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At 40p the fully diluted market cap is £256.1m. FinnCapp were forecasting (27.2.23) 2023 y/e cash of £34.3m and adjusted earnings of £23.6m. That's a cash adjusted P/E of 9.4 dropping to 7.8 for next year. The Tuffnells situation may muddy those figures but is a strong upside. Hardly ambitious.
Tep1 - if it’s an objective view of value that you are looking for, to be honest you couldn’t really do any better than study the brokers’ reports, rather than ask anyone on this board.
That’s where the target price of (I think) 58p came from.
However, what the brokers never seem to take account of is a whole host of other positive/negative imponderables: the dizzying array of macroeconomic factors, sentiment (following the protracted share suspension/untested management etc), the behaviour of a handful of unpredictable major shareholders, the possibility of a takeover, directors’ purchases, regulatory changes…..
That’s why people’s views differ so much about the SP trajectory. My own feeling right now, for what it’s worth, is that it will move up this year towards 40p, but fall tantalisingly short of that. So upper 30s.
That feeling could, of course, change next week after the trading update. But, however impressive the revenue/margin growth, I think it will struggle to break through 40p this year. But who knows?
@sister I am genuinely interested in how you evaluate company worth and therefore share price? At the 40p share price you mention that is 12 times predicted future earnings estimates.
Thanks for taking the time to reply. Interesting. I take your point on the mcap, with the outstanding options.. at 40p we are looking at a mcap between 250-260m. I don't think its worth that anytime soon figure wise and I tend to agree with your timeframe if not longer.
Non taken Sister and it's a legitimate question. Personally I think its important to look at potential difficulties any business you invest in may face.It's pointless looking through rose tinted glasses all the time. DX is a very different beast to the one I invested in during spring /summer 2020. Then it was a turnaround, now its in the growth/investment phase.Totally different considerations. It was quite obvious the turnaround was going well in 2020 so it wasn't a difficult decision to invest with consistent buying from the directors etc. Now it's about growth in a low margin, competitive marketplace with substantial competition. Can they do it and can they do it profitability and what will be the implication on the share price.
I quite admire DX. Investing for growth in difficult economic times is difficult but sound economic practice because when the econonmic landscape improves you are in a much better position to take advantage of it. The difficulty is that the world economic dynamic is changing with trade difficulties between the USA and China and the Ukraine situation and that will filter down to a micro level and it already has very significantly. As I mentioned at the time I sold all my shares as Russia was building up its forces but I couldn't sell DX because they were suspended and I probably would have but that may have turned out to be a blessing in disguise.
The dividend keeps me interested and as long as we see some progression in that I'm quite happy but I review all the time. It's a new board, unproven. I'm still looking for clues as to the exit strategy. There is so many considerations and variables
which we all have.
I don't normally invest on the AIM and DX is the only share I had until recently when I invested in a share that had dropped to a level that I felt was a bargain, but it wasn't a penny share like DX. A few pounds per share so quite a high cost of entry but in a very boring field and a discussion board that virtually no one contributes to.
At the momment I am reasonably confident in DX. I just think the share price growth is further away than others. But who Knows. !
Sister,
Ports says ..... "In my view DX is a sound bet but it is at least a 3 year play and it's mcap is pretty punchy in the current climate."""... That's how in summary I interpret he justifies being an holder. Very responsible approach to an investment... Absolutely nothing wrong with it... The thing that separates my own approach is that I believe that - given as things are looking now and except for some black swan changing stopping the progress - a momentum rather sooner than later is inevitable - the market anticipates targets and by the time the target are reached they will already have been priced in in the sp. I think we will see big things within a year
Portswigger... Sometimes I read your posts and I think you make quite a convincing arguement not to invest in Dx. Yet you are a shareholder. I'm not trying to be funny or criticise but why did you invest in Dx, why do you continue to invest in them ? If you think there are better opportunities why haven't you invested in them or perhaps you have. I'm don't wish to cause offence...just genuinely interested !
Well, that's a question with a multitude of answers.
Turn it round... why would you invest in DX currently. It's a low margin competitive marketplace, no history of share price growth on performance in the last 4 years or so. Even though it's paying a dividend, a relatively substantial holding is required to make it worthwhile. Logistics is pretty boring, there's no great discovery to be made in the industry... you can only do it cheaper or better than anyone else in terms of service and there are competitors with very deep pockets around. DX do have the niche of course in certain aspects of their business which is beneficial.
So how does that compare with investing where there is a much lower cost of entry, investing in companies that are loss making but chasing rainbows in new developments in biofuels, phama, tech, waiting for industry to catch up with their ground breaking offering or those promising riches digging in the dirt. Convinced by sweet-talking CEO's promising the earth. Which do most private investors choose.?.. of course the latter. !. You've only got to look at trading volume and comments on the chat boards of those companies
In my view DX is a sound bet but it is at least a 3 year play and it's mcap is pretty punchy in the current climate.
Logistics is boring,DX is a pretty boring share. it won't generate the chatter and herd unless there is something out of the ordinary like an offer and I think that it is at least a few years away. I wouldn't dream of making recommendations but I would look at AIM companies paying a dividend.There are a few that I would consider a better bet than DX with a bigger margin and better yield but there is generally a higher cost of entry. Each to their own.
I can understand the big investors taking their time and likely playing back room games - but why are not small investors pouring in - please don't tell me they don't know yet about DX - ? Which other AIM share is offering 'credible' and 'grounded' prospects as good as DX? Name them please, as I don't know of one
Yep. Interesting that it is solely an express depot... but they needed one in that area. Like anyone I'm interested in the update but I'm not expecting anything startling. If it moots confirmation of the dividend I'll be happy. In recent trading updates DX have indicated 10% - 15% turnover growth often in parallel with depot growth. We have had the background of inflationary pressures and drop off in consumer spending in H2 so if DX have produced anything unexpected then credit to them. It's only really when get the unexpected that we see substantial share price movement and the markets are expecting a good update and confirmation of the dividend.
Another depot opening....but the most interesting part was the CEO’s reference to “ongoing” successful growth and development. I wonder if that’s a clue as to what they’ll be saying in the next trading update. It’s due this week or next, so we’ll soon find out.
Agree with you on that assessment portswigger. It's going to take time for the new depot leases to become operational and there is no guarantee a license with an administrator will turn into an agreeable lease with a landlord although probable but the legals will probably take a while.. I think the interesting thing will be where these depots are and to what extent are DX taking any Tuffnells fleet or are they using existing as their focus now seems to be electric. Some interesting trades yesterday afterrnoon. Not sure if Buys/Sells as they were around the mid point. I suppose an RNS will tell us if it's anything significant.
I do like a bit of positivity e-mail and its always good to look on the brightside. It's the AIM though and I'm a long in tooth glass half empty guy. The thing is with IDW that those major users of IDW should have been fully aware of DX even if they used Tuffnells. Perhaps there is a reason they used Tuffnells and not DX, may be price... maybe service, maybe they've been with Tuffnells years. Sure DX have licenses with a view to taking on Tuffnells depots but with various different landlaords and logistics to integrate I think it will be second half of 2024 before we see any tangible business benefits. In addition DX is not the only alternative IDW game in town.
We are all still kids at heart and fairy stories are all still here with us. We wouldn't be in AIM otherwise... DX is in full expansion - aided and abetted and enhanced by Tuffnels' demise... If DX manages to get a fistful of Ikea-and-above level partnerships (which I can see vey likely as Ikea is a formidable recommendation) we would all be in fairy land... Plus other positives probably lurking round any corner
Absoluteley e-mail. It is history. The update could get us to new ground and some posters are more positive about that than others.
The question is ........what is going to happen that is going to generate more buyers and sellers at a higher price. That's a question I ask myself all the time. So far all the positive news over the past hasn't done it. Trading volumes are low.Perhaps the update will do it....Personally i think it is a fairy story and my belief in those ended a long time ago.
Most grateful for your insight and the effort you made to answer my question, Ports.
Makes perfect sense, and without any hesitation may I also say that the points of view of the other illustrious and very experienced posters here are very valued by me.
Email, loving the optimism and positive sentiment. I truly hope that DX do get to those exalted heights of £1.
To be honest, I'll happily take half of that. : )
Thank you to you all for indulging me.
Onwards...
Ports,
I admire the historical consistency of your analysis... But that's history... The next update could get us on a new ground - as has been suggested by others, a new reality might start impose itself... Directors' buys might no be the mainstay of sp advancement and the 1pound sp fairy tale might start to gain credibility
It's nice of you to say deep, but its not incredible knowledge its just my trading experiences and I have run businesses for many years so I look at shares from a business/operational perspective as well. Hence my boring posts when I don't quite get the strategy but then again I'm not in logistics. Anyway it's served me pretty well but I don't get it right all the time and others have equally valid points.
The point about DX is that the substantial growth in the share price in my time came from sustained director buying from April 2020. But it was from a numbers of directors and that pricked up ears. Directors usually buy when they think the share price goes up and in this case it did. Similarly Lloyd cashed in when the SP dived over the CG shambles. A lot criticised Lloyd for that I didn't. He saw an opportunity and took it... wouldn't we all if we saw it or had the money. That's the world we live in... morals rarely come in to it.!!
It's not always the case that director buys are good news. Sometimes it's to reassure the markets after bad news or to mask bad news. Sometimes directors do it to portray the company in a positive light prior to a fundraise. Don't forget Directors are always in a position to look after themselves very well whatever the situation and I can't think of any that don't.
Your question was about further director buying. I don't know. There are the outstanding share options of course and like Pianista says I think we'll see further incentives to take into account the "new realities". I rather like that phrase.
The issue with DX is that it doesn't generate the "chatter". I don't whether you were a shareholder when VOX markets were shouting from the roof tops about DX and how everyone wants to work for Lloyd. Lloyd this and Lloyd That.! It did nothing. Dx is not a generally attractive share.The recent II' and Schroders, Lombard all bought in over 30p.They'll be having meetings with DX perhaps quarterly and none have jumped ship but of course they are starting to get a dividend, they'll be planning 5 years plus. To most private investors 5 years plus is a lifetime.
I think brokers forecasts are irrelevant. The share price is what is. Weren't VOX talking about a £1. It's just a fairy story.
Hear Hear Ports.
If I'm not mistaken, it was "Sister" who opined that 25p was a good buy and how correct she was.
Ports when I read your posts, which clearly illustrate your incredible knowledge, I have noticed one thing, which is that you believe movement in DXs SP occurs when "Directors Buys" happen.
So, if you don't mind me asking, what in your opinion could be the reason(s) that directors are not buying, particularly when all is going so swimmingly well, allegedly?
Could it be the way the AIM works, the corporate governance fiasco continuing to hang over DX, the Tuffnells £50 corporate espionage debacle &/or all of them?!
Most PIs have waited patiently and loyally for upward SP movement and despite brokers' forecasts being rosy and constantly stating that the SP should be in the 40s and 50s, nothing!
DX has come a very long way since October 2022, but I'm not sure if DX will ever reach those pie in the sky targets IMHO.
Well the markets are expecting a good update. They've targeted a second dividend of 1p and DX have said nothing to doubt that. email is right about momentum but is it momentum in news or buyers or sellers. Momentum is nothing if it does't generate buyers and sellers. DX has no history in this apart from director buys. Turning around a business is far easier than growing a business in a low margin comptetive marketplace and investors will have been far more interested in a turn around in this industry. I can't remember who said that DX was a good buy at 25p a few weeks ago and it was and it was suprising that trading volume was pretty low and not many buyers at that point. Tufnells was a profitable business although quite modest and not enough for it to find a buyer or find the funding which does tell you something about its liabilities and thoughts about its potential. DX could inherit I dont know 75m - 125m in turnover maybe more but with integration costs it's unlikely to be higher percentage margin than they are currently working at so pehaps it isn't a game changer. The markets obviosly don't think it is so far. Since the end of the suspension last October the Share Price has done nothing. This is despite new depots, hubs, electric vehicles,revenue and proftabilit growth, announcement of dividend, capital allocation policy and one of its biggest competitors going under. ( Good News after Good News) In normal circumstances it is quite logical to ask if this doesn't generate share price growth what will ?
What could happen that is substantially better than that.... not much !
Email - I'd be very surprised if the update didn't give us all we could ask of the company, and more. The question is whether the market will show its appreciation for a change, and take the SP to a new level - maybe the mid 30s (though we'd all like more!). Partly depends on what happens in the wider market, of course.
FROM RSN
""The Company intends to issue a trading update in mid-July when it will provide commentary on DX's performance in the second half of the current financial year ending 1 July 2023 and on its growth prospects""....
I do appreciate the wise caution expressed by distinguished posters. But this is aim -it's all about momentum.... since its Lazarus act, the company conduct has been impeccable... No way the big players need more proofs of where this company is going, it's all clear as daylight - a surprising positive surprise it's very likely indeed
Ports... DX are forecast 35m in free cash year end so presuming they have their figures right I don't see the financial commitments causing much difficulty. Also the Tuffnells depot agreement is only an initial licence not lease agreements so there will be a time lag before these become operational so they will have to take on board the immediate new business within existing infrastructure and capacity. I would imagine H1 will be pretty hectic at the sharp end and the interims will give us better picture next year.
It's a mistake to think good news equals share price increases and conversley bad news equals share price falls. News just affects sentiment which is how many buyers and sellers there are which primarily dictates at what price market makers make a market. The headline regarding tuffnells is good news but that doesn't translate until as pianista eloquently puts it until we get assessments of the outlook etc. The benefits of tuffnells demise will take a while to come through however successful they integrating the new opportunities.
DX have produced good figures for a few years now and really the share price has done next to nothing on figures. Most growth has come following director buys and i for one don't see much change to that even with a updated outlook and brokers forecasts. The question is if that will affect sentiment positively. if it does great but we're still swimming against the tide of negative makro sentiment.
In my view it doesn't really matter what figures DX will produce because the markets are not daft,they will be already factoring in the future. The SP will grow if we see director buys which i doubt because I completely agree with Pianisa on a new incentive plan to feather the nest. Rumour is king and if there was a rumour that someone like DHL was circling DX
the affect on the SP would be far greater than anything the figures could ever do.In saying that if DX do make it work integrating tuffnells business then DX would be looking around 35% plus of the IDW market which would be an attractive proposition to someone.
Great pointers, Pianista