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Today is a rare opportunity for anyone wanting to buy a decent chunk of TST shares. There's 20,000 shares available to buy online at 85p. Most unusual to be able to buy more than a few thousand shares in one go.
Another nice contract won "recently" with a fuel distribution company. Suckling Transport have annual turnover of £21 million, so quite a sizeable company:
Https://www.touchstar.co.uk/blog/sucklingtransport
Today's 2.5p tick up means TST are at 12-month highs in the run-up to the year end.
New fragrance oil contract implementation news:
Https://www.touchstar.co.uk/blog/fragranceoils-case-study
Conclusion:
" Results
The hardware implementation phase took 6 months from start to finish. TouchStar were highly commended for their support in this time, checking device compatibility and connectivity with the newly developed IT system, all of which contributed to a smooth deployment of the final scanning solution.
The new TS8200 handhelds now play a fundamental role within the newly upgraded manufacturing process. From receipt of order, the TS8200 provides detailed dosing information on the devices robust and high-resolution display.
All of the raw materials going into the production process are now also barcoded, not only does this enable real time location visibility and traceability, but from an accuracy perspective, the system ensures that the right product is scanned before it enters in the production process, resulting in reduced errors and an increase in right first-time manufacturing.
Furthermore, the system has also been extended to the goods out, providing additional accuracy with regards to orders shipped and extending visibility into the transport and distribution process.
Benefits and the Future
Fragrance Oils are an excellent example of how real time scanning can benefit businesses within the manufacturing sector. Ian concludes, “The barcode scanning process has enabled the teams to improve dosing accuracy & to reduce the level of rework & scrap generated in our process. This has a positive impact on our operational costs & has helped us to improve our customer service.”
Since the implementation, Fragrance Oil’s are continuing to look at ways to develop and enhance the solution. Plans for a new wi-fi network will allow for greater connectivity and will enable the business to extend the use of the technology into other areas of the business. The potential for the use of barcode scanning within the warehouse operation offers Fragrance Oil’s the additional benefit of real time visibility and traceability of their of goods outside the production process.
Since the installation, TouchStar’s mobile computing solution have continued to evolve, with further growth and development of both their hardware and the portfolio of solutions. This will ensure that Fragrance Oil’s will continue to invest in a solution that will meet their needs both now and into the future. "
"
A new blog post on TST's web site, which looks like more detail on the £1.5m+ contract win to me.
It reads very well, certainly as a validation of TST's reliability and service quality since Certas have been a client since 2014 and are "the largest fuel and lubricant distributor in Great Britain".
Https://www.touchstar.co.uk/blog/certasorder
New post from PodStar - interesting to see them looking to expand in the food and drink sector:
Https://www.podstar.co.uk/blog/foodchallenges
Extracts:
"Electronic Proof of Delivery (EPOD) software plays an important part in tracing the entire supply chain. At TouchStar, our EPOD system seamlessly integrates with your existing systems to create a digital record of the product’s journey, from point of delivery to the customer. This helps demonstrate compliance with regulations and is easily auditable should it be needed."
"An EPOD system can help with this by being able to prove cold chain compliance. Our PODStar system is able to capture the temperature of goods whilst they are in transit and on delivery. We are also able to attach photo evidence to the electronic receipt and digital file, ensuring it’s not lost."
Nice 20,000 share buy at 84p reported just now from earlier today. Massive by TST's usual standards :o))
Chelverton Growth Trust issued their prelims this morning. They have a £595,000 holding in TST (almost 20% of their entire portfolio) and stated the following.
TST's £2.4m cash pile now represents almost 35% of the £6.99m m/cap, so perhaps to create the suggested value there are special dividends on the way, unless TST utilise the funds for overseas expansion as flagged and/or for further organic growth:
Https://www.investegate.co.uk/chelverton-grwth-tst--cgw-/rns/final-results/202211090700057451F/
"Touchstar, as expected and heralded last year, has continued to improve its performance. This was evidenced in its latest interim results with increases in sales, gross margins, order book, profits, and consequently cash reserves. It will be important for Touchstar to utilise its hard created balance sheet strength to create value."
WH Ireland have retained their current forecasts for the moment.
They have a 120p target price. Their predicted cash pile is £2.4m at the end of this year - over 30% of the now £7.6m m/cap.
I note they now have a 2024 forecast of 8.4p EPS, with a £3.1m cash pile. If/when the market begins to look forward to that in just over a year's time the share price could imo be anywhere from 150p to say 200p. Certainly well above where it is now.
They summarise:
"WHI view: This morning’s update is clearly positive and further adds to recurring revenue levels across the group. Touchstar continues progress against its key strategic objectives and we believe that the momentum the business is demonstrating is highly encouraging. The shares trade on an FY 2023E EV/Revenue multiple of just 0.5x, EV/EBITDA of just 2.4x and PER of 11.2x. With over 40% of revenue now being recurring in nature, we believe there is the potential for the shares to re-rate as the strategy continues to be successfully executed. We see fair value at 120p."
Sizeable contract win for this £6.4m m/cap company - £1.5m over the next year, plus multiyear recurring income subsequently.
Nice closing comment too about "the uptick in activity we have seen in the Petrochemical Distribution sector", with a hint of further contract awards to come:
Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Contract-Award/89488226
Sounds good - "Herts FullStop is the UK’s fastest growing Education supplier":
Https://www.touchstar.co.uk/blog/hertsfullstop
WH ireland's latest 20 page note is worth a read. Here's the summary page FYI - they have a 120p target and forecast 5.5p EPS this year, rising to 6.7p asnd then 8.4p EPS.
They also see a £2.4m cash pile at the end of 2022 - almost 40% of the £6.4m m/cap:
"Recurring revenue strategy delivering growth and margin expansion
Touchstar is an established supplier of mobile data computing solutions and managed
services to a variety of industrial sectors. The company boasts a number of high-quality clients and its relationships are longstanding given the embedded nature of its products and services. While the business, historically, has been hardware focused, Touchstar increasingly provides a range of end-to-end solutions, with major products in the proof-of-delivery, access control and security and logistics markets.
With the successful execution of its software-focused, recurring-revenue strategy and a major restructuring in 2019, the company returned to profitability in FY21. Now, software revenues make up a much larger proportion of the sales mix, with total recurring revenue accounting for in excess of 40% of group sales. Set against this progress, the shares still only trade on FY22E and FY23E EV/revenue multiples of 0.5x, FY22E EV/EBITDA of 3.2x, falling to just 2.4x in FY23E, and FY22E PER of 13.6x, falling to 11.2x in FY23E, a significant discount to wider peers. As such, we believe there is potential for a re-rating as the strategy is successfully executed. We see fair value for the shares at 120p.
? Interim results demonstrated continued momentum
Total revenue grew 7.2% to £3.1m and recurring revenue moved ahead by 17.6% to £1.3m, representing 42% of the total. With a 330bps increase in the gross margin, EBITDA grew by 23.1%, while EPS rose by 46.2% to 1.9p. Net cash at period-end stood at £1.6m. The order book as at 13 September stood at £1.0m, +22% against the prior year.
? A focus on recurring revenue to drive profitability and growth
Touchstar is successfully delivering on its strategy to realise value from its solutions and, in doing so, has driven progressive profits and cashflow and enhanced the quality of earnings. The group benefits from a high-quality product range in niche markets, with high barriers to entry given long-term contracts and the considerable complexity of its core markets. Customer relationships are reinforced by the cost of switching providers, which, for the embedded systems Touchstar provides, are considerable.
? Valuation At 11.2x 2023E earnings, Touchstar trades at a significant discount to its London-listed peer group, trading on a FY23E P/E of 14x-25x. Our fair value of 120p (60% premium to current share price) is based on an FY23E PER multiple of 17.6x, taken from a weighted average of UK-listed technology solutions providers and SAAS businesses. We also note that our £2.6m net cash forecast equates to over 40% of the current market cap, putting the shares on a FY2023 EV/EBITDA of ju
Great new article about TST's fast-growing fuel distribution software business. A few rather interesting snippets:
Https://www.touchstar.co.uk/files/mydocs/FuelOilNewsSeptember2022_TS.pdf
"We’ve been ballistically busy with projects for the first half of the year. As companies have emerged from the covid crisis, they’ve decided they’re now ready to look at the things they put on the shelf. As a result, we’ve been signing up new customers such as BATA, Par Petroleum and Alan Stobart (part of WCF group), and Rix has also committed to a big upgrade project with us."
"What are the key areas of focus for TouchStar at present?
There are two big areas at the moment. The first is completing android migrations for our current customers, and this is moving at pace. The second is expanding our customer base to Europe, the States and South Africa."
"We also have another burgeoning partnership with Leighton O’Brien, a wet stock management company, which is based in Australia but also covers the whole of the
Asia Pacific region and the States. They’re very excited about what we do as all their retail customers in the States use paper-based systems with very little visibility, mostly via third party logistics companies."
"How was the UKIFDA EXPO for you?
Absolutely fantastic. The best exhibition we’ve been to in 25 years! Our feet didn’t touch the floor. We had four people on the stand and every time we turned around there was someone new to talk to, whether that was a customer or a prospect...and deals have moved along significantly as a result of it."
Good H1 numbers. WH Ireland have issued a 20 page update note:
- they have a 120p target
- they forecast 5.5p EPS this year, rising to 6.7p EPS and then 8.4p EPS
- they forecast a £2.4m cash pile at the year end - almost 40% of the m/cap
That's an EV/EBITDA of just 3.2.
The H1 resulkts show £1.6m and rising cash against a £6m m/cap, almost 2p EPS in the seasonally weaker H1, sizeable and rising recurring income, increasing order books, optimism for the future...
This business is steadily being transformed for the better. and looks very good value now imho.
Progress continues, happy days, distribution next year.
Good to see the access and control side winning new business:
Https://www.touchstar.co.uk/blog/gbsiot-touchstar-atc-case-study
Good news:
Https://www.touchstar.co.uk/blog/parpetroleum
"Par Petroleum select Touchstar EPOD solution"#
08 September 2022"
"To tackle the challenge of reducing paperwork and streamlining processes, TouchStar will be using their comprehensive API integration and working with the existing CODAS back office system to integrate processes seamlessly. As a result, the trucks and back-office systems will communicate with one another in real time, providing a greater level of automation and reducing paperwork.
Process improvements will include
Real time transmission of ePOD’s, to enable same / next day invoicing
Control of driver workflow to a standardised level, for improvements to efficiencies, safety and service
Automated, electronic start of day vehicle checks
Significant reduction of manual data entry, to eliminate effort and potential human error
Single entry – either on the tablet device or directly at the meter
Full, real-time integration with the back-office system, CODAS
Removal of the need for pre-printing delivery tickets.
Another significant benefit will be ensuring compliance with SLA’s for Par’s haulage customers. Leanne Hardy (Managing Director, Par Petroleum) is delighted by their choice of the Fuelstar system: “Touchstar solutions are specifically designed for the fuel distribution industry and we are very confident Fuelstar will streamline and improve our end-to-end delivery processes.”
Topped up a bit. All those new contracts that weren't RNS'd should get a mention at least in the outlook figures - and the Millingtons have also been topping up a good bit in the meantime. Good cash. I also wonder if the recent driver shortage has meant that companies are looking hard at how to maximise performance and ease for their teams.
WH Ireland are organising an Investor Roadshow for TST with a series of presentations for investors following the interims, which are apprently being issued on Wednesday September 14th.
Robert and Virginia Millington have been buying and increased their stake to 4.19%, or 355,000 shares:
Https://uk.advfn.com/stock-market/london/touchstar-TST/share-news/Touchstar-PLC-Holdings-in-Company/88823214
They appear to run this Private Asset Management company:
Https://constancepam.com/index.php/who-we-are/
"Founded by Robert and Virginia Millington, Constance is an unincorporated association of investment professionals based principally in the UK and Spain. Constance does not charge fees, members’ input is in the form of intellectual capital and the contribution to aggregate portfolio returns. Portfolios are managed individually. Constance has developed particular expertise in UK smaller capitalisation companies (<£100mn) quoted principally on the London Alternative Investment Market (AIM) and Venture Capital Trusts, but invests in equities worldwide and across the full market capitalisation spectrum. Constance also uses commodities, indexed linked bonds, peer to peer (P2P) loans and other alternative instruments to spread investment risk."
Wahaayyy! What a roll.
I’m surprised they are not RNSing these contracts. Any thoughts why?
More good news - this new contract will benefit this H2 as it's due to roll out from September:
Https://www.touchstar.co.uk/blog/wcfnortheast
Extracts:
"WCF North East roll out Touchstar Android fuel delivery solution
27 July 2022
WCF North East roll out Touchstar Android fuel delivery solution "
" Business challenges
As the business continued to grow and become more diversified, WCF North East were looking to introduce a technology-based solution that would replace the ever-increasing amount of paperwork. Efficient and effective operations are fundamental to delivering a first-class service, so WCF needed to significantly reduce or completely eradicate paperwork which was both time-consuming and prone to human error.
Any new technology introduced to the company’s operations needed to reorganise and improve existing processes and enable the drivers and back office to communicate more effectively.
The Solution
To tackle the challenge of reducing paperwork and streamlining processes, TouchStar began by using their comprehensive API integration and worked with the existing CODAS back office system to integrate processes seamlessly. As a result, the trucks and back-office systems seamlessly communicate with one other, providing a greater level of automation and reducing paperwork. Another significant benefit is the GPS technology which supports truck routing and scheduling teams, as well as receiving data directly from the devices in real-time. All of this provides a consistent and high level of customer service and reduces unnecessary mileage for WCF drivers.
The integration and the attachment of the signature to the invoice has proved invaluable to the company. The fact that WCF can obtain live data directly from the devices is invaluable and the range of different meter types TouchStar accommodates fully met the WCF brief. Since implementing the system, WCF have seen a number of benefits including better visibility on what, when and where fuel has been delivered. Delivery processes have become more efficient and automated including back-office stock reconciliation, driver paperwork and safety checks. WCF have been able to plan better and improve their service to the customer with a greater degree of accuracy and compliance.
Android Implementation
Since the initial set-up and training, TouchStar has continued to work closely with WCF to provide ongoing support to both office staff and drivers. TouchStar has now been commissioned to upgrade the entire WCF North East fleet from a Windows operating system to Android.
The advent of Android has dramatically improved the functionality of mobile devices. It is an open system and has now been adopted on a large scale. "
"Touchstar has invested heavily in the development of a range of mobile and in-cab devices that operate under the Android platform.
The transition will commence in September 2022. "
Another contract win just posted:
Https://www.touchstar.co.uk/blog/donegaloils
Extracts:
"Donegal Oils select Android In-Cab Computers from Touchstar Technologies
26 July 2022"
"Touchstar hardware and software solutions are specifically designed for the fuel distribution industry. The company has invested heavily in the development of a new range of terminals based around the Android operating system. This platform offers multiple technical benefits over previous generation Windows devices and, as a progressive organisation, Donegal Oils readily accepted Touchstar’s suggestion to upgrade their fleet hardware.
Donegal Oils are confident FuelStar will continue to streamline and improve their end-to-end delivery processes. To date the key benefits have been identified as:
Real time transmission of ePOD’s, to enable same / next day invoicing.
Control driver workflow to a standardised level, for improvements to efficiencies, safety and service.
Automated, electronic start of day vehicle checks.
Reducing manual administrative tasks like re-keying data.
In-cab Sat Nav, with truck attributes"
Certainly a steady update, cash pile will be growing faster with improved profitability.
WH Ireland have now updated, and they have a 120p target price.
They retain their forecasts for the moment of £0.4m PBT and 5.5p EPS this year with a £2.4m cash pile, rising to 6.7p EPS and then 8.4p EPS (with a £3.1m cash pile).
They conclude:
"WHI view: This morning’s update illustrates both continued positive trading momentum, alongside progress against the Board’s key strategic objectives. The shares now trade on an FY 2023E EV/Revenue multiple of just 0.6x, EV/EBITDA of just 2.4x and PER of 11.2x. With over 40% of revenue now derived from recurring contracts, 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."