Roundtable Discussion; The Future of Mineral Sands. Watch the video 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.
Up 19% now - and at new 5-year highs.
Hopefully the rubber band has snapped upwards :o))
What's going to be the news event that snaps the rubber band holding this share price down. It's becoming more and more of a mismatch to the fundamentals.
Extracts from WH Ireland's update today FYI:
"Full year results in line; positive outlook for FY 2023E
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has released results for the 12-months to 31 December 2022, in line with the trading update provided in January and illustrating strong growth in recurring revenue, profitability and cash generation.
Since the beginning of the year, trading is reported to have been strong, with an opening order book of £1.7m, opportunities being presented in new territories and with the potential to undertake bolt-on acquisitions to enhance the existing product base and footprint. On the back of the results, we leave our forecasts unchanged and introduce FY 2025E estimates for the first time.
The shares trade on an FY 2023E PER of 12.0x falling to 9.5x in FY 2024E and are backed by a strong net cash position equivalent to 41p per share. With 40% of revenue now being recurring in nature and good growth opportunities ahead, we believe there is the potential for the shares to re-rate as the strategy continues to be successfully executed. We see fair value for the shares at 120p."
"WHI view: Good progress has been made in the year against the group’s key strategic objectives and we view the momentum being demonstrated as being highly encouraging. On the back of today’s results, including the positive start to the new financial year, we leave our forecasts unchanged and introduce FY 2025E estimates for the first time.
It is worth noting that net cash per share is now equivalent to over 50% of the current share price (and forecast to increase). With rising levels of recurring revenue, and the potential to invest the free cash in growing the business further, as well as the potential for the introduction of a dividend and share buyback programme, we believe valuation multiples have significant scope to expand."
WH Ireland have retained their 120p target for the time being, but "believe valuation multiples have significant scope to expand".
They forecast PBT to rise sharply to £0.7m this year, resulting in a slightly higher 6.7p EPS (presumably due to higher tax rates), though of course they did undercook last year's forecast.
Similarly, the cash pile is forecast to rise slightly to £3.6m. Again this seems very conservative.
The EPS is then forecast to rise to 8.4p and 9.7p in the next two years.
With 41p per share and rising in cash, it's easy to see a share price of anywhere from 150p up to 250p over the next year once the market starts looking forwards.
I'm with you on that. Excellent results! And hopefully the mooted share buyback programme will help narrow the spread and increase trading volumes.
Excellent results as expected, with 6.6p EPS achieved and the £3.5m cash pile representing 50% of the m/cap.
Recurring income is up again to 40%, and cash generation is terrific with £1.8m cash generated from operations in the last year.
Crucially the outlook is excellent, with the order book up massively to £1.7m and the outlook described as "very positive".
There's also the promise this year of (1) a dividend and share buybacks, (2) bolt-on acquisitions and (3) international expansion.
Ian intends to step down in 2024 having done a fantastc job, but that likely gives him another year in charge, and I have no doubt he'll find a like-minded successor.
TST is now a growth company with sizeable recurring income and huge liquid asset backing per share. It deserves to be priced at minimum 120p imo and possibly up to 150p:
https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Final-Results/90784460
This new article sounds promising (subscription-only unfortunately):
Https://*************.com/views/67752/touchstar-a-value-ahead-of-results-buy
"Touchstar – a value ahead of results Buy?..
By HotStockRockets | Thursday 6 April 2023"
"A late January trading update from Touchstar (TST) included “revenue and profits in line, net cash generation and EBITDA ahead of expectations… the buoyant level of the current order book and trading momentum underpin the prospects for 2023” and that it expects to report results in “late April”. Ahead of those, we suggest there looks strong value in the shares from an 85p offer price
etc"
The excellent trading update stated that the prelims would be out in "late April".
However, I've just had an email from WH Ireland noting that TST will be doing an investor roadshow from 18th-25th April.
Which pleasingly suggests that the results will be out more quickly than anticipated, and certainly on the 18th at the latest.
I agree Rivaldo. This is a great little company that is going under the radar. Next contract will certainly make it more popular.
Managed to buy some more here at 82p just now on the brief dip to 80p-85p!
WH Ireland now forecast historic 5.8p EPS, rising to 6.7p EPS this year and 8.4p EPS next year.
The current £3.5m cash pile - which is 50% of the m/cap - should continue to staedily rise from here subject to the acquisition of presumably earnings-enhancing acquisitions.
The order book is "buoyant", recurring revenues are over 40%, and:
"The buoyant level of the current order book and trading momentum underpin the prospects for 2023 and gives the Directors increasing confidence for 2023"
Https://www.touchstar.co.uk/blog/silver-mushroom
"Premium Homeware Retailer Selects TouchStar for Hardware Refresh
27 February 2023
UK-based rugged mobile computing providers, TouchStar Technologies, is pleased to announce that Silver Mushroom, the family run, premium online kitchen and homeware retailer has selected TouchStar for a mobile computer refresh. The upgrade will see the business upgrade their existing picking operations with the latest, rugged devices for real time stock visibility and control.
Based in Preston, Lancashire, Silver Mushroom offer carefully curated selections of quality homeware items ranging from well-known names to more niche brands. Established in 2011, the award-winning business has experienced tremendous growth in demand, which subsequently led them to opening their own third-party fulfilment centre, CK Fulfilment in 2022."
"Tony Barnes, Operations Director at Silver Mushroom comments, “We selected TouchStar to support us with the upgrade due to their experience and solid reputation within the industry. We were looking for a more robust and user-friendly device to replace our existing devices which were prone to damage. Not only were they able to help us select the right hardware, but the support they provided in getting us up and running has been exceptional”.
The technology rollout recommended by TouchStar was Zebra’s TC21 handheld touch computer. Rugged and fit for purpose, the TC21 is lightweight, easy to carry and easy to operate. Always connected, the device is perfect for the company’s scan intensive picking operation, significantly reducing downtime and ensuring the company’s picking operation is more productive and cost effective.
Peter Marsh, Sales Director for TouchStar comments, “With over three decades of experience supporting the rollout for mobile computing solutions for warehouse environments, we were thrilled to have the opportunity of working with Silver Mushroom. We feel that that in the TC21, we will be delivering a fit for purpose device that will deliver real operational benefits to the business. We look forward to supporting another successful hardware upgrade with Silver Mushroom”.
Good to see TST winning sizeable business in the CCTV sector, both hardware and software - over 1000 fixed and mobile CCTV cameras in total at 135 locations, installed over a 6 month period:
Https://www.touchstar.co.uk/blog/reed-assessment
Good to see the spread reduced to a more manageable 7p today, with buying coming in at 91.3p.
Contracts are being won at a rapid pace! The Fuelstar side of the business seems to be storming ahead. This reads rather well as regards the benefits of TST's systems adoption:
"Future-proofing their operations. A planned stream of new and advanced software functionality arising from Touchstar’s significant on-going investment in R&D"
I note that Manx are "scheduling implementation of the system for spring", so this will benefit TST's current H1. Here's the link:
Https://www.touchstar.co.uk/blog/manxpetroleum
The maximum shares you can buy online is now just 5k after a 7,500 share buy at 90p reported after the close yesterday.
Good to see TST recommended for this new contract win by a third party:
Https://www.touchstar.co.uk/blog/hd-group
"On the recommendation of Minster, HD Group selected TouchStar’s TS8200 handheld as the mobile computing technology to support the real time data capture in the new operation. The new handhelds will equip warehouse operative with advanced scanning capability, help identify and track goods within their fulfilment process, capturing accurate stock information that together with Minster, will help support an efficient and flexible operation."
"Kerry continues, “Since the system went live, we are excited by the numerous operational benefits the technology is starting to deliver. The support we have received from both companies so far has been excellent, and we look forward to the potential benefits the system will be able to offer us as we continue to grow our operations.”
Let us hope we do get a decent uplift to reflect true value. Still waiting news on shareholder return seems to have gone quiet!
Ah, today's tick up was caused by a 20,000 share buy at 90p just reported late. Nice.
Good to see the spread narrow somewhat today. Online you can sell an unusually large 10k at just over 80p, and the bid price has moved up on very small buying, so the signals are good at present.
The real online spread is usually somewhat less than the published prices might indicate...and of course the share price generally moves quickly with just a little activity.
WH Ireland's 120p valuation does look ridiculously undercooked now, but as I said it seems likely imo that this will be moved upwards once the prelims are published in April.
I agree with all you say Rivaldo. Disappointing that the shares didn't do much today but it might be an opportunity to accumulate some more. The problem is that there is always such a wide spread - 75p to 90p is the closing price this evening.
WH Ireland have reiterated their 120p target price. They've left their forecasts unchanged at present at 6.7p EPS this year and 8.4p EPS next year, with the cash pile rising from £3.5m to £3.6m and then £3.8m respectively.
They "believe valuation multiples have significant scope to expand".
I suspect that WHI will upgrade their forecasts when the prelims are released as analysts tend to do.
Given the cash pile representing 50% of the m/cap, based on 8.4p forward EPS and a P/E of say 14, it's possible to see a sum of the parts valuation of perhaps 160p-170p, though of course we need to see the year end debtors/creditors etc.
Here's WH Ireland's summary:
"Full year trading update illustrates further positive progress in the year
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has reported a positive year-end trading update for the 12 months to 31 December 2022, pointing to revenue and PBT in line and cash generation well ahead of our forecast. Revenue is expected to be 10% ahead of FY2021A (FY2021A £6.1m), with EBITDA up 25% and PBT increasing 100% (FY2021A £0.2m), reflecting strong operational gearing and continued margin progression.
The year-end net cash position at £3.5m was significantly higher than expected (WHI est. FY2022E £2.5m), a result of strong cash conversion in the period. Looking forward, current trading is reported to be buoyant, with a significant increase in the order book to £1.7m (30 June 2022: £1.0m) and an increasing share of recurring revenue at 40% (FY21: 38%) supporting our forecasts.
The shares now trade on an FY 2023E EV/Revenue multiple of just 0.4x, EV/EBITDA of just 2.0x and PER of 11.9x. With 40% of revenue now being recurring in nature, we believe there is the potential for the shares to continue to re-rate as the strategy continues to be successfully executed. We see fair value for the shares at 120p."
The recent small overhang has now been partly cleared by this morning's buying.
Online you can now sell 15k, whereas you can only buy a maximum 10k at the full 90p offer (more than is usually available).
At 90p I calculate an ex-cash P/E for this year based on the previously forecast 6.7p EPS of only 7.3.
And this forecast includes precisely zero interest receivable. If you add in say interest at 3.5% on a steady £3.5m cash that would bring in a further £125k or so, i.e a further 1.5p EPS, taking the forecast up to 8.25p EPS.
The ex-cash P/E would therefore reduce further to just 5.9.
This is an extremely encouraging year end update. EBITDA is ahead of expectations, all other measures are nicely in line - and the cash pile is way ahead of expectations at £3.5m (forecast was £2.4m).
That £3.5m cash now represents 52% of the market cap!
Alongside this, the now historic EPS should be around 5.5p. This year is forecast to bring 6.7p EPS, but this should be conservative given the "buoyant" order book, which is up to £1.7m from just £0.6m a year ago.
With 40% recurring income now, TST are in a great place.
Plus with interest rates rising, the cash pile will generate very nice interest receivable to add to the excellent prospects.
And it's encouraging to note not only the various ways in which that cash will fuel organic growth, but also to see IM state for the first time that acquisitions are now on the cards....
Rivaldo, do you work for Touchstar?
Some nice quotes:
Https://www.touchstar.co.uk/blog/atf
Extract:
"Ongoing support
Speaking about working with TouchStar, both before and after installation, Neil said: “The ongoing support from TouchStar has been fantastic – they’ve been able to rapidly fix any issues we’ve had. Even from our initial contact with the sales team, we’ve felt assured that the team at TouchStar know the product very well”
TouchStar is also providing a phased rollout of an upgraded system for ATF Fuels, migrating from Windows technology to Android. Initially installed for their aviation fleet, the whole of ATF Fuels’ delivery vehicles will be upgraded to the new system. Both sides are working towards having the system running smoothly and fully integrated very soon.
Conclusion
Neil sums up ATF Fuels’ use of TouchStar: “The thing we like about TouchStar is that it integrates with the back office and we can change the drivers’ routes throughout the day rather than the driver leaving in the morning with a block of tickets. It’s made us far more efficient – not having to phone up drivers and make changes, no hand-writing of paper tickets. The last 7 years have gone by very quickly, we’ve had this system from very early on in our development as a business. It’s implementation was seamless and we’ve been able to use it without it ever being an operational distraction. I’ve no reason to fault it. The support side has been really good and we’re more than happy with the system performance, which is very reliable.”