NETeller - NLR - 3.15
Thought i would start a new thread following on from
hawick - new issue looks very special - not to steal the thunder from
hawick but just to highlight the company name to those not already in to this
potential blockbuster.
Those of us who are following NETeller know the background and have been
active with postings,for newcomers i strongly sugest viewing the
( new issue looks very special posting )the content will speak for itself.

Brief overview of NETeller
The company handles online cash transactions across the globe
on 21st oct gained fsa approval to operate as a regulated e-money issuer
and will passport the regulated status to all 25 EU member states
it has over 1 million clients rising by 2000 number each day
1500 online merchants and processed over $1.5 billion in 2003
pre tax profit is estimated to be 29 million to dec 04 rising to
40 million next year
per currently 20 to dec 04 falling to 11.5 which is low for sector
brokers have been raising forcasts on a regular basis
share price has risen over 50% since launch earlier this year
new markets emerging constantly,asia has the potential for supergrowth
online casinos are creating enormous profits
given all this - cash generative - huge market - fsa approval
infastructure in place to handle growth, profits accrue to bottom line
the market force is behind it with good relative strength
all put together it is hard to argue against this has the potential
to be a blockbuster over the year ahead

regards HUSTLER

Another quiet week almost over.








:-)

Still finished on a high though Dil..Jb

Great end of the week for me holding MMG and NLR...and more to come I expect.

Amazing how NLR perks up virtually at the end of every trading day. Anyone got any theories why that is?

Dils valuations????????????????????.

cheers GF.

The Durlacer note we have been given details of......................

For informational purposes only. If you 'aint in .... GET IN.!!!!



Durlacher:
NETeller + Sportingbet 447p
To Poker or not to poker

536.1m Speciality Finance NLR

The decision by Party Poker, the worlds largest on-line poker operator, to seek a UK listing underlines the continued heady growth in the sector. SuperBowl plus a glorious NFL season that saw many of the favourites win, will ensure that Q1 2005 has been a strong quarter.

We recently upgraded our short term price target for NETeller to 500p.

However, positive industry news supports a more aggressive target.

The current rating of just 16.0 PER to December 2005 is in our view, too low for a business that is effectively a low risk, non-site specific geographically diverse way of playing on-line gambling. By the end of the year we would expect the rating to exceed 25PER or a price target of 700p. Even at 700p NETeller would enter the 2006 year on a prospective PER of just 12.7.

Our short term price target is thus raised to 700p and longer term to 1200p.

No doubt UK investors will continue to doubt the rates of growth but they should note simple credit card processing companies in the USA command prospective ratings around 35 times NETeller is cheap by comparison.

Our estimates do not reflect any additional income NETeller can drive from its recent award of a UK e- Money license (such as direct advertising, loans, mortgages or credit cards) from its existing customer base or the significant upside from the long anticipated entry into Asia. We have not reduced our forecast 10% tax charge despite the Isle of Man, their domicile location, announcing taxation falling from 10% to 0%.

Finally, we met Sportingbet yesterday. We were impressed by their market position and clear continued growth. Numbers in the market appear to be too low. Q1 profits of 5m were followed by 15m which will only be complemented by their Q3 which is normally their strongest period. We believe Sportingbets PBT will be around 52m for the year, well above the house forecast. Next year
looks set to show significant growth with forecasts around 80m to 85m looking possible. BUY

cheers GF.

I think you ought to post that Durlacher note once a week Goldfinger just to remind us whats left in this share.

The fact that this has the habit of finishing on an intra day all time high is proof enough to me that the bull run is not yet over.

capa

Yup give us a reminder next monday ..........LOL.

cheers GF.

It's just starting capa.

Ill second that Dil.

cheers GF.

Lifted from advfn and tipped yesterday friday in the share weekly..........

Friday, February 11, 2005


NETeller is up by 46% since 21 January

Since I recommended shares in electronic wallet business, NETeller, at 397.5p in the 21 January issue of TSW the shares have rocketed to 581.5p. Such a sharp rise in a short period of time, coming on top of an earlier strong rise from the April 2004 flotation price of 200p, leaves the shares vulnerable to a reaction on profit-taking. But, even at the higher price, the shares look exciting for long term investors given the rate at which the business is growing and the opportunity to build a large business.

Subsequent to my recommendation of the shares I have been talking to the company to gain a better insight into the business model and the service provided by the company to its customers. In part what is happening is that the company is meeting a need not satisfactorily met by credit cards. In addition, it is able to grow profitably at a spectacular rate because it has the support of the online gaming businesses and enjoys virtually zero customer-acquisition costs. By contrast, the average cost to banks of acquiring a customer in the UK is around 200.


Here's how they do it
NETeller works as follows. Customers for online gaming sites are offered various payment options typically including NETeller. If they choose the NETeller option they have to go through a signing up process which can take around 18 minutes. The company is trying to reduce this time but cannot compromise on its capacity to know its customers and its ability to verify each transaction.

Once the forms are completed the customer needs to put money in his electronic wallet. There are various options, credit cards, BACS transfer and the like, but they all take 2-4 days to put money in the account. The alternative is to opt for Instacash. The e-wallet is loaded immediately with 500 in cash for an eight per cent charge. NETeller has the customers bank details and debits his account with the money. In practice, in 10 per cent of cases, there is insufficient money in the account. The company then terminates these customers effectively using the process as a filtering mechanism to secure the 90 per cent of new customers who do settle their debts. A high proportion of these customers continues to use the Instacash facility generating profits for NETeller.


NETeller makes money in three ways
The company has three ways to make money. There are the charges for Instacash, which generate around 40 per cent of profits. The company also makes a three per cent transaction charge, in line with credit card fees, when it transfers money to merchants. This accounts for around half of profits. A third source of profits is merchants who pay the Instacash charge for their customers in order to win their business. The merchants drive a harder bargain and pay 5.3 per cent for Instacash rather than eight per cent. In total the company makes around 11 cents of profit for each $1 in the system and is hugely profitable with pre tax and interest margins over 60 per cent.

Online gaming companies like NETeller because it pays them with indemnified money. A further advantage is that, unlike with credit cards, winnings can be paid by the merchants into the customers e-wallet where they can again be used for gaming. This creates a multiplier effect on money entering into the NETeller system. The company reckons the multiplier is 1.8 times in North America where the company presently does most of its business. In the UK and Europe the multiplier is higher.

The company has ambitions beyond the gaming market. For example e-wallets are ideal for cross-border peer transactions where both parties have ewallets. The recipient of the cash can then use a NETeller debit card to take out cash from a cash point machine or transfer funds from the e-wallet into a bank account.

Another exciting prospect relates to stock market transactions. These have much in common with betting (too much, some investors might think) and could lend themselves to the e-wallet approach. Trials are being conducted with some small Canadian stock brokers. Ultimately the company has aspirations to become an Internet bank.


International opportunity
An exciting area of potential for the company is international expansion. The barely tapped UK and European markets are around a third the size of the USA and growing fast from a small base. The Holy Grail of growth is Asia where there is a high propensity to gamble and a market 3-5 times the size of the US. Even the Japanese market alone equals the US. The company says there are difficulties with the banking infrastructure and investors should not expect too rapid progress.

Nevertheless NETeller has all the makings of a phenomenal growth story with the customer base growing at over 2000 a day in the fourth quarter even though traditionally the fastest growth comes in the first and third quarters. Already there are over 1.25m customers, or members, for a company that was only launched six years ago. In the last year close to $3bn in funds was transferred and the growth rate is arguably even accelerating.

When co-founder, Steve Lawrence, realised the potential of the business, two and a half years ago, he recruited a heavyweight chief executive, Gord Herman, formerly boss of GE Capital in Canada. Since then growth has been rocket-paced. NETeller may even have the potential to join such star companies as Ebay, Google, Yahoo and Amazon as one of the key heavyweights of Internet commerce.

cheers GF.

This is such an exciting share !! I can hardly believe my luck in finding and actually following my instincts by buying. It could so easily have been a wish I'd bought story. thanks for the info GF. With all your picks doing so well when do you make your first million??

Some more coverage here as well MP.............



mitzy - 12 Feb'05 - 14:30 - 260 of 261


Recieved my Feb edition of Scsw today and they mention they have visited the management of three Biotech companies this month and they will reveal more next month.I'm hoping its MMI's...because they covered them 3 years ago and then dropped coverage of them.
Neteller is the January tip of the month in their portfolio..

cheers GF

From the Fleet Street Letter.......................

...."As evidence of the beauty of its business model just consider these facts: every $1 deposited with NETeller typically brings in $0.11 of revenue and this translates into $0.066 of profit. So for the first quarter of 2004 the company made an impressive daily profit of $92,500.

Its revenue is derived from it taking a cut from each movement of cash that takes place between the merchant and the customer and at present 63% of NETeller's earnings come from its merchant base.

Spectacular margins - and take a look at that growing cash mountain

It enjoys a spectacular gross margin of 69% and with limited additional costs expected during its predicted future growth, much of its new business will be dropping straight through to the bottom line. Profits are expected to hit $51m this year and grow to $67m for 2005.

One thing the company does not suffer from is an ability to generate cash. At the end of June NETeller was sitting on a cash pile of $122m compared with $31m the previous year.

Its rapid growth and cash generation is a result of it successfully growing both its base of customers - they presently stand at 1m and are predicted to double over the next 12 months - and its merchants that now number 1,500. "

cheers GF.

And some more good news from the Times yesterday.........................

Neteller, which has developed an electronic wallet for online gambling, rose 21p to 602p on optimism ahead of US investor presentations.

cheers GF.

A fellow NLR investors overview - very good!

"
Looking through my NETeller folder-I note how sentiment towards this stock has accelerated at an alarming rate recently. Please note my use of the word Alarming should be taken an Bullish! I have an IC note tentatively making NLR a buy at 2.30.
It ends with the following provisos;
BULL POINTS
Rapid growth
Cash-generative and cash-rich
Market leader
Acquisition target for banks

BEAR POINTS
Unpredictable and rapidly evolving market .

Then I see Canaccord Capital Equity Research 9 Sep 2004 stated-
---We are initiating coverage of NETeller with a BUY recommendation and a 437p
target price, which equates to 15 times our F05 EPS and an EV/S of 7.5. Risks
include uncertainty of future regulatory action in the US, revenue concentration from the Internet gaming sector, and improvements in competitive offerings..
NOTE-They have since upgraded in the January 31st 2005 note with a price target of 6.25 target.

Of course the decision by Party Poker, the worlds largest on-line poker operator to seek a UK listing has suddenly set the sector on fire. Estimates are now being upgraded almost daily with a Durlacher note of late January 2005 stating Our short term price target is thus raised to 700p and longer term to 1200p.
Note how sentiment towards this stock has accelerated at an alarming rate!

I became interested in NLR as late as 3 and then was almost bounced out when the founders offloaded all those shares at 2.80. However despite others concerns-I saw this as very bullish and got digging for more shares.
It was probably the announcement that Neteller had been awarded an e-banking licence- which will drive sales, reduce costs and thus lead to even greater profits progress. The e-banking licence will allow Neteller to advertise its services within the UK and, once the pass-porting to all 25 EU countries has been achieved, throughout Europe-that finally threw any doubts, if investors had any, that shares in Neteller were capable of moving substantial higher.

As an investor you have to avoid the daily static and focus, just focus upon the bigger picture. Little surprise then that before NLR burst through the 5 barrier, in January more than a few shrewd fund managers were increasing their weightings here. As reported on CityWire;
Framlington's AAA-rated Roger Whiteoak snapped up 50,000 shares for his Framlington UK Smaller Companies fund . He now holds 423,000 shares in this fund and a further 1.3 million in the Throgmorton investment trust .
His fellow AAA-rated manager Dan Nickols also holds 345,000 shares in the Old Mutual UK Select Smaller Companies unit trust having bought 65,000 shares two weeks ago. Rathbone's A-rated Carl Stick holds 250,000 in the Rathbone Special Situation fund but has not added any since early November.
I say you shouldn`t be surprised if these very same fund managers have been adding. I know I have!

Neteller has already signed up William Hill, Ladbrokes, Victor Chandler, Sportingbet, BetonSports and PartyPoker among its many clients, and now the prospect of non-gaming related revenues are fuelling fire to the imagination.
As Share Weekly pointed out- The company has ambitions beyond the gaming market. For example e-wallets are ideal for cross-border peer transactions where both parties have ewallets. The recipient of the cash can then use a NETeller debit card to take out cash from a cash point machine or transfer funds from the e-wallet into a bank account.
Another exciting prospect relates to stock market transactions. These have much in common with betting (too much, some investors might think) and could lend themselves to the e-wallet approach. Trials are being conducted with some small Canadian stock brokers. Ultimately the company has aspirations to become an Internet bank.
(Now with that last line Internet Bank, could Neteller have thrown a treble six?!)

The trading update last week did not contain details of any Asian expansion and commentators claimed that Netellers statement as Uninspiring. What utter Tosh!
In a pre-close trading update, the company said average daily sign-ups ofnew members grew 94 pct to 2,072 in the three months to Dec 31 2004, noting that growth in new member sign-ups has historically been strongest in the first and third quarters.

Well if that`s uninspiring, keep the lack of inspiration coming lads!

Like I say-as an investor you have to ignore hapless market static and focus-focus-focus. I intending riding all the way with this company-opportunities this good must be used to your every advantage!

As Share Weekly concluded- .When co-founder, Steve Lawrence, realised the potential of the business, two and a half years ago, he recruited a heavyweight chief executive, Gord Herman, formerly boss of GE Capital in Canada. Since then growth has been rocket-paced. NETeller may even have the potential to join such star companies as Ebay, Google, Yahoo and Amazon as one of the key heavyweights of Internet commerce..
"

Cheers,
Stuart

Good post Stuart read with interest..700 by the end of Feb ??Jb

Yes excelent post Stuart, was that from the ample board?.

cheers GF.

Hi GF,

Yes, I've been caught :)

The Ample board has a been very busy on NLR stuff and is where I'm finding most of the additional information. Recently the number of informative posts has increased dramatically - probably in relation to the number of informed people holding!

Not sure exactly what to expect this week from NLR. Still very positive but surely this uptrend can't continue at this rate until company reports!?!?

Cheers,
Stuart

What a great start,, the way this is going ,,700 by the end of the week..