I listened in to the FDV 2023 AGM and it was good to hear the CEO and Chairman give some updates. They didn't really mention anything that isn't already known from previous quarterlies. What I took from it is that nothing problematic is going on under the hood and that they are happy with the underlying performance of the buisness.

Bot the Chairman and CEO are on the board of Zameen and they said that it is doing very well given the difficult operationg conditions in Pakistan and that it has enough cash on its books to get through the crisis -- similiar to the recent observation @JPPicard made about Zameens LinkedIn feed.

They did get a few strong questions about the recent Cap raise and why they didn't raise more at the last raise when the SP was $1.50. They answered that the advice they had at the time was not to raise more money than they needed. I think there is a bit of hindsight bias in these questions, as no one would be complaining if this raise was done at $2 vs 0.44c. I give them a pass on this, given it was a small raise that was needed to fund the LATAM contingent payments that were due.

They were also asked whether they raised enough money to see them through to profitability. They said they have enough cash in the buisness and that excluding future M&A activity they do not see a need to raise any more money. They said they don't have any active plans for acquisitions but are open to good opportunities if they become available.

The IPO of Zameen was asked- this is still a focus and is in progress but it sounded like the Pakistani credit crise will need to be resolved first and normal operations and broader confidence rebuilt before action on this will occur.

I asked about the FDV LATAM corporate costs and why they are excluded from their headline numbers. They said they are roughly $1m/yr (just realised that I am not sure which currency though, probably $AUS) and they have kept them out of the EBITDA numbers to make the underlying time series comparisions easier for investors. I am not a big fan of this, given that they have consolidated the region under a central management team and this is an ongoing expense of the buisness I would prefer these be included in the headline numbers. Anyhow will be easy enough to add this back in to the EBITDA numbers in the future.

I am still happy to back Shaun and the team to deliver and I don't think much has really changed apart from the SP. I choose not to participate in the SPP as my view is that the SP is more likely to go lower in the short term and I am expecting some decent tax loss selling and a better top up point in early/mid June.

@Bushmanpat, I've titled this straw bear case as their are some near term risks that you might want to consider.

Overall I think what you have done is a good go at getting a ballpark idea of where FDV could be in a few years if they keep executing in LATAM. I don't think the 5 years to get to $100M is that agressive and I will be disapointed if they dont achieve this sooner. If we look at how quickly the revenue of Zameen has grown over the last 5 years from $22M in 2018 to $82M in 2022, with this period including a flat covid 2020, so a pretty difficult 5 year period. LATAM is currently doing revenue of $45M, they have a good management structure in place and now and are capturing the transaction revenue so I think this trajectory should accelerate if it is working well.

Now for the bear bit -- There are a few near term issues that I am not sure how they are going to be resolved.

-The big one that is in the price, is a default by Pakistan. It looks like they will get a IMF bailout, but this is me just reading the tea leaves as I would have expected them to fall by now if they were going to, but this is still a binary risk.

-They also have some contingency payments that fall due in May this year related to the purchase of the LATAM buisnesses - US$17M for Infocasas and US$9.7M for Encuentra24. They did do a deal last year when they did the regional restructure with the previous owners now the managers of the region. As part of this they swapped some of their earnout into FDV equity - minimium 50% for Infocasas and 25% for Encuentra24. They can also elect to take it all in FDV equity if they want to but if we assume they will take the minimum then FDV needs to come up with around $US16M. I'm not sure where they are going to get this from as they are still a ways off getting positive cashflow to cover this, they had cash of AUD$27M last quarter but this would leave them very thin if they use it all. Some options are a cap raise, would be bad timing given the SP. They might be able to offload some or all Zameen to the majority holder as part of a pre-IPO share registry cleanup. Alternatively they may negotiate a payment deferal. This is all speculation though as they haven't mentioned anything, but I expect that the details will be in the March quarterly.

Anyway @Bushmanpat this is a longwinded way of saying that, like you I am comfortable about the long term growth potential of FDV and LATAM in particular. I also think that they will get MENA improving as well. I do see this being a dynamic and bumpy ride though and I don't have high confidence in assessing what it is worth today beyond thinking that it is broadly undervalued if they execute the way I think they will. My approach with FDV is to keep following the quarterlies and as long as they keep executing against their strategy and the indivudal buisnesses are impriving then I am happy to back management and hold on.

I'm pretty happy with the progress FDV have made in 2022 in both revenue ($82m) and EBITDA momentum.

FDV LATAM is the clear standout and the consolidation of this area and new management team seems to be having a good outcome. Revenue up 48% to $45m. EBIDTA of $2.1m up from $1.1 in 2021. InfoCasas and Encuentra are the main drivers of this and are following the same trend of Zameen just a few years behind. Fincaraiz and Yapo were more stationary but commentary suggests these have been improving from the start to the end of the year and and should be better in fy23.

FDV asia was a solid contributer, mainly centred on Zameen but many of the others showed good revenue growth rates if off small bases. AUD conversion rates are reducing the benefits from this region.

FDV MENA smallest contributor in terms of revenue ($8.5m) and still lagging the other regions with negative EBIDTA of $0.8m, but generally moving in the right direction and had positive cashflow in the 4th quarter.

Cash burn of $1.8m for the quarter but still have $26.9m of cash available.

It looks like they have 3 clear winners now - Zameen, InfoCasas and Encuentra and several maybes. It is a pretty good strikerate and happy to keep backing Shaun.

A nice vote of confidence that FDV is looking as good from the inside as it does from the outside. Yesterday director Anthony Klok bought 75,000 shares on market. His total interest is now 215K shares and 450K options.

And as reddogaustin pointed out with the quarterly, its all just incremental positives.

To me FDV is a bet on the strong management of Shaun Di Gregorio and team. I think he is a very quality operator and I like the way they tell investors what they are doing, and why and then importantly deliver on their milestones. To me this is a 2-5 year minimum story but I am confident that FDV will be a bigger and better business into the future. This company has the perception of risky as it operates in developing countries but I think the way they have their buisness risk spread across the globe and the quality of management makes me consider this to be one of my lowest risk holdings and expect this will have a share price of more than $2.50 when all buisnesses are operating in positive EBITDA.

A copy of the analyst call is available from the FDV website and is worth a listen. Shaun does a very good job of explaining what they are doing - below are my takeouts.

New geographical structuring of the business segments into three defined regions.

-Latin America (Colombia, Bolivia, Chile, Paraguay- 4 businesses)

               -1.1m + EBITDA

-Asia (Pakistan, phillippens, Myanmar, Sri lanka- 7 businesses)

               -2.8m EBITDA (5/7 companies + EDITDA)

               -Majority ownership of Hoppler (51%)

-MENA (middle east, North Africa + west Africa- 4 businesses)

               -2.0m EBITDA loss

-Transformation on track, bought AVITO in full just over a year ago – 4^th quarter only 0.2m EDITDA loss vs 2.0m a year ago.

Target the uncrowded market regions (have avoided China, India, Mexico etc) and aim to buy/develop best in region marketplaces

Revenue of 60.2M à next milestone target of 100M/yr, exit runrate is currently 78M

-         Used Covid to increase the quality of overall portfolio, growing at rapid rate. FY22 aim for breakeven across the group and maintain and increase positive EBITDA over the next 12-24 months.

-         Strong balance sheet (>54m) and no requirement to raise any more capital. Last raise in December (53.9m @ $1.50 - Good timing and they have a history of raising necessary capital when share prices are high).

-         Thinks they are in a sweet spot coming into 2022, revenue performing well, intact strategy to grow each business.

Transition to a transaction focused marketplaces from a more traditional market classified business on track and accelerating – gives them the opportunity to collect more of the total value of the transaction and facilitate required services (e.g home loans, pre-purchase inspections etc) and collect a fee.

They think about transaction revenue as the opportunity to fully facilitate the transaction in house within their platforms. To be successful the business needs to be market leaders and have the trust reputation àstrong brands + strong marketplaces = ability to improve the experience for the buyer and seller which facilitate transactions. Using technology to facilitate high quality matching to produce quality leads. Keeping the consumer in your environment and making them feel safe using you to process the transaction. Targeting 10-15% of transactions to be captured by the business will generate 15-20 times the revenue of the traditional classifieds buisness that gets revenue form only advertising.

Economics of the transaction business gets better over time à is expensive and time consuming to start up from scratch. Much easier to facilitate transactions when you a captive audience of sellers which is why they target and develop good market leading classifieds business and then transition to transactions.

Zameen (30% owned by FDV) continues to perform very well – 60m revenue à 51m is generated from transaction revenue. Commentary on Zameen is that they consider this will be a billion dollar standalone business in time.

Lot of excitement about Infocasis (owned for just over 12 months) and its successful transition to transactional revenue – Facilitated 1400 property sales in 2021 vs 185 in 2020.  They consider Infocasis has cracked the code on how to do transactional revenue and they are moving this technology and know-how to the other businesses within the Latin America group.

Talked about how the transaction revenue is still cutting edge and many other groups haven’t done it well but they are confident of how it is unfolding in Latin America. Transaction revenue is still a bit earlier in the Asian business. Commentary was this this has gone from nothing to something really quickly and they expect this trend will continue over the next 24 months.