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NR appreciates the current article in the Investors Chronicle highlighting the low valuation of Vlx compared to its peers.
Yh true . There is gonna be a lot of selling at 300
The electronic sector of which volex, is part , is making new 6 month highs, which is supportive of the break upward. Bollinger bands are both separating, which indicative of a fast sp, move. If and when the lower Bollinger band starts to turn up, the sp, will probably retrace, which provides the opportunity to profit take. Since the long term down trendline is broken, expect the trend to resume after any retracement, is finished. The old highs are 300 and 325, for prospective price targets.
Personally I’ll feel happier to see a break of 300p to know those highs are back in sight.
Broker targets all increased
Now High 658p
Med 484p
Low 372p
Was High 514p
Ave 390p
Low 322p
Likely Tesla as the source of the order. I am a long term holder both in Tesla and Volex
https://twitter.com/sharetell/status/1651505520040108032
…and for an expanded range of products. :)
Great Rns. £30million Ev contract win
Great entry opportunity at support price
Analysts at Canaccord Genuity raised their target price on power products manufacturer Volex from 380.0p to 400.0p on Wednesday after the group's full-year trading update came in "strong and ahead of expectations"
Canaccord Genuity said Volex had seen "good demand" across structural growth markets including electric vehicle, complex industrial, and medical, which has driven share gains as supply chains improved through the year and boosted manufacturing output.
The Canadian bank stated reassuringly, new client wins and increased volume allocations had also allowed the group to "largely mitigate against a well-flagged normalisation of demand in consumer electronics" following the Covid-19 pandemic.
However, Canaccord thinks the most important piece of new information was that strong cash generation, in part due to some unwinding of strategic inventory, had driven "a significant deleveraging" of the group's balance sheet in H2.
"As a result, we think M&A may feature sooner rather than later once again to support the group's strategic growth ambitions. We have raised our forecasts to reflect the upgraded guidance for FY23E which subsequently lifts our outer year expectations. Adjusted EPS rises by 5%/3%/1% for FY23E/24E/25E, respectively," said Canaccord, which reiterated its 'buy' rating on the stock.
Sounds very encouraging.
Fonzey.
I'm impressed with FY 3/2023 TU from £vlx
H2 revenue actually dropped slightly from H1 (H1: $357.5m, H2 $352.5m) = $710m+ FY
However, margins rose (H1: 9.0%, H2: 9.6%) underlying operating profit margins.
Annoyingly, the update quotes a profit measure that is *not* quoted in the last Singers note (from Nov 2022). So we have to manually work it out, which I've done, as follows:
Underlying operating profit of $66m turns into u/l profit before tax of $60m (assuming the differences in H1 are unchanged in H2)
Assuming same tax charge %, then I estimate EPS as H1 actual: 14.4c, H2 est: 15.3c, FY 3/2023: 29.7c
Translate into sterling, gives 24.0p EPS (my estimate, based on today's TU)
With net debt strikingly lower than forecast at $76m (Singers last forecast was $102m) and only 1.0x EBITDA, nobody needs to worry about debt, and not much of an adjustment is needed for valuation purposes.
Outlook sounds perky.
How to value it? I can't see why we wouldn't apply a PER of say 12-14. That would give a valuation of 288p to 336p. So at just over 200p last night, this share looks significantly under-priced, and should logically be a 20-30% riser today, I reckon.
Complaints - why has Volex left it over 5 months from the last trading update? That's a yawning gap, and causes shareholders to worry. So it needs to introduce another trading update in between this too-long gap in future.
Why does the trading update quote underlying operating profit, which is a measure that Singers does not include in its forecasts? It needs to quote u/l PBT, and EPS in trading updates too.
Overall, this looks terrific, and VLX shareholders are going to be rewarded nicely for their loyalty, I reckon. Well done to holders!
Regards, Paul.
P.S. Singers note has just come through. They've estimated 27.4c for FY 3/2023, so a little lower than my guesswork above. Not sure what the reconciling items are - they're probably building in a little caution, so actuals beat slightly?
(Copied as link is subscriber only)
I'm pretty sure everyone can see that, Mick.
opened UP 11%
17.4% increase in operating profit on last year. Wonder if the divi will be raised?
Impressive performance including significant reduction in Debt over 6 months, clearly all helped by being at the forefront within the rapidly growing EV Market.
Just hope the SP doesn’t take off before having a chance to load up more !
Fantastic update !
At odds with recent price action, completely mis priced.
Should be a strong move up today.
Strong organic growth with revenue and profit ahead of expectations
We we will get the year end trading update on or very close to the 20th April (same as every year). Could we start to climb back the 495p we once were. At under 210p we are definitely undervalued so a rise coming I think but how much upside we will soon find out….. GLA
Recent tweet from NR was that some UK companies were undervalued by 20-50% compared to across the pond. Not sure if he includes Volex in that category.
haha this made me giggle...very true...out of the entire family, definitely not the sharpest.
"Rothschild is not famous for being an idiot".
Well, up to a point. He's hardly the sharpest knife in the family drawer, as he amply demonstrated in the Bumi fiasco.
By Edward Sheldon, CFA. There are several reasons I’m bullish on Volex (LSE: VLX) right now. One is that the company is growing at a healthy rate. For the 26 weeks to 2 October, the group posted year-on-year revenue growth of 22.1% along with 14.1% growth in underlying profit before tax. Results were boosted by 53% organic revenue growth in its electric vehicle division.
Another reason is that management has ‘skin in the game’. Both executive xhairman Nat Rothschild and COO John Molloy own a ton of Volex stock. So, it’s in their interests to get revenues, profits, and the share price up.
Finally, the stock is dirt cheap. With analysts forecasting earnings per share of $0.27 for the year ending 5 April 2023, the forward-looking P/E ratio is only about 13.
Risks here include debt levels, which have risen on the back of acquisitions, and excess inventory issues. I like the risk/reward proposition at current levels, however.
It's the net debt at $117,000 that is the problem. That's a lot of dept compared to the profits and these days heavy debt is a bigger risk than it was and must be paid for.
Due anytime