Miton UK MicroCap Trust plc (LON:MINI) Co-Fund Manager Gervais Williams was asked his view on one of the investments in the Trust, Aferian plc (LON:AFRN) in a recent wide ranging interview.
DirectorsTalk asked: Looking at the world of media tech, Aferian is right at the heart of capitalising on the shift into streaming and Pay TV markets. Streaming as a service is expected to double over the next four years and they’ve developed a highly successful SaaS-based software solution. Is this the kind of company you’d like to find that is in a growth market and can build scale?
Gervais Williams commented:
“Absolutely. Aferian’s got a very strong balance sheet, it’s been investing hard and it’s got very good customer service. It has had some challenges this year because some of its customers have delayed their orders so that’s why the share price is low. Again, when you look at free cash flow yield, the ability to generate cash relative to its share price, in this case, you’re looking at free cash flow yields of 8% or maybe 10% over the next two years
So, from that point of view, it’s cash in for cash out. These companies aren’t reliant on getting lucky one way or another with the markets, they’ve got their own opportunities. As I mentioned with the others, in terms of the risk reward ratio: the downside is related to stock markets and is always there, but the upside potential when they succeed can be very substantial.
Aferian plc (LON:AFRN) is a new breed of Media Tech business, focused on enabling operators to meet the challenge of the rapidly converging worlds of broadcast and next-generation streaming services.
