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On 21st June - almost on the half year date - TST stated:
"Trading conditions and trends remain positive and are consistent with market expectations"
Given this, there won't necessarily be any further update until the interims, which last year were on 15th September so not long to wait.
The share price has consolidated nicely around these recent highs. I'm optimistic that the interims will support further rises, particularly with the share buybacks in reserve.
Excellent news.
We know that Chelverton sold their last 670,000. TST bought back 225k, the Millingtons bought around another 225k and Ian Martin bought 25k so that's almost 200k unaccounted for - less than 3%, so unlikely to bring another holdings RNS unless the buyer already owned some or buys some more.
Chelverton sold out completely - zero - as per holdings RNS
Bod - I beg to differ. I think you will find the shares held in Treasury are not counted towards the total shares in issue for the market cap so will thus reduce accordingly.
I didn't expect Chelverton to be out this quickly. That has to be a massive positive for the share price moving forward.
Thanks, Rivaldo. I stand (sit) corrected :)
Hi BodRuncie, thanks, I did see TST had bought back the 225,000 shares but forgot when I posted this morning!
Just to say also that for m/cap and EPS purposes the shares bought back and held in treasury aren't counted, so future EPS calculations will be increased to take the buybacks into account (unless those treasury shares are reissued to satisfy options or for acquisitions). This is the case for example with VLE (I hold), which has been buying back shares into treasury for some years now and has seen its shares in issue and m/cap reduce accordingly.
Dibs, there would only be fewer shares if TST cancelled the ones they bought back, but they are being held in treasury, so total share number and mcap remain the same.
Bod you are indeed correct. 225k shares purchased by the company and kept in treasury. And, in fairness to rivaldo as he pointed out there is nothing to stop the company from selling those shares on at a profit in future to perhaps an institutional investor.
Furthermore, the other onward effect of this share purchase is to lower the market valuation of the company as there are less shares in issue x the share price.
I haven’t calculated it, but the EV must be ridiculously low, given the volume of cash in the business.
Oh incidentally take your point about the MC ;)
Rivaldo, maybe I misunderstood your comment, but TST did RNS a share buyback yesterday. Did you see it?
Hi Dibs61, good to see you here.
TST has been a long-term recovery story under the terrific stewardship of Ian Martin, so is still under the radar for many. When it was called Belgravium it was largely reliant on lumpy sales of hardware. Now it's been transformed, with:
- recurring income up to around 40% of revenues and rising
- high and rising sales of internally developed software
-highly cash-generative with over £3m cash and rising against the £8.4m m/cap
-big plans for international expansion
-possible acquisitions now on the radar
-taking advantage of the fuel industry's transition from out of date software to TST's own advanced software
Here are the Millingtons: https://constancepam.com/index.php/who-we-are/
As for why the mcap is so low, are you looking for an answer beyond the world being in a risk-off bear market where the UK is particularly unloved?
Good morning rivaldo,
I have taken an initial small position here this morning. Quality outfit here. Great investment.
Like others though my ONLY concern is liquidity. Other than that this is first class and surely undervalued at this price? 41p in cash alone… strong cash generation… dividend policy initiated. Plans to grow organically and expand internationally.
I just cannot understand why the MC is so low. Can you tell me? Or anyone else?
A second RNS today - the Millingtons have bought around another 225,000 shares in TST. Their stake is now 6.98% (up from 4.19%):
Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Holdings-in-Company/91735029
One would assume that if TST had bought any of the shares back we'd have seen an RNS by now.
So it would appear to be very good news in that a number of institutions/major buyers have been found to take out Chelverton, which is how they achieved a bargain price in taking on large stakes in an illiquid stock from a willing seller winding up their fund.
Of course TST can't announce anything until they've been formally notified by the buyers - and that's only if the buyers were already or are now over 3%. So aside from the Millingtons we may never find out who the other buyers are if they remain below 3%.
Encouraging to see Ian Martin (the Chairman) buying another 25k shares, taking his holding to 830,250 shares - or over 10% of the company:
Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Director-Dealing/91732716
My money on TST bought the lot. Not sure there are any others.
Nice - 1.775m shares traded today! I'm assuming that's Chelverton's 670k now gone to safe hands, so the only question is whether TST bought a load back or whether we have institutional buyers in the frame (or a combination).
TST were "initially" budgeting for a max of £300k of buybacks, but had permission to buy back 850k shares.
TST did say they would RNS any buy back so agree unlikely, unless they issue another RNS shortly. So yes question is who bought them off book.
Chelverton have declared they now have 670k shares left, so as they had 850k before they must have sold 180k.
Interesting that the transactions took place on 4th and 26th July - if they'd been buybacks I'd have thought TST would have had to RNS them immediately, so perhaps there's a large buyer out there sweeping up the stock?
Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Holdings-in-Company/91683890
Nope. No volume. Just MMs fishing for trades.
Patience.
Price has fluctuated today based on no trades... I wonder if there has bee na news leak somewhere?
Nice 17,857 buy at 112p just reported - looks like someone's filled their ISA for this year with £20k of TST shares.
Bought a few more as it does seem very cheap. If they move towards 2.5 x's dividend cover then DPS could be nearer 4p for FY25.
An EV:EBITDA of 3.1 says it all really - the UK markets are kind of broken for micro caps, but value will out eventually.
FYI here's WH Ireland's conclusion today - imo their 120p valuation is extremely undercooked, especially given the 41p per share of cash:
"Today’s announcement follows the successful completion of Touchstar’s capital reduction (announced on 26 April 2023), which enabled the company to increase its distributable reserves and capacity to carry out share buybacks and pay dividends.
For FY2022, Touchstar reported a year-end net cash balance of £3.5m (41p per share), with strong free cash generation of £1.1m (FY21: £0.6m) and EPS of 6.6p for the year.
We update our forecasts this morning to account for the commencement of a dividend payment and buyback of 0.279m shares in FY23 (a budget of £300,000 at the current share price). For FY2023, we look for DPS of 1p (was 0p), EPS of 6.7p (was 6.7p), and net cash £3.3m (was £3.6m), for FY2024, DPS of 2.0p (was 0p), EPS of 8.7p (was 8.4p) and net cash of £3.4m (was £3.8m), and for FY2025, DPS of 2.5p (was 0p), EPS of 10.0p (was 9.7p), and net cash of £3.8m (was £4.3m).
WHI view: While the company’s intention to return value to shareholders has been well flagged for some time, today’s announcement is a positive development, firming up the company’s plans for an attractive programme of distributions. With £3.5m of net cash on the balance sheet at the year end (making up 38% of the group’s market cap), putting the company on an FY24E EV/EBITDA of just 3.1x, we view the strategy announced today as a sensible approach to realise value in Touchstar’s underlying business – which has, in our view, been undervalued up to this point.
As demonstrated in the most recent full year results, Touchstar has continued to make good progress as it executes its strategic objectives, with an increase in the share of recurring and software revenues and the effects of the previous restructuring driving increasing margins and strong cash generation. Our estimate of fair value for the shares stands at 120p."
WH Ireland have this morning raised their forecasts for the next couple of years.
They note that have TST have 41p per share in cash (£3.5m) against the £9.1m m/cap.
Given the 1p interim dividend now announced, I'm not sure why but they go for a 1p divi in total this year rising to 2p next year and 2.5p after that - surely the clue is in the word "interim"!
Their new forecasts are:
this year - 6.7p EPS
2024 - 8.7p EPS (up from 8.4p EPS)
2025 - 10p EPS (up from 9.7p EPS)