Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
STRONG BUY - strong growth across the board (revevenue, EBITDA, net income) just CFO came is softer but still positive. Outlook remains very appealing and at this valuation level it's a STRONG BUY !!
Hasn't been that cheap for ages or ever.
Greatly underappreciated share in my opinion so I keep topping up each month. At the current price forward P/E is somewhere below 20 if I'm right.
Very good investor meets company presentation earlier this week, well worth watching, especially the last 15 minutes from the CFO. I thought the most interesting bit was about their 'programmatic' M&A strategy where they are aiming to execute 1-2 deals per year for a total value of 20-30% of market cap. This makes complete sense to me & means a material addition to annual EPS + a material portion of the consideration being share based not wasting management time integrating a minimally accretive deal. This is all funded via a mix of FCF and earn out shares, and the CFO was clear that he believes no consultancy should ever be in debt (something that I'm sure TPX wish they'd followed).
It means we can assume that they are looking at deploying £45-70m on their one to two 2023 deals, this would be funded by the ~£20m cash on hand + ~£15m in 2023 FCF + the rest in share based earn outs. Given the current environment they should be able to negotiate some good terms, (better than iOLAP), but it's impossible to say how much these deals will add to EPS. Even assuming 10p per annum (~£5m incremental PAT) it's easy to see FY24 EPS reaching 50p+, versus the current 33p forecast. Simple multiple expansion on 17x would see ELIX trade at 850p, however given this was trading at 20-25x for most of this year you'd have think a share price in excess of £10 would be readily attainable if they execute well.
Beyond FY24, where will this be trading in 5-7 years if they continue such a strategy? The CEO emphasised they want to emulate Accenture so the ambition is huge and they've arguably done the hardest part in reaching significant FCF generation with no debt. I've added an initial position today and will increase further if this does fall back, however I'd be surprised if it goes much lower given the fundamentals + quality management.
lagging the ytd rally for no reasons. Peers are smashing it so will ELIX. STRONG BUY
Volume of buys up today. Peeps getting ready for the pending TU in 2 weeks time?
https://www.mca.org.uk/press-releases/strong-growth-in-management-consulting-expected-in-2023-according-to-biggest-uk-survey#:~:text=The%20latest%20Member%20Survey%20from,of%20economic%20uncertainty%20and%20change.
Famous last words - I reckon the results are going to be pretty stellar. Why?
- CEO has tons of shares - he has plenty of skin in the game
- order book MUST be known in advance in respect of projects going forward (at least 6-12 months) - to ensure planning of staff. Expectations must have been set based on these.
- management consultancy is set to grow in 2023 - I reckon peeps think it might retract but even in a recession - companies are going digital / spending on digitalisation / restructuring etc.
- very strong H1 so H2 expectations should not be strenuous to achieve.
- last investor presentation @ 8/12/20 - management appeared relatively confident reiterating current year expectations (so this was 23 days before the year end). Of course, they can not disclose new info - but my reading was that it was pretty positive.
- NED bought shed loads of shares in Nov 23 - before the "closed period" at similar sp.
- they might be eyed up by one of the big boys for a potential TO - would not surprise me.
PE ratio is up there but take a butchers at their CAGR + profitability and tell me that they don't justify a high valuation.
Results out imminently.
Today's US payroll figures confirm the strength of the US economy where ELIX has c44% of their biz. Bodes well for 2023 year.
Already doubled my position compared to last year. Bit by bit each month. I'll be happy if it stays this low for a few months longer.
I'm in. The H1's looked solid but the price dropped after, director buys since the fall. I like the growth story although organic growth does seem rather dependent up promoting enough Principles up to Partners. My main reservation is that for a business based on its staff the reviews in Glassdoor are not exactly the best for companies in the sector.
Added at £4.20, a 15% fall on nothing of any substance creates a good top up opportunity IMO. Enterprise value is now ~£170m vs an expected EBITDA of £20m, so 8.5x EV/EBITDA.
Things can always get cheaper in the short term but this is now trading at a lower valuation than the July 2020 IPO so looks interesting. Let's see what happens...
today's knee jerk reaction is a buying opportunity imo
GL.
Sold out a few weeks ago at 520p.
It takes two to tango.
I had gone to the conclusion that peeps would not be willing to pay a premium for high growth. Therefore, minimal upside.
Not going to rain on the parade anymore.
Long term wise - ELIX is a winner. Short term wise - I do not know.
Fantastic update, 2023 guidance increased vs market expectations and excellent 2022 performance.
Assuming they maintain a 29% EBITDA margin and hit the mid point of current estimates (£86m) they’ll deliver £25m EBITDA for 2023. At 10x EV - EBITDA this would put them on a share price of £6. With mature, slower growing peers like Accenture trading at ~16x EV this would still be cheap…
FinnCap-
'Elixirr continues to gain market share in a very large end market and, reflecting
the continued growth potential, we have upgraded our FY 2024E EPS by +9%. Elixirr has evidenced
it is not seeing the slowdown others in the wider consulting market have described that has
recently impacted its share price materially, providing a significant value opportunity.'