IT BYTES BACK! says: Is Fusionex a Brexit Casualty?

 The world especially Europe is watching the UK general elections much more closely this time. Barely 10 days after these elections, the first formal Brexit negotiations is set to take place.

Since Brexit was voted in, the British pound sterling has slumped 18-percent. The UK’s Financial Times reported that UK-focused mutual and exchange traded funds suffered outflows of £668 million, taking the year’s cumulative withdrawals from the UK to £1.6 billion.

Investors are said to be nervous about the impending elections and what is predicted to be painful exit negotiations in the upcoming weeks.

In 2016, 38 companies raised an average of £30m on the Alternative Investment Market (AIM). Ninety-percent of those listings took place before the June Brexit vote.

According to the London Stock Exchange, 107 companies left AIM in 2016, bringing the number of firms listed on the Junior market below 1,000 for the first time since 2003.

So it is not surprising that Fusionex International PLC had announced its delisting intentions some weeks back. However, in order for a company to delist from AIMS, it will need to obtain at least 75-percent of shareholder votes.

Headquartered in Malaysia, the company floated its IPO on AIM in December 2012 at 150 pence a share. By May 26 2013, the share was trading at 350 pence and remained in the same range till the beginning of 2016.

Throughout 2016 its shares dropped to 129 pence, prompting the company to seek a way out. Following the company’s announcement to delist and a series of resignations, the company’s shares further dropped until its present price of 39 pence.

The reaction to the news of delisting seems startling given that the company has continued to post record growth and wins. In 2016, Fusionex revenue grew 23-percent to £17.6 million, while gross profit rose 26-percent to £13.8 million. The company’s net operating cashflow grew to more than 50-percent to £3.3 million in 2016. Despite this growth, the stock price has remained largely flat in the past 15 months. As at H1 2016, the company has enjoyed a record 79 big data analytics wins, globally.

Gartner Inc. rated Fusionex as a “vendor of interest” in Gartner’s 2016 Magic Quadrant report. Its flagship big data platform, called Giant, won marquee customers, including Intel, the Sands Group, Japan’s Brother Industries, GroupM, Jones Lang Lasalle, UEM Sunrise, MediaPrima, AirAsia, the Singapore Ports Authority, China Light & Power, and Yeo’s Foods & Beverages.

Despite the market’s reaction, business seems as usual at Fusionex. On June 1, the company launched its latest upgrade to its highly successful big data platform – GIANT 2017, with voice-activated command capabilities, making it probably the first in the world to deploy NLP (natural language processing) using voice commands.

Eight companies who were part of the pilot programme have already signed up to continue using GIANT 2017. Yet despite all this Des, the stock remains undervalued, which makes us wonder what more does a company need to do to instil trust? How do we make their shares great again?

Fusionex’s EGM on the delisting is set to happen on June 15, just less than a week away.

While the CEO and the Board of Directors hold 41.93 percent of votes, unless they get 33-percent of remaining shareholders votes, Fusionex will remain on AIM.

IT BYTES BACK! says: Perhaps we should be less quick to judge delisting exercises but look at all angles with analytical eyes.