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I certainly hope so. I have been rather surprised that this has sat around the low 600's for so long especially as they flagged the strong start to the year and the potential for cost savings and synergies with the SDL takeover.
I have it pigeonholed as one of my longer term holdings but I still like to see it go up....
Are we heading to 700p which I think is fair value here? I have been accumulating here and happy to pay up to 660p for RWS. Trading statement on the 22nd so in over 2 weeks I am hoping the fundamentals translate into a higher SP.
out today. PBT up double digits, integration going well with new management in place, debt free and able to make acquisition. Headwind of US dollar weakness ay be offset by growth. Verdict is keep buying. Might get a boost this afternoon when the Mag hits cyber land.
Got some more today and showing a nice proift since buying last month at 535 before exdivi. Going to sell half at 700p and look to reinvest on a fall or buy elsewhere. If it makes it of course but happy to buy up to 660p currently.
Excellent posts monkshood. Much appreciated. It seems the small drop yesterday has qiuickly reversed and we are setting sail for 700p. Will pick up more next Weds.
For anyone not attending the AGM here are a some of the points raised-
Acknowledged SDL has been lower margin and looking to improve this by cost control and other measures. Started cross selling between both companies base customers. They seem to be very impressed by SDL’s Helix platform, it is even better than were expecting. Confirmed that Electrocomponents is using SDL’s software.
The Iconic earnout agreement was changed due to the overlap with SDL’s offering in a similar space. I think that this way, they can roll out a more combined offering without issues over who has ‘ownership’. Pfizer is using the Iconic software and they are looking to role it out to more life science customers.
Probably the key issue, was that if Sunak changes the tax breaks on Aim holdings then they would move their listing to the premium main market. Currently 10-15% of their holders are funds that use the AIM listing as a tax break (not sure if this figure also included the CEO’s holding) which they would potentially lose. As they would go into the FSTE 250 I guess this would reverse some of the positions that changed when SDL holders had the issue of going on to AIM…
More details of how things are progressing, including reinstating guidance, due in April.
Overall I got the impression that they are very positive about the future.
Hi FK. This is one that I plan on sitting on for a few years unless something drastic occurs. PBT does look good and if they can get SDL's contribution to convert revenue to profit at a rate nearer to RWS's then there will be even more upside.
I am seeing the f/x effects on several shares I hold. I do not worry if they, like this, are for long term. From what I understand, the companies hold most of the monies in banks in the designated currency, they can then use this for acquisitions etc. So although it shows as lower revenues when converted back to £ for the accounts , in practice, over the longer term it has less impact on their growth than may first appear.
RWS was mainly hit in the auto and aero sectors last year. I would imagine that the latter still has not even started to recover so there should be plenty more upside there.
Morning Monkshood. I would not be surprised if the note of caution on Currency and Covid the 2CC but not 10CC spook the market today. Bad news is halfway round the world before good news has even got its boots on. But bad news is good news as I want to buy more. The double digit increase in PBT has been clouded but not chez moi. Keep buying.
All looks very positive.
"The original RWS business has delivered excellent Q1 2021 results, with good revenue growth and a significant double-digit percentage increase in adjusted profit before tax. SDL in its two months in the Group produced results in line with its prior year'' ( SDL had a strong H2 with circa 194M revenue in the prior year )
thanks fallingknife I am now 15% up and feel this will be a steady riser in the long run
We may not need to wait until April, it is the AGM next week so we should get an update at that as to how things are going.
Analyst Calum Battersby reiterated his ‘buy’ recommendation and 810p target price on the stock, which closed up 0.6%, or 3.5p, at 599p on Friday.
‘We believe 2021 will be a year of significant value creation for the company. We acknowledge clear catalysts, in the form of a synergy update around March or April, and a significant recovery in organic growth in the second half of 2021,’ he said.
Battersby added there was an ‘excellent valuation opportunity’ as the shares trade below long-run average multiples even before synergy upgrades from its acquisition of SDL.
‘We recognise that there is a highly attractive investment case for RWS, which we expect to drive significant outperformance over the next year,’ he said.
Exceeds my target but has given the SP a lift today. Very undervalued.
Hi FK. I did well on SDL, then jumped back into this a little too early, nicely in the blue now though.
I underestimated the shakeout of SDL shares held by II's with it moving from FTSE to AIM. I thought that they would all be out soon after the index change but in retrospect I realise that is only those held by trackers. There are lots that are held in funds that are not allowed to be held in AIM stocks and these appear to have been more gradually sold down (at least this is my interpretation)
It looks like your timing may have been a bit better. I have made this a core holding as I can see the potential for lots of upside for the next few years.
Afternoon Monkshood. I am a bit gutted that the rise didn't start until November as my belief that RWS is worth 700p is strong and I wanted to pick up more before we hit 665p. Looks like the market has woken up to this idea too.
It looks like the II's that were selling, probably due to loss of FTSE status, are done and we have seen a nice rerate. Plenty of scope for further upside going forward.
The AGM is in a couple of weeks so we should get an update of how thins are going then.
SDL certainly seems to be going well with another strategic partnership recently announced .
'SDL, part of RWS Holdings plc, today announces a strategic partnership with Fuji Xerox Co., Ltd. to offer SDL Contenta Publishing Suite to manufacturers and aerospace and defence organizations in Japan, with a future plan to expand into other Asia-Pacific countries/regions. This marks a significant milestone in SDL’s global expansion strategy for technical content creation, management and publishing.'
more today at 535p. I hope the divi fall is absorbed tomorrow but in any case I will be reinvesting my divis back in when they arrive. I am a buyer at up to 650p and hopefully the rerate is underway. Managed to sell before at 625p but am confident these are undervalued.
Hi Informer. As with any merger it is difficult to tell how two companies perform under the same umbrella, even ones that were leaders in the field like RWS and SDL. Covid's disruption on business is another factor though it has increased demand for Covid related translation.
That said I am very interested in adding here and will do so monthly, If you just bought in, it is a long way off its peak. I think Shares Magazine have it in its shares to follow for 2021. RWS was in it in 2020 for sure, And as its divi is increasing from memory the falling SP has driven up the yield. So I say hang on in there. Looking forward to gains here unless the market crashes. In which cases I would try to pick up more by bottom fishing.
I've increased my exposure to this stock based on their past but I've not been keeping track on their latest news. Can someone give me confidence in the decision I've just made ????
I think that it is - but then I would say that...(although I did buy some more last week)
I came to this by way of SDL, this has continued to perform strongly winning contracts with the US navy and the US Government Publishing Office in the past couple of months.
Both companies held up well throughout the past year but there was an impact. There should be scope for both a bounce back in the affected areas as well as gains from synergies between the companies going forward.
I also think that the share price is still slightly supressed by the repositioning of II's after the merger, due to RWS being on AIM and SDL having been in the FTSE250 (all be it briefly).
They have also said that the new financial year has started slightly ahead of their expectations.
I was reviewing this company with a view to taking a position and couldn't understand why it was underperofmring the market. Makes sense now...most revenue is in USD which is structurally under pressure. Difficult to know if this is still a "buy"?
Outlook-
· The new financial year has started positively and is slightly ahead of our expectations
· Following the acquisition of SDL, the Group has no net debt
. Synergy opportunities in excess of the already announced £15m through enhanced operational performance over the coming 12-18 months
Look like an excellent set of results. Zero net debt, an increased dividend, and a large acquisition to integrate into the business. The synergies should lead to cost savings that by themselves will increase profit.
Thursday is the date for the Full Year results when we should get more detail on the merged company.
In the meanwhile we seeing some "Off Book" trades against regular number of AT (ALGO) deals
Yesterday we saw
AT________ Deals 608______ Volume 148,469 ___Value £845,367______ dominating number of deals
Off-Book___ Deals 79______ Volume 216,141 ___ Value £1,232,538_____ dominating volume and value
I originally thought that once they had merged SDL would be removed from the FTSE250. I am not so sure this has happened as I have only seen - 'In the absence of an active market, SDL will be removed using the stock terms of 1.2246
RWS Holdings shares for each SDL share held.' on FTSERussell - nothing about which company will be replacing this in the index (which you typically see). No idea why - but maybe it is giving more time for II's to rebalance hence the continuing large volumes and odd movements.
Next index change date is early Dec, maybe by then it will have settled down and we will see a steady rise...
Trading volumes have been averaging 3 times the pre merger based on stats (merger 12 trading days ago). The are several negotiated deals which appear on Stock Exchange listing but not on other lists… including two equally big £3.5million within seconds… another 8 above £100K…which may suggest big boys playing swaps.
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Normal trading yesterday had points to watch for PI’s is in the huge proportion of ALGO trades. In the trading band below 500 lot size there were 743 ALGO trades average deal £1,172 against 41 off-book trades average size £1,334. (All trade sizes 785 v 85). The ALGO trades were being made throughout the day at a rate of around three every two minutes. (some at 3 per second). Which to me indicates we had Fast Trading (Flash Guys)
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Another oddity was many trades with lot size under 10 or value £50 . That was 28 trades out of 909 (and 84 under 35 or £200). What is that ??? Signals between dealers ??? ALGO dealers doing a trial run ???
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Just my observations on an fascinating days trading. May we live in interesting times