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Started: stargate, 22 Feb 2024 18:09
Last post: stargate, 22 Feb 2024 22:03
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.
Started: cryptonomicon, 21 Feb 2024 08:08
Last post: cryptonomicon, 21 Feb 2024 12:13
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
Started: threeputt, 26 Oct 2023 10:14
Last post: threeputt, 26 Oct 2023 10:14
Pbt £1m pa, £6m cash, £10m mcap
buyout potential surely ?
Started: Trendz, 8 Aug 2023 13:58
Last post: robbieishere, 14 Aug 2023 20:58
https://*************.com/views/69872/buy-arcontech-group
Started: unhooked, 12 Sep 2022 09:18
Last post: unhooked, 13 Jul 2023 09:20
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
Last post: 42trader, 17 Sep 2022 10:53
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.
Started: AP-Invest, 17 Jan 2022 16:21
Last post: unhooked, 28 Jun 2022 12:07
I've added this morning. Nothing is for certain, nothing without risk, but this is simply too cheap given the net cash position and the well covered yield. Provided the next trading update is not another disappointment, this will do well from here in my view.
Drifting down - now at a 4 year low.
With a market cap of < £10m, the company is probably too small to attract institutional interest and I can't see me getting my money back any time soon.
Not sure when to buy back in here , The chairman's statement was a bit downbeat
Fortunately , I decided to sell a few days ago ( thinking there may be a Ukraine Linked sell off ) knowing I could lose out on an RNS lift - but the RNS was not that good - which surprised me
RNS Due soon
looks like some holders going in to risk off mode due to Russia - short term thinking I think
Lots of small quantities of shares - possibly people who are here to go a lot higher which is good , looks like the quick profit traders left just as we hit the early 80's
Looks like one buyer paid up to 89p with a total of three buys 9,900 pounds each
IC review:
Shares in Aim-traded financial software provider Arcontech (ARC:74p) have been massively de-rated since the company issued a profit warning in late November 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.
The two changes are unrelated, but in terms of revenue they account for £0.3m of Arcontech’s last reported annual revenue of £3m. House broker finnCap lowered its revenue estimates by 6 and 11 per cent to £2.8m and £2.9m, respectively, for the 12 months to 30 June 2022 and 2023.
Furthermore, the company’s incremental operating margin on new sales is around 60 per cent, so any contract wins or losses have an accentuated impact on profits. This explains why finnCap cut its current year pre-tax profit estimate by 17 per cent to £0.8m and now only expects a flat result in the 2022/23 financial year. On this basis, EPS to fall by from 7.9p in 2020/21 to 6p.
Arcontech’s strong defensive characteristics (recurring licence fees account for 93 per cent of annual revenue) had been a major bull point, so the loss of two customers has clearly undermined investor confidence. The timing is incredibly frustrating, too. That’s because the company’s small sales team has been strengthening the qualified pipeline of potential prospects, and the directors note “renewed client interest in new business projects”. Travel restrictions during the Covid-19 pandemic had made converting the robust pipeline of opportunities difficult in the near term, but as these restrictions are now being lifted then it should augur well for the company to make up the lost ground. This is still a realistic possibility in my view.
Furthermore, the de-rating has been so savage since I covered the half-year results (‘Bargain shares: On the hunt for value’, 6 September 2021), that Arcontech’s £5.4m (40.5p) net cash pile now equates to more than half its £9.8m market capitalisation. This means a business that is still making £0.8m operating profit and generating free cash of £0.6m a year is being valued on a cash-adjusted PE ratio of 5.5. FinnCap is pencilling in a current year annual payout of 3p a share, which gives a prospective dividend yield of 4.1 per cent. The free-cash-flow yield is more than 6 per cent.
The shares are now firmly in bargain basement territory and the company is a bid target as well given Arcontech’s £4.4m enterprise value equates to only 5.5 times operating profit estimates. Recovery buy.
great news thanks, was thinking about adding but now I know it's been tipped I'll wait for mms to walk it back down (if they do)
Updated today by IC’s ST and states now firmly in bargain basement territory.
Advises a “Recovery buy”
unhooked - no need to say don't get excited - just commenting :-)
Not massive but over 100% daily 3 month - quite a few small trades
Decided to come in today after director buy , have been waiting for a trigger point and quite interested in how they use the cash pile as they have suggested acquisition.
Bought back in today with a small purchase of £1k. Looks like a seller is still around as I can buy way more than I can sell.
Saying that, this is getting extremely cheap with an Enterprise Value of just £5m. Currently has a PE of 12 but if you work it out via EV/EBITDA then it drops down to a low 4. Broker finncap has a target price at 180p. There is support at this level, but with probably Boros selling out it could continue to drop a little more. Boros held 2.47% last count, so no more notifications will be made for him selling. How much is left to sell, who knows. Nav Price per shares is 49p.
Sadly yes. No sign yet of any reversal as all its doing is slowing dropping. I’m going to research this again now as I believe it could be close to the bottom. 75p looks possible now with as low as 60p could be on the cards. This is still a good company despite the loss of 2 contracts and a possible takeover target. But while it is only hitting new lows I’m looking to buy back in at 75p and add on drops below that. I may do a small purchase today also as you never know when it may turn around.
Well, you were spot on with yr prediction 42trader, wish I'd listened to you! Let's see if this support level holds.
The risks of investing in tiny microcaps - share price now half what it was at the start of the year... and all that cash sitting on the balance sheet!
B*gger it, I topped up at 96.4p. This has fallen far too far and I'm quite prepared to be patient.
Started: reapz234, 14 Oct 2021 11:45
Last post: reapz234, 14 Oct 2021 11:45
The growth prospects for this company appear to be very weak. Still looks overvalued. Looks to me that the SP will continue to go lower, until the growth prospects are proven wrong...
Last post: unhooked, 11 Oct 2021 12:57
but of course it can get cheaper still... ha!
Seems today's weakness caused by LTH Leon Boros presumably losing patience and reducing his stake by about a third, per today's RNS.
Just have to sit this one out and hope for better times.
Feels hard adding to equities atm, but I've topped up on today's price weakness.
Arcontech's defensive qualities are what my portfolio needs in these volatile times... and it's going cheap!
Looking through the note, the results don't look bad to me. Sure they've had some opportunities deferred, but revenue slightly increased, the sales pipeline increased, the product suite increased, the cash position increased (and the div secure), etc. Given the decline in price, (~175p to 134p) it looks like its on sale. In any case, as a result, today I've been buying.
no jam today, tomorrow or the next day....
My memory is that the dividend is to be paid today. Do you fellas have any insight on how this is done--deposit direct to the investing account or mailed cheque?
Many thanks in hope.
Started: Vulcan998, 7 Sep 2021 13:45
Last post: bobbyaxelrod, 8 Sep 2021 10:49
Thanks for sharing. He has been bullish for a while. I think the main problem with his argument against what he is saying (which is the share is undervalued) is that the earnings multiple is (usually) related to growth (rather than the fact it is an operationally leveraged software business with a strong balance sheet), and the business does not appear to be growing fast enough. I am continuing to watch from the sidelines, because I like the company, especially financials, but I find myself in a position of "having to take their word" for the reasons for slower sales growth (e.g. longer sales cycles, ST's other reasonings) rather than being able to deduce for myself. I do agree with him that the valuation is an attractive buy in price presently.
Reading this and the RNS, again, I’m seeing nothing that makes me want to sell the stock. My little holding is in my mental old oak chest for the long haul.
Many thanks indeed for this.
Arcontech unloved and materially under-rated
Flat revenue of £3m and pre-tax profit of £1.02m in 12 months to 30 June 2021.
Net cash up 8 per cent to £5.4m (40.6p a share).
Dividend raised 10 per cent to 2.75p a share.
High level of pent up demand with qualified list of prospective new customers across six countries.
Aim-traded financial software provider Arcontech (ARC:135p) delivered a resilient performance in its latest financial year despite the Covid-19 pandemic restricting customer contact due to remote working practices.
The company makes its money by providing software products and bespoke solutions for the collection, processing, distribution and presentation of time-sensitive financial markets data. Sales cycles are long and complex, which discourages clients from switching to another provider, so face-to-face meetings with key decision makers are key when pitching for a new contract. For instance, Arcontech needs to demonstrate: the potential cost savings of its solutions; how it can replicate the functionality of the clients’ existing products; and how it can deliver new benefits to minimise disruption. New contract awards are small initially and then scale up, so generating organic growth in future years.
Arcontech did manage to win new contracts in the 12-month trading period, one with a Tier One bank client, to add to its roll call of blue-chip clients which includes Barclays, JPMorgan, Morgan Stanley, and Bank of England. The small sales team has also been successful in strengthening the qualified pipeline of potential prospects, but Covid-19 restrictions have made converting the robust pipeline of opportunities difficult in the near-term, hence why the directors expect current year profits to be flat (or lower) as any pick up in revenue will not be fully reflected until the 2022/23 financial year.
The market reaction has been savage with Arcontech’s share price plunging below the 160p level at which I suggested buying at six months ago (‘Tap into a prodigious cash generator’, 28 February 2021). It’s a ridiculous overreaction. At the current price, the company has an enterprise valuation of £12.6m, or 12 times net profit, a low-ball valuation for a high margin (operating margin of 36 per cent), cash generative (free cash flow of £0.8m forecast in 2021/22) business that has strong defensive characteristics (recurring licence fees account for 93 per cent of annual revenue). Arcontech is also highly operationally geared given its relatively fixed cost base. Indeed, the incremental operating margin on new sales is around 60 per cent, so any contract wins have an accentuated impact on profits. Moreover, at the current valuation Arcontech is an obvious takeover target in a consolidating industry with peers trading on PE ratios of between 32 and 43 times. Recovery buy.
Started: guygad, 6 Sep 2021 20:01
Last post: guygad, 6 Sep 2021 20:01
Any of you fellas have access to ST’s latest piece?
Started: guygad, 23 Jun 2021 02:13
Last post: unhooked, 1 Sep 2021 09:27
your sale was well timed it seems...
your sale was well timed, it seems...
I sold out today, not comfortable holding into results with the constrained growth picture. The fact I sold out is likely a bullish sign! I will be keeping an eye on it. I just felt with the "long sales cycles" perhaps H2 wouldn't have much unexpected positive news (although probable dividend increase). I still really like the business and think there is a fair change I could buy back in, especially its low capex requirements, but I wasn't comfortable with the valuation I've paid based on earnings and earnings growth.
For me the software offering is opaque as I have no direct experience of their utility. I have seen previously that Arcontech were involved in the auctioning of Bank of England bonds, which suggests the people that matters rate them. I just wish they could expand their offering, using the cash flows to explore other ways to make money, otherwise they will likely tick along with dividend increases each year. Especially with the massive increase in retail investors, it seems a whole generation, there is space for a non-trading app but one based on news flow (and Arcontech could further use this consumer data in its other offerings).
I've added ahead of the RNS, mainly based on business fundamentals (cash position, recurring revenues, cash flow positive, reasonable valuation, dividend growth). I am hoping the dividend will continue to grow, but think the board need to be more adventurous in how they use the cash, e.g. a small investment could lead to a big re-rate, like a retail investor based offering etc.
Started: RomanPope, 1 Mar 2021 08:27
Last post: TeesExile, 1 Mar 2021 21:30
Nope, easy to buy this morning and to sell this afternoon. Made more than the day job pays...
Simon thompson has tipped this as a potential takeover. He believes 220p is fair value even without taking into account any takeover price.
Did anyone have difficulty buying this morning?
Started: You_Having_a_Laugh, 1 Mar 2021 13:33
Last post: You_Having_a_Laugh, 1 Mar 2021 13:33
ST has helped some get out. The momentum indicator I use on this were pretty week so lets see how long before it starts to ebb backwards again.
Recommended today by ST.
I bought into this before the merger with Arcontec , it shows how difficult it is to get good technology accepted and established.
Some obviously knew in advance of this news release hence this week's. Still a good RNS.
Started: Vulcan998, 2 Sep 2020 08:54
Last post: SlickMongoose, 2 Sep 2020 14:55
Results look solid to me, not sure what the drop is about.
The cash generation and profit seem very good - dividend growing strongly - the forward view statements are not strong but seem confident