fronts.

The market cap at today’s price stands at just £13 million, which given the growth rate and opportunities ahead despite the speculative element may be worth keeping a close eye on.