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Hi Dubliner, yes recognise the name. I have my finger in too many pots probably. Very happy to be here though and although currently around b/e have taken some profits over time. Living on the continent, I am a customer of Equals Money and am impressed with the service. Also planning to hold. If 100 goes, don't see any resistance until 130.
GL DJF
Hi DJF, I recall you from one or two other stocks I have been involved with.
I recently re-bought a position here and was stupid to have sold my original holding (bought early 20s and sold not much higher - doh!).
If investors here have not seen it would recommend registering and looking at the presentation below that was flagged in the Full year Results RNS. I found it very encouraging indeed and this time I plan to hold!
ttps://webcasting.buchanan.uk.com/broadcast/640f4ab0e57d7909a3e206e3
I am looking forward to seeing how Q1 closed out Revenue wise and what how things have shaped up in April and May.
Equals Group will report on May 16th: AGM and Short Trading Statement according to their website. We seem stuck around 90p and looking for a catalyst to break out.
NT. is a bit of a weird one. If his trading record is to be believed we should all be following him. He seems to be nearly always in at the bottom and out with a profit. The thing I find slightly odd is how much the sp has shifted after his published buy price. I don’t know anyone who has that sort of success unless he does have a crystal ball. Anyhow good news from the States with JP mopping up the last ? Failing American bank. ‘ risk off’ apparently . Bit of an early call with mad sadists like Putin on the rampage.
I cant see this slipping back again famous last words. Have topped up 4 times now all the way to 90p. I believe it has been a lot higher than that in recent years and far more established now with monumental prospects too. Gl
And of course Crystal Amber Fund have exited now, which was holding the share price.
1.05! Prefer PH target 1.70 I think. My calendar has the 16th May for the next TU, I’m on free share here, but looking to add if there’s a drop lower than mid 80’s (don’t think it will). Anyway happy to hold for the long term.
Seems to be gaining more interest now. Naked Trader opened a small position with a rather unambiguous target of 1.05 considering the expansion potential oonex would bring if cleared by end of September. Paul Hill seemed very exited in his interview with the bosses recently and rather shyly confessed to having taken a rather large position on another interview, sensible fellow. Some pretty decent institutional holders including 5 percent by hedge fund. Also Ameriprise financials increased holding to 12 percent in November. Wouldn’t be at all surprised to see more than the current 55 percent but maybe not till acquisition completion. Expect a bigger jump then. Gl
The shares have only risen 13% since we tipped them in February 2022 at 77p. This is largely due to a difficult stock market backdrop for growth companies because Equals has made great strides during last year which saw several upgrades. Revenue grew 58% and this momentum has continued with the first quarter running 54% ahead of the prior year and 13% up on the fourth quarter.
The Solutions Platform is attracting larger corporates by offering own-name IBAN account(s), allowing clients to collect payments in multiple currencies, while paying their bills locally and exercising central control over the process via API connection. The onboarding process can take six months for these big customers but they ought to be sticky. With a healthy pipeline of quality clients, growth should be sustainable and medium term prospects are underpinned by the proposed Oonex acquisition. This will bring licences and banking relationships in Europe, more than doubling the addressable market.
As a platform business Equals is seeing increasing returns to scale with its ebitda margin rising from 15.1% to 17.4% last year. Forecasts have it improving to 20.3% for 2023 followed by 20.9%. Cash is expected to grow from £18m at the end
of 2022 to £66m over the next two years, which is equivalent to 36p per share. Very attractive on a p/e of 12.4x.
From Growth Company Investor / David Thornton
Recommendation - buy
Am happy enough with what I've heard this week to hold onto my present holding, for at least the year ahead. Have trust in IST and RC to make the right calls regarding Oonex, assuming regulatory approval is received. After all they have done a good job in transforming Equals, in the last couple of years. On looking at the Oonex website did notice that they have a compliance unit in The Netherlands because of a KYC and AML position on offer. I did wonder if this was a sign of Equals getting involved already.
Good to see the share price bounce back.
Watching this one, as an ex holder. They seem to have addressed most of my points in last posts.
Q1 is well up, will be about £21.5m by close of month. Solutions has flipped into gear and is up around 50% even on Q4 of 2022, hence, the underlaying pipeline of new business here is 'hidden' and likely much more to come.
Gp% also edging up by around 1%. My expectations for the year are now revenue of £95m (excluding the acquisitions), and EBITDA in the region of 19 - 21m. Valuation depends on the multiple applied, which I guess is somewhat personal / arbitrary, but clearly well above the current sp.
Good to see clear out of travel cash - just too much stuff in here, gives a better focus. They haven't splashed a lot of cash to buy a substantial EU business, but acquired a small start up (loss making) to get the regulatory licences, which seems on balance a reasonable way into EU expansion - they are free to launch their platform in the EU without the complexities and costs of buying another substantial / established business to convert over to their own platforms.
Pleased with Q1, and with a clearer forward plan. Looking to get back in as a LTH, when my finances allow it!
GLA in here.
Fdh, the Vox was ok, but with you talking to Vox, really! we need institution investors not PI’s to move this up in to the 150’s +. Ian does explain why this is a good move (eu IBAN’s) etc.. Anyway looking forward to 6pm. Hopefully onwards and onwards.
Will look at the vox interview when I get time but don't understand why a company seriously wanting to attract corporate business bothers.
As far as the Oonex acquisition goes, at the moment just seems like buying a small loss making business with licences and calling it Equals European Headquarters in Belgium.
As a shareholder, I want to know if Oonex will be rebranded as an identifiable part of the Equals Group. Also, if any experienced Equals staff will relocate to Belgium to oversee operations. Making full use of their knowledge of what Equals can offer European businesses, to help support Oonex staff and boost expansion. Growth asap not medium term, whatever that means, thereby protecting Equals investment in this business.
The results report does show details of thought towards future growth. Hopefully the next one will be even better with specific objectives laid out with targeted dates .
Oh the link works! LSE didn’t allow Vox links before, which I always found weird.
Not sure that I’m happy that this interview is done prior to meet the company at 6 tonight, but hay I suppose they need to get exposure. For newbies, the link below won’t work, just Google Paul Hill Equals.
https://www.voxmarkets.co.uk/articles/q-a-with-equals-group-ceo-ian-strafford-taylor-cfo-richard-cooper-dd880a4
Market seems to have so far responded positively to the results and acquisition. Live 15 minutes away from the Oonex and happy to see them fully part of the Equals family and delivering a strong foothold in the EU. Close to B/E now for me but holding long-term.
GLA
Hi SNN, must be a very contented person at the moment, good luck to yu. I had my chance and didn't take it. So the Investor Presentation will be the same day as Finals, Mar 27 at 6m. Will be very interested in what IST has to say. Thanks for taking the time to take look at their numbers.
Did take the trouble to look at Wise, IPO'd at a high price but have come down some since. It seems they have got their plans, with a decent global reach, thanks to the use of reputable established overseas businesses as agents. Not dug too deeply, but couldn't easily find details of their own global offices. Though they have recently opened an office in Texas, where Equals were looking for business last year. Have an acquaintance who has worked for a major UK bank in foreign payments for most of his working life. He obviously can't tell me anything specific because he knows too much. On my mention of Wise, he did concede that some of their own clients were 'most likely' using them. Wise also have plenty of cash.
Thank you, SNN, for those comprehensive responses. A very useful insight, and interesting too to understand your thinking in selling.
I think I will wait for the news on 27th March, with a view to perhaps selling some then. My holding is in an ISA, and I have no immediate use for the funds tied up in this. I hold a relatively modest number of shares anyway, but I think I'll keep a few pro tem, just for the ride!
Once again, thanks for taking the time to put together such a well thought out response. Break a leg!
Overall, doubts! A lack of direction, lack of clarity and forward vision as to where this is going. What is the target market / customer they are aiming at? Not sure they have built a platform that has a purpose. As fdh said - a man without a plan?
One I am very closely watching. I suspect they still may be holding a good hand, but the cards are held close to their chest. Solutions needs to win sizable enterprises as clients, and a good many of them. The intriguing pull is what is in beta testing.
Purvis - thanks for the post and your thoughts. Partly, my decision was personal - I needed funds for something else which was a pure no brainer, already more than double, and likely to double or more again in 6 to 9 months time. Also, my holding was large and not in my ISA, the CGT bill is uncomfortable! (But can use the annual allowance and a big chunk of losses from a few years back.)
The valuation here seems wrong. However, looking at Argentex and Alpha, not particularly out of line (roughly 20 times PER or 13 times EBITDA). In part the valuation is being held back by wider market issues / recession concerns etc. I can't see this getting any lower, therefore, as this year goes on, the sp should rise as this year's profits growth comes through in trading updates, and if the company has guided correctly, the market expectations will prove conservative. As a minimum then, the value is 17m EBITDA (plus?) times 13 (more in better market conditions) which is £220m, say about 135p per share. From a price of 90p to 135p is a 50% gain over the next 12 months. If I had funds, I would buy back a smaller position inside my ISA. Not many shares appear with that upside in one year.
My doubts are about growth. The company seems a bit of a dog's breakfast of different products not really integrated. The previous strong quarter on quarter, consistent growth, appears to have stalled in H2 2022. Solutions is not where I was hoping it would be (more revenue by now). IST did address this in interviews (other major shareholders may have raised the same question). He said the trend continues upwards and he feels it unjust to measure progress monthly, or even quarterly. He is limited to what he can say, but suggested there is stuff happening 'under the hood'. He certainly intimated further positive developments.
They did previously suggest dividends were a possibility. Now, no. They are keeping cash for acquisitions, and likely to be over seas expansion. Not sure I like that idea, sounds like a sizeable acquisition, given their growing cash pile. If their tec is top notch, paying for expansion doesn't make sense to me - buying customers to put through their tec?
A lot of growth is in the white label offering. They say Solutions can be white labelled for IFAs, estate agents and removal firms! Again, seems to be a lack of growth / demand for their products in their own name, directly. Seems a lack of direction and a lack of demand for the platforms they have built? I have doubts! Should be an open goal for winning business from the banks. Perhaps, like a lot of things, customers are sticky and change resistant.
Solutions seems to be an integrated offering and growth is not where I would want it to be. However, they did say they have four sizeable 'clients' in beta testing mode, so the lead time is clearly long. If this proves successful and these four fully on board, other similar large enterprises will do so too.
Good morning SNN.
Your last post indicated you might be posting again with further thoughts. I, for one, would be interested to hear them. This share certainly seems to have been in the doldrums and honestly I can't see why. I do agree that the profile is not what it should be with potential corporate investors (another puzzling element, given what appears to be a switched on management team), but the model seems a good one, and one which I'd say is increasingly relevant on the b2b side as companies take a keener interest in costs. On the FairFX side (I'm a long term card holder, which is part of the reason l came to this share at around 40p), the travel boom won't hurt, although I do realise this is a less significant driver in the business.
In short, I'm tempted to follow you out and take my profits. What stops me is the persisting feeling that this share has a lot further to go, and that l can't get to grips with why we're where we are.
Well, I have crunched the numbers somewhat more and 'considered things'. Numbers wise, I am going for quarter revenues of £20m, 21, 23, £24m - total £88m. Contribution margin same as 2022, ie 47.5% gp margin and 2.5% marketing, so 45% giving £39.6M. Overheads of 22.6m and EBITDA of £17m. Canaccord are saying £80m revenue and EBITDA of £15.5m (guided by the company as conservative).
A jump in profits from £12m EBITDA in 2022 to £17m in 2023 is an increase of 42%. Currently we are on about 12.5 times 2022 EBITDA. There is something wrong here re the valuation or the quality of the company, its growth prospects, its business model and or products / services it offers (hence the low valuation). The market price is signalling to take a long hard look at what this company actually does and where it is going to ... ... ... ... and where to value it ... ...
for a later post! (I concur with fdh's comments)
For disclosure, I have fully sold out, half went in December, and half again following the Jan update. Will continue to watch and follow developments.
Morbox, thanks for the interview link.
Personally I thought that IST looked tired. With regard to overseas expansion he sounded like a man without a plan. Can't see how a financial institution can expect to buy an overseas business and put 100% faith in them representing the interests of the company. The employing of European staff plan in the UK and getting to know them inside out before getting them to run a future planned overseas office seems the less risky way. It means that clients can be built up from London to start with, if the staff are capable. As for Amsterdam as the starting point, the very fact that it will be possible to hire Dutch employees able to converse in English. German and even French, is a huge plus. Genuine solid expansion can't be rushed, communication with customers is essential. Alpha Group are opening an office in Madrid this quarter because potential clients have expressed a desire for a local office.
With regard to the FY numbers slightly disappointing for me, possibly a sign of economic downturn. Though numerous European travel worker strikes in December could have deterred pre-Christmas economic activity. Have no idea about Equals customer base, be it financial , manufacturing etc; therefore harder to judge.
Sold around 30% of my holding on the morning of the update. Still holding a fair few, might be persuaded to buy back if I hear from a man with a well thought out plan. Am sure a fair few institutional buyers, who would help push the price past 100p, would be interested in seeing some feasible global ambition.
Good coverage in the latest edition...
Many thanks, top analysis SNN
KR O4L
Canaccord now saying buy with 149p target (presumably 12 months out). Paul Hill on Vox saying 160p
I'm still crunching the numbers and considering things, and will post up soon. Looking back on my December post which is unnervingly accurate, and want as good as a forecast as I can come up with. Provisionally, I'm at revenue for 2023 in the order of 89m and EBITDA of 18m (plus). Again, sticking to 15 times EBITDA, is somewhere at 160 - 170p per share. I seem to expecting higher profits than the brokers & analysts, but am valuing the business on a lower multiple, giving similar target prices.
Given EBITDA now of 12m, at 15 times is comfortably over the 100p mark. The market is clearly signalling a different message, however ... ... ... Still early in the day, though, and sp now finding a solid floor at 92p. May take a week or so for sp to find itself a new level. 100p is showing as massive resistance, but once gone it's gone. IST in the Vox interview says the 2023 forecasts he has put into the market (via brokers) are sensible, and that he hopes to beat them. So, likely to be another year of broker upgrades, with the sp lagging behind fair value, again, month on month.