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Results today to 31st March are really impressive and ahead of even the upgraded expectations.
Underlying EBITDA at £6.35m is well ahead of the forecast £5.9m, as are the adjusted EPS and the total dividend.
Above all, the outlook is very, very confident with record books. If you've seen the usually incredibly understated CEO then you'll realise how meaningful this is.
Interesting to see if Cenkos raise their 7p EPS forecast - likely they'll wait until later this year.
There are many growth drivers here - 5G, cloud computing, data centres, new regulations etc.
Amongst the most exciting extracts are re the growth in data centres, and re this new product:
"This year, the Group expanded its portfolio by releasing a new Virtual SNE (network emulation) product, targeting engineering teams developing infrastructure products for deployment in networks hosted in cloud computing environments. While demand is at early stage, the value is in the strategic positioning of the portfolio to track this trend as and when it grows momentum."
and in particular re the new iTrinegy acquisition which hugely widens the potential customer base:
"NE-ONE hardware and software-based Network Emulation platforms provide organisations, primarily across the technology, financial, gaming and military / government sectors, with the ability to accurately recreate complex, real-world network test environments in which to analyse and verify the performance of applications, before deployment."
Fingers crossed for these on Tuesday. They are stubbornly stuck around the 170-175p mark. I'm hoping figures will be materially above previous comment and MMs are not wanting to get caught short of stock.
SPI have issued a terrific trading statement today, driven by the growth in 5G, which must continue to augur well for CLX given SPI are such a large customer.
The outlook going forward is particularly confident:
Https://www.investegate.co.uk/spirent-comm-plc--spt-/rns/strong-momentum-continues/202205060700065350K/
Extracts:
"Strong Momentum Continues"
"The Group has continued the strong momentum seen in 2021, starting the year with 18 per cent order intake growth in the period"
"Encouragingly, the orderbook continues to build, and the book to bill was 112 for the first quarter, versus 104 in 2021. This performance highlights the continual progress made by the Group as it seeks to improve visibility and drive long term, sustainable growth."
"We continue to secure many large 5G contract wins as the development of the technology and network deployments remain firm long term drivers underpinning our growth. During the period we made significant strides in winning business with Hyperscalers, a key focus for us, supporting our customers with 5G cloud network expansions and automation, and again delivered double-digit growth in Services."
"We also secured a key 5G core testing win as part of a major UK government 5G initiative, for which additional phases are anticipated. In addition, we won a strategic deal with a leading Hyperscaler for our Benchmarking as a Service offering.
As demand for 5G pre-deployment testing and network rollout support continues to gather pace, we have firmly positioned ourselves as the partner of choice to support our ever-expanding global customer base with our leading-edge solutions, and to further capitalise on this growth, we have accelerated elements of our R&D programme, originally planned for later in the year."
" "We are delighted to continue the momentum seen in 2021, starting the year so strongly and further expanding our orderbook, providing greater future visibility.
"We continue to significantly broaden and deepen our customer base with our leading-edge solutions and the demand for our assurance solutions is robust, as market drivers for reliable communications, including 5G, remain a key global priority.
"We have developed a portfolio of offerings that have demonstrated strong mitigation of technical cyclicity as we focus on supporting our customers in the ever-growing area of network assurance, focusing on software solutions.
"The strong orderbook and continued business momentum means the Board remains confident in delivering its growth plan for the year."
Encouraging to see CLX arrange an Investor Meet presentation on 26th May after the prelims are released:
Https://uk.advfn.com/stock-market/london/calnex-solutions-CLX/share-news/Calnex-Solutions-PLC-Notice-of-Investor-Presentati/88029622
Https://www.fool.co.uk/2022/04/22/my-top-stock-on-london-stock-exchanges-aim-market-right-now/
"My top AIM stock today
The company I’m referring to is Calnex Solutions (LSE: CLX), an under-the-radar Scottish business that specialises in telecommunications network testing solutions. Founded in 2006, it listed on the AIM in 2020, and currently has a market capitalisation of around £150m.
Calnex is a global leader in the telecoms network testing space with a distinguished list of customers. Today, it serves businesses across the entire telecoms value chain including network carriers such as BT Group, hardware providers such as Ericsson, and chip companies such as Intel. The group is led by founder Tommy Cook, who has over 35 years’ experience in telecoms testing and measurement.
Why I’m bullish on CLX
The main reason I’m bullish here is that the global telecoms industry is going through a period of major change today. Not only is new 5G network technology being rolled out but new technologies (cloud computing, autonomous vehicles, smart cities, etc.) are emerging. This means that telecoms networks will need to be tested rigorously in the years ahead. Calnex is in the right spot at the right time.
Strong momentum
Looking at recent announcements, Calnex appears to have plenty of momentum right now.
Earlier this month, the company advised that it continues to experience “high demand” for its range of test and measurement solutions and that results for FY2022 (the year ended 31 March 2022) would be slightly ahead of the market’s expectations. It added that the order book was sitting at “record levels” heading into FY2023, giving the board confidence that the group can deliver “significant, sustainable growth” over the coming years.
The group also announced the acquisition of iTrinegy Limited, a leading developer of software defined test networks technology, for £2.5m. iTrinegy generated revenues of around £1.4m in the year to 30 September 2021, and Calnex expects the business to be an important contributor to group profit in subsequent years.
A high-quality business
Looking past the growth potential here, I like the fact that Calnex is a high-quality company. Over the last five years, it has generated consistent revenue and profit growth. Meanwhile, return on capital employed has been high. On top of this, the balance sheet is strong and the company has started paying a small dividend. Overall, there’s a lot to like about this AIM stock, in my view.
I’d buy this AIM stock today
Now.. there are some risks....
One is the valuation. At present, Calnex trades on a forward-looking price-to-earnings ratio of about 31. That’s not an outrageous multiple, however, it probably doesn’t leave a huge margin of safety. If revenue or earnings growth slows, the stock could underperform.
Another is supply chain issues. These could potentially create challenges in the short term.
Overall, however, I’m very bullish here. I’d
Another Queen's Award for Enterprise.
Calnex is only 1 of 7 UK companies to have received two.
Quite a long piece on Calnex here
https://www.scotsman.com/business/west-lothian-tech-firm-calnex-seals-ps35m-acquisition-amid-record-order-book-3650305
Taken another 5k
GLA
More new highs, and buying coming in at the full 165p offer price.
Yet more excellent news today:
- the results to 31st March '22 will be ahead of previously upgraded expectations
- the order book is at record levels
- semoconductor supply constraints are being managed successfully
Above all, there's a strikingly confident statement that CLX expect to "deliver significant, sustainable growth over the coming years".
Plus there's a very good-looking earnings-enhancing acquisition for a max £3.5m. The client base is remarkable for a small cap:
"Juniper Networks, JPMorgan Chase, Ubisoft Games and the Government and Military in the UK and US"
CLX can use its power to scale up this business quickly and globally:
Https://uk.advfn.com/stock-market/london/calnex-solutions-CLX/share-news/Calnex-Solutions-PLC-Acquisition-of-iTrinegy-and-U/87809353
Just received the April factsheet for Keith Ashworth-Lord's CFP SDL Free Spirit® Fund. There's a nice mention for CLX, which now comprises 4.52% of the Fund and is the sixth largest holding:
"Of the gainers, Calnex Solutions, a recent addition to the portfolio, led the way following a positive trading update pointing to FY22 revenue and profit in line with market expectations but, more importantly, FY23 expected to be materially ahead."
Going along nicely these.......no turning back hopefully
This news is from March 2nd, not picked up before - CLX working with Colt and Cisco in Paris on a "private 5G pilot", shaping "the Future of Distributed Edge".
It sounds like CLX are at the cutting edge here:
Https://www.calnexsol.com/en/article-display/125-timing-and-sync/1734-innovating-to-shape-the-future-of-distributed-edge
"Innovating to Shape the Future of Distributed Edge
Colt delivers ground-breaking private 5G pilot in Paris supported by Cisco and Calnex.
Innovation is at the heart of Colt’s strategy and we’re continually testing the latest technologies to meet the future needs of our customers. As part of our 5G and Edge incubation program we’ve been working with partners including Cisco and Calnex on a private 5G pilot in Paris.
This explored a range of new concepts, including a distributed Edge platform and network synchronisation, both enabled on the >Colt IQ Network. Our goal was to provide valuable use cases, especially for digital transformation and Smart City concepts, and validate them in a real user environment.
As part of Colt’s 5G and Edge incubation program, we have been working with partners including Cisco and Calnex on a private 5G pilot in Paris to trial a range of new concepts, including a distributed Edge platform and network synchronisation, both enabled on the Colt IQ Network. This was intended to provide valuable use cases, especially for digital transformation and Smart City concepts, and validate them in a real user environment.
In a world where everything is connected and every user will have the opportunity to enjoy a highly personalised experience from home or at the office with the hybrid model, 5G offers massive potential to revolutionise both business and consumer markets.
As a result, many sectors with high bandwidth requirements for business-critical services, including manufacturing, R&D, and broadcasting, are looking at how private 5G can help deliver the promised benefits.
The real estate sector is also assessing private 5G, and our pilot examined the performance of indoor 5G connectivity and opportunities related to smart offices and consolidated private building networks.
For developers and real estate companies, connectivity presents an ever-present challenge – particularly for their development pipelines, where the expectation is that they will be at ‘state of the art’ upon delivery, which may be several years down the line.
The pilot represents an important step forward in further understanding the benefits 5G for business verticals like real estate and how to deliver them. It also highlights the importance of working closely with trusted partners, which we see as a critical element in delivering services in the future.
etc"
There's an excellent write-up about Calnex on Sharescope FYI:
Https://knowledge.sharescope.co.uk/2022/03/09/calnex-solutions-plc-lse-clx/
Ticking up again already today and looking very strong.
Interesting in the current climate to note CLX's military applications:
Https://www.calnexsol.com/en/article-display/124-network-emulation/1581-application-performance-testing-for-aerospace-and-defence
Https://www.calnexsol.com/en/resources/network-emulation-article/1307-satellite-communications
Very good results from key CLX customer Spirent this morning (and well received by the market), summed up by:
"5G remains an important enduring driver for Spirent and we continue to benefit across the portfolio from customers utilising our leading expertise and solutions."
"As a result, the Board is confident that the Group is well-set to deliver sustainable growth in 2022 and beyond."
Much more detail here:
Https://www.investegate.co.uk/spirent-comm-plc--spt-/rns/full-year-results/202203100700062706E/
Also an excellent new article about CLX on Sharescope:
Https://knowledge.sharescope.co.uk/author/elric-langton/
Finally, interesting in the current climate to note CLX's military applications:
Https://www.calnexsol.com/en/article-display/124-network-emulation/1581-application-performance-testing-for-aerospace-and-defence
Https://www.calnexsol.com/en/resources/network-emulation-article/1307-satellite-communications
OT : sorry about the prior post, wrong thread (should have been on the SUR thread!).
Bonkers markdown, with the MMs stuffing any sellers given the market conditions.
I read a number of articles on the weekend noting that the current energy crisis will only accelerate the implementation of action and legislation to speed up the amount of loft/general home insulation, installation of heat pumps etc.
All of which will be of benefit to SUR.
Great update. These have a habit of slipping back after good news. Will buy more again should they fall back too much......
Cenkos have today increased their forecasts for the coming year by 17%....
Here's their summary:
"Calnex Solutions has announced that the strong levels of trading
throughout H1/22 have continued and FY22E trading is in-line with
expectations, subject to fulfilment of certain orders in March 2022. The
order book into 2023 has increased substantially following a significant
order from a large datacentre customer and FY23E trading is now
expected to be materially ahead of current expectations. We have
increased our FY23E revenue and PBT forecasts by 15.4% to £25.5m and
17% to £7.0m respectively"
"Forecast upgrade and outlook.
Following the strong trading update today, we have increased our FY23E revenue and PBT forecasts by 15.4% to £25.5m and 17% to £7.0m respectively. With an expanding order book and the telecom infrastructure, networking and services markets seeing a growing number of market participants requiring testing solutions, the growth outlook for Calnex remains compelling."
broker note out - Calnex Solutions has announced that the strong levels of trading throughout H1/22 have continued and FY22E trading is in-line with expectations, subject to fulfilment of certain orders in March 2022. The order book into 2023 has increased substantially following a significant order from a large datacentre customer and FY23E trading is now expected to be materially ahead of current expectations. We have increased our FY23E revenue and PBT forecasts by 15.4% to £25.5m and 17% to £7.0m respectively.
https://twitter.com/surprised_trade/status/1498567262801903618
'...the Company will begin FY23 with a record order book across all product lines and it is anticipated that revenue and operating profit for FY23 will be materially ahead of market expectations'
Terrific update this morning:
- the year to March'22 will be in line with previously upgraded expectations
- the coming year "is likely to be materially ahead of current market expectations"
- CLX have received "a significant order from a large data centre customer" which signals the start of a very material new market
- CLX have successfully negotitated their way through the various current supply chain issues - and there's "the potential for further growth" should those issues ease
This bodes well for SPT and therefore CLX:
Https://www.sharecast.com/news/broker-recommendations/canaccord-genuity-positive-on-us-opportunities-for-spirent-communication--9148383.html
"Canaccord Genuity positive on US opportunities for Spirent Communication
Analysts at Canaccord Genuity took a fresh look at telecommunications testing outfit Spirent Communications on Thursday after the company finished 2021 "on a high note" and said it was "encouraged" by signs that some of its top customers were planning to increase capex in the current year.
Canaccord Genuity said Spirent ended the year with a "solid" order book and stated it was further encouraged by signs that three of the firm's top customers, AT&T, Verizon and T-Mobile, were planning to increase spending on network equipment and 5G deployments by a combined 9% in 2022.
The Canadian broker noted that as the major US network providers continue their network upgrades, it expects another year of "solid spending growth" on 5G as well as fibre and high-speed ethernet rollouts and pointed out that Spirent should also benefit from a ramp-up in capex at Dish, which has begun to build a 5G greenfield network with a $10.0bn overall budget, with Spirent named supplier of 5G core network test and validation solutions.
"The US makes up 55% of Spirent's revenues, and we estimate the three US service providers plus Dish generate circa 35-40% of sales, buying its testing and network assurance solutions," said the analysts, who stood by their 'buy' rating and 320.0p target price on the stock.
While Canaccord added that test and measurement was "a relatively small part of overall telecom capex", it believes a double-digit increase in spending budgets will provide "a solid growth backdrop for Spirent"."
https://twitter.com/surprised_trade/status/1485930100193468416pulled back in the mkt drop, however, profitable, growing and cash rich'....share disposals can be less reliable indicator than share purchases,....Directors can sell stock for personal reasons which have no reflection on the state of their employer; they might need to free up funds for a divorce or raise money to pay for someone in their family to have medical care. You also quite often see directors sell some shares when they’ve received stock as part of a bonus payment, where they are selling to raise enough money to pay the associated tax bill.'
It is but still never a good sign!!