QIS Capital - New Feature Company - Lingo Media Corporation 2016 - March 22nd 2016
Included in this update:
- QIS Capital Initiates Coverage of Lingo Media Corporation (LM:TSX-V)
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Lingo Media Corporation (LM:TSX-V)
Current Price: $0.76
QIS Capital is pleased to add Lingo Media Corporation to its list of Feature Companies and we look forward to providing subscribers with regular updates on the company. A full corporate profile for Lingo Media will soon be available in the Feature Companies section of the website at www.smallcaps.ca/feature_companies.
As always, investors are encouraged to complete their own due diligence prior to making any investment decisions based on information provided by QIS Capital.
Lingo Media Corporation delivered record performance in 2015 with strong revenue growth and profitability. The company had positive working capital and no long-term debt as of the latest financial report and Lingo Media’s shares are trading at less than 8 times trailing earnings.
Lingo Media combines education with technology (EdTech) to develop and market English language learning (ELL) solutions in both online and print based formats. The company now offers over 2,000 hours of interactive learning through a number of product offerings that are currently marketed in Columbia, Peru, and Mexico through a network of distributors.
With its motto of ‘Changing the way the world learns English,’ the company targets a wide range of end users from young students just beginning their education, to business executives looking to incorporate the English language as a useful business tool. Products are sold to academic institutions, governments, and corporations.
The company provides both online and print-based solutions through its two business units: ELL Technologies and Lingo Learning. ELL Technologies is an English language learning online training and assessment business. Lingo Learning is a print-based publisher of English language learning programs in China. Lingo Media has formed successful relationships with key government and industry organizations, establishing a strong presence in China's education market of more than 300 million students. The company is extending its global reach, with an initial market expansion into Latin America, and continues to expand its product offerings and technology applications.
In 2015, more than 17 million primary school students studied English in China using Lingo Learning textbooks and supplemental materials. Under its partnership with People’s Education Press, Lingo holds about a 60% market share in the primary school market in China for English textbooks.
Globally, the market for ELL products and services is an estimated US$56.3 billion with about 1.6 billion people around the world learning English. Worldwide expenditures on digital English learning products are expected to make up US$2.5 billion of the global market by 2016, including US$260 million in the Latin American market.
In April 2015, Lingo completed a $500,000 financing through the issuance of five million units at a price of $0.10 per unit. Each unit consisted of one common share and one share purchase warrant exercisable at a price of $0.125 per share for a one year period. Although unrelated to this financing, it is also important to note that the company has 1.875 million $0.75 warrants that are expiring on May 11, 2016.
On August 6, 2015, Lingo Media was selected by the Peruvian navy to provide English language training products. Through the company’s Scholar program, users will learn the fundamentals of English by completing 3,000 activities and 900 hours of learning. Also in August 2015, Lingo Media was selected by a municipality in Colombia to provide English language training as the country carries out a mandate to improve the English language skills of its citizens.
In September 2015, Lingo released a redesigned version of Winnie’s World, the inaugural title of the company’s Kids program. Like its other offerings, Winnie’s World now has cross-platform, multi-browser capability and does not require any prior knowledge of English. This preschool program is designed to address the growing early child care software market, in which Lingo does not have any major competition.
On September 30, 2015, Lingo announced a significant multi-million dollar contract in Colombia with the National Training Service (SENA) secured by its subsidiary, ELL Technologies, in partnership with eDistribution. SENA is a national public institution under the Ministry of Labour focused on the development of education to foster employment. ELL Technologies and eDistribution will develop and distribute lessons, learning objects and digital resources, which SENA will implement into its learning management system.
On March 16, 2016, the company announced the completion of its “ELL Studio”, a speech recognition and practice pronunciation mobile app. Lingo plans to launch ELL Studio in the second quarter of 2016.
Lingo Media achieved sales of $3.65 million for the nine months ended September 30, 2015, up 173% from the $1.34 million generated during the same period in 2014. The company’s net comprehensive income for the nine months was $1.77 million or $0.072 per share as compared to a comprehensive loss of $236,690 or $0.011 per share last year. As at September 30, 2015, the company had a positive working capital position of $1.25 million or $0.044 per share with no long-term debt.
With its easily scalable online learning solutions, Lingo Media is ideally positioned to take advantage of the large market for teaching English in Latin America. Furthermore, with such a vast potential market worldwide, there are many other geographic areas that would make ideal future expansion targets. With 2015 annual results due in April 2016, Lingo Media is on pace to record sales in the range of $4.5 - $5.0 million with a corresponding net profit in the range of $0.10 per share for the year. The company’s shares are trading at just 7X this estimate despite a record year of growth. Management is confident that Lingo Media can deliver another record year in 2016.
|LATEST FINANCIAL RESULTS (000s)|
|3 Mos. Ended Sep. 30||9 Mos. Ended Sep. 30|
|Income fr. Ops.||563||(236)||1,873||2|
(as at Sep. 30, 2015)
|Current Assets||$ 2,728,806|
Shares Outstanding = 31,031,676 (mgmt and insiders = 22%)
Fully Diluted = 37,939,177
We are initiating coverage of Lingo Media Corporation at $0.76 and will be reporting on results as the company reports on its progress over the next 12 months. A full overview of the company will be available shortly in the Feature Company section of the website.
Address: 151 Bloor Street West, Suite 703
Phone: (416) 927-7000 ext. 23
Fax: (416) 927-1222
Contact Person: Michael Kraft, President & CEO
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