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Another derisory offer for a British company. That's K3C and Kape - potentially some of the fastest growing companies around - within a matter of weeks gone on the cheap. So frustrating as not long ago we were up to around 500p. Sagi taking advantage of market conditions, and bending his shareholders over (thanks Teddi). Think I'll keep hold of the shares for now, as it will 100% go through at a basement price of 2.85, but the board may eek out a little more. Doubt there will be a counter bid accepted from external parties personally, unless a mega offer comes in.
Pound to a penny, Unikmind aka Teddy Sagi, relaunches KAPE as a brand new IPO in a couple of years (claiming to have now "added value") -
- at a vastly greater SP than that which has been agreed today, of anything up to £10 per SP.
Yes, huge shame. This could and should have been so much more for investors. I’ve let go of half on the slight chance we squeeze a little bit more.
i was expecting more but i am done here ,and i think next could be CNIC
It's a done deal
I'm in the same position as you. Only bought a month ago and not even making a profit yet. But as Unikind own 64% of the company anyway it's there's for the asking. Directors own a paltry 0.385 % so they are powerless too.
The issue is that any counter offer from another party can just be voted down by them - I’m afraid KAPE is gone
What do we think the chances are of this going through? Any chances of this disgraceful offer being rejected?
Really really really huge destruction in value...almost can't believe a board would allow this. It was always the risk...and I cannot blame Sagi...its the UK markets fault for not valuing these brilliant companies in any fair way.
Sad times - I only bought in a month or so ago. This is the end of KAPE as an independent PLC. The offer is too cheap but can you blame them? The market ascribing scandalous value to the shares. Hopefully another party will come forward
They will want your shares. Let them get to 75% by having to buy in open market. Do not sell. Company worth far more.
So Unikmind are acquiring KAPE for 285p. Hmmm.
Can't blame them for taking advantage of the current price. The UK markets are fast asleep. If the City isn't ready to value companies like KAPE appropriately then why on earth shouldn't Unikmind reap the rewards themselves.
The initial offer was 265p! So the directors squeezed out another 20p for us....
KAPE is worth far more, but given the lack of traction on the market I'd do the same in Unikmind's place. Of course that's the danger of investing in companies with a dominant shareholder.
It's been a highly successful ride for me from 66p or so, but could and should have been so much more.
The only hope is another offer for the company. Can't blame them really, uk investors don't seem interested
Looks like this guy has Kape by the nuts!
Whilst I can appreciate your dislike of using TTM calculated ratios, I think you’re too dismissive of their use. They are handy.
Without TTM metrics you’re just left with previous years' accounts whereas TTM trails the previous 12 months starting from the current most recent trading updates to gain a better insight into trends, to better manage the future.
(Yes, I did erroneously add “and calculated forward” instead of current quarterly trading results) that’s because I’m always looking at the forward metrics that run down the right-hand side of my screen :)
Although I dislike stocks with single-digit profitability metrics, those single-figure metrics I initially posted on - are higher than last year's single-digit metrics
- so a trending improvement, and I look forward to maybe the first of double-digit metrics in that category come late March.
(Market consensus for revenue is for $619m for year ending ‘22).
The Jan 17th update did reveal to expect circa $623m in the upcoming March 21st trading results - so a beat on the consensus guidance!
And hopefully, that transmutes all the way down to the bottom line. So holders are right to be bullish going forward
- but currently, the SP is paying no attention to that ‘in the bag’ update, at all!
Forward consensus is what matters and it's pretty low leaving room for easy beats.
Low valuation provide downside protection.
STRONG BUY.
“they’re all TTM (Trailing 12 months based) so they’re based on the latest trading updates and calculated forward. (Not by me but by the algo’s :)”
By definition TTM/published data are not forward looking or calculated by algo. It’s priced in and backward looking.
Not backward-looking data at all, DaddyAIM - it’s current data,
- they’re all TTM (Trailing 12 months based) so they’re based on the latest trading updates and calculated forward. (Not by me but by the algo’s :)
The last 4 years or so where profits were produced, all fall in much of a muchness, in line with the latest TTM metric results I posted about, so they sound about right.
Which leads me to the thought that if it’s a well-known fact that KAPE functions on a low margin and therefore achieves less earnings per $ than the average for the industry, then gaining huge revenue to compensate must be their modus operandi - their edge in achieving increasing market share by being cheaper than the competition - and thus low earnings per $?
So, why doesn’t the market like that? I’ve back-read a handful of some analysts' reviews and ROE comes up frequently where they bemoan the lowly achievement in ROE but go on to highlight the increasing revenue (to compensate?)
Sort of like a Tesco of their industry? Pile it high and sell it cheap?
Why is the market behaving as if it’s a bad thing to operate on low margins like a High Street supermarket - and thus withhold the overdue re-rating due in the SP? Has there been a change in company culture, that the market dislikes?
The SP has been retracing for well over a year now - before that, it was years of a fantastic climb from the lowly depths up to record highs, before this current long-term retrace in the SP then took over.
Is there another reason the market is holding back on re-rating the SP?
Has there been a change in the business I’ve yet to find out?
That’s all I can come up with - somewhere along the line the company went for growth at the expense of profit margins.
the massive issue velo is that all your analysis is backward looking thus priced in.
Kape does not have the best cash conversion c. mid 40s but the growth and the valuation on conservative consensus warrant a buy.
Great overview and comments here Velo, very helpful
Typo! (From 1st post) -
" If so, they're not efficient at converting **revenue** into cash."
Should have read as: **earnings**
PS.
Just looking at ROCE, ROE & ROA, and all three are in v low single percentages.
That's a poor performance.
High percentages in double figures say at the very least 10 to 15% would indicate a company that is efficient in converting paper earnings into cash.
So with such a lowly cash conversion, I checked out liquidity and sure enough, it was poor.
Of the three key metrics measuring liquidity, two were dire with the third unimpressive.
Which leads to the query : How is it paying its bills?
With difficulty, if the figures are to believed.
(Or is there another explanation? I look forward to the March big reveal).
Earnings look great, but as the caveat goes:
Profit is vanity
Cash is sanity.
Maybe that's all a byproduct of a growth stock?
If so, they're not efficient at converting revenue into cash.
Paper earnings can be manipulated (not in a criminally fraudulent way) - cash very much harder to do so. That's why analysts are always yabbering on about cash this and cash that. Something us private investors are not so hot on.
PSS.
Not deramping just offering an alternative viewpoint to the inexplicable refusal of the market to re-rate the SP on what appears on paper to be terrific progress by the company.
" We’re all scratching our heads, Trendz!"
-----------------
Could be to do with market distrust of the accounts.
The recent update declaring to expect truly astonishing growth in revenue for the full year should in normal circumstances have been rewarded, but more than one analyst in recent years has complained of confusing balance sheet entries.
The other year, nothing made sense but when one analyst put a minus in front of a key metric it turned that positive entry into a negative. So it lessened the impact of good results - but the balance sheet now made sense. It goes on like that to this day. Deliberate manipulation or incompetent bookkeeping?
More than one analyst has thrown their hands up in surrender proclaiming "I can't understand these accounts; so I never recommend anything I can't understand". A neat way out of crossing the line in legal action against claims of fraud.
For instance, overall Kape scores very poorly against the Beneish M-Score indicating a high likelihood that the earnings ARE being manipulated (Stockopedia/Sharepad).
However, should the market really go for it and seriously depress the SP, I may commence buying on a very cheap entry offer, because should that huge increase in revenue stand up to scrutiny in the full accounts in the full year, March 21st reveal, that's when all might be forgiven.
We’re all scratching our heads, Trendz!
How can this be valued so lowly. A p/e of just 15 would put this on about £4
indeed ! dw mate this will payoff