Argus Research Initiates Equity Research Report Coverage on Fingermotion, Inc. (NasdaqCM: FNGR)

Rhea-AI Summary

Argus Research has initiated coverage on Fingermotion, Inc. (NasdaqCM: FNGR), highlighting its advantageous position in telecommunications services in China. The firm projects substantial growth driven by the company's mobile payment solutions and partnerships with telecom giants like China Mobile and China Unicom. For fiscal 2022, FNGR reported revenue exceeding $17.3 million, a 50% year-over-year increase. Argus estimates a fair value of $9.00 per share, suggesting significant upside potential from current trading levels around $3.00.

Positive

• Revenue increased by over 50% year-over-year to approximately $17.3 million for the first nine months of fiscal 2022.
• Strategic partnerships with major telecom providers and reinsurers are expected to enhance product offerings and revenue streams.
• Argus Research estimates a fair value of $9.00 per share, indicating potential for significant stock appreciation.

Negative

• None.

NEW YORK, March 10, 2022 /PRNewswire/ -- Argus Research, an independent investment research firm, has launched Equity Research Report coverage on Fingermotion, Inc. (NasdaqCM: FNGR)

Click Here to view full Argus Equity Research Report.

COMPANY HIGHLIGHTS: Excerpts (as conveyed by Argus Analyst Steve Silver) include:

FNGR: Leveraging Telecom Partners to Enter New Technology Markets

• In our view, FingerMotion has built several operating vertical markets that serve users of China's leading telecommunication providers China Mobile and China Unicom, including mobile payment and recharge solutions. The company appears to be well positioned to leverage its exclusive licenses from these carriers to drive future expansion into new markets with new value-added products and services, led by the InsurTech (Insurance Technology) industry.
• We expect near-term revenues to be generated by its focus on providing value-added services to the Telecommunications Services vertical, including data subscription, device sales and device protection programs. We also expect FingerMotion to advance its partnerships with leading global re-insurers including Pacific Life Re and Munich Re to monetize its analysis of telecom customer demographic and behavior data to help shape new insurance offerings.
• We are encouraged by its December 2021 listing on Nasdaq and expect it to provide enhanced share liquidity as well as increased access to capital, as it invests towards executing its growth strategy.
• The shares are currently trading at valuations more aligned with Telecommunications Services companies, which typically garner a 2X-3X forward EV/Revenue multiple, which we attribute to its nascent initiatives in the higher margin data and IT software industries, which we believe can carry a forward multiple near 10X using this metric. Over the coming years, we expect Big Data to provide a more balanced revenue mix and improve its margin profile, which we view as presently underappreciated by the market. As such, we expect the valuation gap to narrow as FingerMotion executes its growth strategy.
• Based on our forward EV/Revenue analysis, we arrive at a fair value estimate of $9.00 per share, well above current levels in the $3.00 area.

INVESTMENT THESIS excerpts (Click Here to view full Argus Equity Research Report):

In our view, the company remains in the early stages of its growth trajectory. Through the first nine months of fiscal 2022, which ends on February 28, 2022, revenues increased by more than 50%, year-over-year, to approximately $17.3 million. Telecommunications Products and Services comprised 39% of revenues, while SMS messaging accounted for 61%. In the prior year, the former comprised 14%, compared with 86% for the latter. We are encouraged by the re-allocation of company resources towards capitalizing on new opportunities within the Telecommunications Products and Services vertical, as we believe that messaging carries a lower gross margin and represents a more modest driver for future growth. As evidenced by recent platform expansion to include new services including device subscriptions and sales, loyalty programs and most recently, a plan to offer device protection, we think FingerMotion is successfully executing on its growth strategy for its core capabilities.

In late 2018, it was awarded contracts with China Unicom and China Mobile that enabled the formation of partnerships surrounding the analysis of data among their vast customer bases. This new operating unit called "Sapientus" was launched in mid-2020 and has pegged insurance, healthcare, and financial services among its primary initial targeted vertical markets. The unit leverages FingerMotion's access to consumer demographic and location data, while, importantly, avoiding privacy concerns, given that they do not take ownership of the data or utilize data at the specific name-level. Rather, Sapientus uses anonymous user demographic and location service combining high frequency geolocation and mobile usage data with auxiliary contextual information details to compile data for broad analysis and application regarding behavioral insights.

To date, Sapientus has secured contracts with Pacific Life Re and most recently with Munich Re, both global reinsurers, through which new products can be developed, and ultimately commercialized, thus leveraging the Company's proprietary analytics and algorithms to derive user insights that can help to transform the insurance value chain, including more effective and efficient underwriting, fraud evaluation and management, and other risk assessment tools. In our view, Sapientus' utilization of in-house experienced actuaries, data scientists and computer programmers can serve as a key market differentiator, by enhancing the understanding of behavioral patterns, mining behavioral patterns and distinctive features that can be linked to key risk drivers and product economics, to help insurers offer their customers new products and a better customer experience through enhanced claim management and underwriting efficacy.

Sapientus has completed its first stage analytical framework and business application development. Over the course of calendar 2022, we expect the unit to shift towards commercialization, and for FingerMotion to define the monetization of the unit to potentially include earning commissions and profit sharing through its customer segmented programs with partners. Over time, we see the potential for the platform to extend beyond insurance into other verticals, including diversified financial services, healthcare and other e-commerce applications, and be integrated within the systems of other service providers.

About Fingermotion, Inc. (NasdaqCM: FNGR)    fingermotion.com

FingerMotion, founded in 2017, is a technology company that is leveraging relationships with leading telecommunications providers in China to provide mobile payment and recharge platform solutions, corporate SMS messaging, and additional value-added technologies, led by the emerging Big Data analysis of customer behavior, initially to the InsurTech (Insurance Technology) industry.

For more information please contact:

Company Contact:
FingerMotion, Inc.
For further information e-mail: info@fingermotion.com
Phone: 718-269-3366

Investor Relations Contact:
Skyline Corporate Communications Group, LLC
Scott Powell, President
One Rockefeller Plaza, 11th Floor
New York, NY 10020
Office: (646) 893-5835
Email: info@skylineccg.com

About Argus Research Corp. 

Headquartered in NYC, Argus Research (www.argusresearch.com) is a leading independent equity research firm (est. 1934)  ̶  providing fundamental and quantitative research coverage on more than 1,600 companies across all 11 sectors of the S&P 500, as well as macroeconomic and equity market forecasts, thematic research, model portfolios and pre-IPO research.  In addition, Argus has recently committed to providing a sponsored research solution for small & mid-cap companies seeking coverage.  Argus's Equity Research & earnings estimates are available on major research / earnings estimate aggregator platforms, including Bloomberg, Thomson Reuters, Factset and S&P Global.

For more Information please contact:

Darrell Stone
646-747-5438
dstone@argusresearch.com   

Argus Research Co. has received a flat fee from the company discussed in this report as part of a Sponsored Research agreement between Argus and the company. No part of Argus Research's compensation is directly or indirectly related to the content of this assessment or to other opinions expressed in this report. Please refer to the full Argus report and the disclaimer for complete disclosures.

SOURCE Argus Research

FAQ

What is the recent news about Fingermotion (FNGR)?

Argus Research has launched coverage on Fingermotion (FNGR), highlighting its growth potential and strategic partnerships.

How much revenue did Fingermotion report for fiscal 2022?

Fingermotion reported revenues exceeding $17.3 million for the first nine months of fiscal 2022, reflecting a 50% year-over-year increase.

What is Argus Research's fair value estimate for Fingermotion (FNGR) shares?

Argus Research estimates a fair value of $9.00 per share for Fingermotion, based on its growth potential.

What sectors is Fingermotion expanding into?

Fingermotion is leveraging its telecom partnerships to expand into the InsurTech sector, focusing on mobile payment and recharge solutions.

Who are Fingermotion's key telecom partners?

Fingermotion partners with China Mobile and China Unicom to provide mobile services and expand its product offerings.