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Share volume, was the highest volume, for more than 6 months, and yesterday volume, was second highest, for more than 6 months. A sp, resistance breakout, with heavy volume, as indicated from ARC, records, validates the probability of the sp, resistance break, carrying through to higher price levels.
New 2 year close price today. Yesterday, 21/2/24, the RSI(relative strength index), crossed above 50, signifying the beginning of an uptrend. This was further strengthened because the RSI, crossed above its own preceding high, causing a bullish failure swing. The volatility based 20 month, top bollinger band, of yesterday at 96, was broken upward today. Similarly the 20 day, top bollinger band, of yesterday at 95, was broken upward today. The background, to those technical events, is that the supporting software sector value, broke above its recent price pivot, which enhances the bullish event for ARC.
And there are £8m of tax losses available so they won't be paying corporation tax any time soon.
Looked pretty good and the outlook seemed positive. Cash has increased to £6.8m since December and market cap is only £12m, so you're effectively getting around £1m of PBT for £5.2m. Seems very cheap.
Stockopedia has dividend of 3.7p for full year, so yield of over 4%.
It's a shame the UK market doesn't give these companies a decent rating, but happy to hold here.
ATB
Pbt £1m pa, £6m cash, £10m mcap
buyout potential surely ?
https://*************.com/views/69872/buy-arcontech-group
Https://www.investorschronicle.co.uk/ideas/2023/07/26/lock-in-this-9-free-cash-flow-yield/
And the decline continues. 62p to sell this morning. Recent resignation of NED Louise Barton can't be helping. Will she cash in some or all of her considerable number of shares? One imagines she might.
With plenty cash on the balance sheet, 62p looks compelling but in this climate one needs to be v brave to put fresh money into tiny market cap minnows.... and that is part of the problem I guess.
Disappointed. Should've taken my loss months ago.
Share price has broken below 70p this morning... close to all-time lows.
Can't believe how forgotten and unloved this share is.
We desperately need some good news.
Are management really putting their backs into it, or do we need some fresh talent?
continued.....
FinnCap pencils in 10 per cent growth in the payout in the current financial year, implying the shares offer a prospective dividend yield of 4.8 per cent. The broking house also forecasts net cash of £6.1mn (45.5p) at the 30 June 2023 financial year-end, a sum that equates to two-thirds of Arcontech’s market capitalisation.
Effectively, an operational business that is forecast to make bottom-of-the-cycle full-year pre-tax profit of £0.65mn on annual revenue of £2.65mn is in the price for £3.8mn. Of course, we need a share price catalyst to spark a re-rating, the obvious of which is a return to revenue and profit growth.
Furthermore, with the shares so lowly rated – Arcontech is priced on only 1.4 times book value, enterprise valuation to operating profit multiple of six and offers a prospective pre-tax return on capital employed of 9.5 per cent – then it’s possible that the company will fall prey to a larger predator. Either way, the shares have decent recovery potential, having drifted from the 82p level when I covered the annual results (‘Tapping into a prodigious free cash flow generation’, 12 September 2022). Recovery buy.
strange, it is indeed behind a paywall if I use it via that link, but that link came from searching for "investors chronicle tipping arcontech" and selecting the first option (on my laptop) which is the same page, and then I don't get the paywall !
Anyway here it is cut & paste, enjoy !
Aim-traded financial software provider Arcontech (ARC:74p) reported £56,000 lower first-half pre-tax profit of £0.37mn on revenue down from £1.45mn to £1.35mn, but pre-tax profit was almost 13 per cent higher than in the second half of its 2021-22 financial year.
The revenue decline was as anticipated after one customer decided to scale back its market data spend, and another opted not to renew its contract because it is switching to a solution in a legacy, bundled contract. That said, it’s rare for Arcontech to lose contracts. Of far more importance is news that the company is now “starting to see small amounts of growth and is confident that this will continue”, says chairman Geoff Wicks. That’s a positive development following several years of inactivity during the Covid-19 pandemic when the lack of face-to-face access to financial institution customers severely hindered its sales teams.
Arcontech makes its money by providing software products and bespoke solutions for the collection, processing, distribution and presentation of time-sensitive financial markets data. It is a software house as it doesn’t deliver any market data, but instead provides the means for clients (who are in the main large banks) to do so. Arcontech’s blue-chip client base of financial organisations includes Barclays, Citi, JPMorgan, Lloyds, Morgan Stanley, Santander and the Bank of England.
It’s a high-margin asset-light software business that boasts an equally high recurring revenue stream, reflecting the fact that customers sign multi-year contracts, which provide Arcontech with a high proportion of repeat income. In fact, all the income in the first half was recurring. True, the market still remains difficult and some financial institutions are taking a close look at their cost bases to make savings as they streamline their operations. However, analyst Michael Hill at house broker FinnCap believes that some individual contracts in the sales pipeline could exceed the entire £0.1mn revenue uplift he is forecasting in the 2023-24 financial year. That’s worth noting as the company makes an incremental operating profit margin north of 60 per cent on new contracts, implying scope for hefty earnings upgrades if they are landed.
Solid free cash flow generation
In the meantime, shareholders are benefiting from the company’s impressive cash generation. In the six months to 31 December 2022, free cash flow of £0.3mn covered more than two-thirds of the £0.43mn cash cost of the annual dividend of 3.25p a share paid in the period and meant that net cash increased by 5 per cent to £5.9mn (44p) year-on-year. FinnCap pencils in 10 per cent growth in the payout in the current finan
Thanks, but paywall.
You (or someone) might want to cut & paste?
But I think I got the gist
https://www.*nvestorschronicle.co.uk/ideas/2023/02/28/this-cash-rich-high-yield-stock-is-also-a-takeover-target/
i saw this ok, note i've swapped the 'i' for the '*' just in case lse wont let me post here
I just looked on the other share chat forum and it appears that it was tipped again in the Investor's Chronicle yesterday. Unfortunately I can't read the article because it's behind a paywall.
Deffo hang in there.
I didn't buy at 67p the other morning because I already had a top-up at 71p from way back when.
Altogether, I have quite a large position here - bought at various prices - and will be patient.
Still plenty of net cash on the balance sheet and a reasonable divi yield.
I'm normally a fool in these situations and sell out far too early regretting my impatience. With that cash bank there is always a chance of a buyout here so I may just stick around on this one
What was I saying?
Very, very happy to be proved wrong... in the right direction!
No idea what's causing the rise - nothing in those Interims or any subsequent RNS.
I know the investor's chronicle have been tipping it for a while...
you were saying ? wish i had bought more at 67 like i was tempted to.
any idea on the rush today ? has it been tipped somewhere ?
... and more time & patience...
Nothing to cheer us up in these Interims.
Well, here we are again with the share price back down at the 12-month low, on no specific news. Particularly disappointing when the UK small cap market is predominately up since the new year. A problem with very small companies - and Arcontech is a minnow these days - is that they can be almost forgotten, certainly by most institutions, and remain 'dormant' in terms of their share price for years.
You'd think they might be rewarded for having all that cash on the balance sheet, since the absence of it has hurt sentiment in other companies, but Mr Market still not playing ball. Can we have news of contract wins please? Something to re-validate Arcontech's proposition?
Time and patience... and the hair goes greyer!
Fincapp’s target price is 180p
Arcontech’s compelling value opportunity
Operating profit beats forecasts by 8 per cent
Net cash up 12 per cent to £6mn (45p a share)
Annual dividend realised 18 per cent to 3.25p a share
Aim-traded financial software provider Arcontech (ARC:82p) beat house broker FinnCap’s operating profit forecasts by 8 per cent, albeit they had been downgraded last autumn after one customer decided to scale back its market data spend, and another decided not to renew its contract because it is switching to a solution in a legacy, bundled contract.
Adjusted operating profit of £0.87mn was still a fifth below the prior year result on 9 per cent lower revenue of £2.76mn, but the fact that the board lifted the dividend 18 per cent to 3.25p a share and issued an upbeat trading outlook is well worth noting. That’s because several years of inactivity during the Covid-19 pandemic (at many of the company’s clients and prospects) has created pent-up demand and a robust pipeline of contract opportunities.
Although conditions remain uncertain, as economies globally face well-documented challenges, Arcontech’s directors are “confident that some of the current interest will be converted to firm orders and start to build back the revenue lost during the pandemic”. Also, as rivals push through price increases, Arcontech is well-placed to capitalise by offering its expanding range of solutions at attractive prices.
So, although FinnCap conservatively pencils in current-year revenue of £2.65mn to factor in a full 12-month impact from last autumn’s contract losses, analysts at the brokerage “see substantial upside” to their forecasts and note that Arcontech’s operational leverage means that it could drive double-digit growth to operating profit estimates of £0.65mn. Furthermore, the company is a prodigious cash generator, delivering £0.97mn of free cash flow in the 2021-22 financial year, implying a free cash flow yield of 8.8 per cent, and boosting net cash to £6mn (45p a share), a sum equating to more than half its £11mn market capitalisation.
The bumper cash flow performance enabled the board to raise the payout per share by 18 per cent to 3.25p, declared from adjusted earnings per share (EPS) of 6.5p. On this basis, the shares are priced on a cash-adjusted PE ratio of six and offer a dividend yield of 3.9 per cent. FinnCap believes that the dividend could be hiked to 3.6p a share in the current financial year without making a dent in the cash pile. This is based on an ultra-conservative EPS estimate of 4.9p, implying the shares offer a prospective dividend yield of 4.4 per cent and are priced on a cash-adjusted forward PE ratio of 7.5.
" Investors just need to make sure they have a low average" - that's the hard part !
That’s the thing with holding shares, it always takes longer that hoped to get a recovery. Everything always takes time. The key thing here is value. Covid, inflation and the loss of those two contracts have pushed the price down to silly evaluations which will in time correct itself. The dividend increase and the fact the company is still profit making suggests the sp will increase in time. Maybe not to previous highs for a while but high enough to make a profit for those buying at current level. A take over ofc is very possible. Investors just need to make sure they have a low average.