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The sp seems to me to be a very good entry point for a company that has very good prospects so I have decided to add a good bit more . I cannot see any negatives other than the general turmoil that is happening to stocks . So this is a hold in rough seas .
Tesla yesterday reported 68% rise in car sales last year and forecasting 60% rise this. Hopefully lots more cables to order from Volex!
What would be your current sell target?
This is Nat Rothschild I doubt he will be bothered to much .
Yes I did at the time think that purchase by Sharon Molloy, wife of COO, purchasing 95,000 Shares on 14/03 at 262p was revealing, and glad I topped up again on the back of it. Remain intrigued as to how NR will finally capitalise on his holding here, and will hang on till then !
CONTINUED....
Directorspeak - sounds upbeat -
Nat Rothschild, Executive Chairman said, "We have delivered an excellent performance in a challenging environment and are now well ahead of the five year plan we set out in October 2019. This is a validation of an effective strategy which has created a resilient and diversified business. We continue to pursue a number of exciting organic growth opportunities, while successfully acquiring and integrating compelling acquisitions, leaving us well placed for the future."
Valuation - many thanks to Singers for crunching the numbers.
I find EPS easiest, which are (converted by me at £1 = $1.30)
FY 3/2021 actual: 23.1p (boosted by an unusually low tax charge)
FY 3/2022 forecast: 20.3p (this should be close to actual, as guidance given today)
FY 3/2023 forecast: 22.2p
FY 3/2024 forecast: 23.8p
Remember that Volex is acquisitive, so these numbers could be boosted with further acquisitions.
Whilst I’ve been typing the above, the market has opened, and Volex has shot up c.14% to 280p, so it makes sense to use 280p as my valuation share price. This gives us a PER of only 13.8 times for the year just finished, FY 3/2022. Dropping to 12.6 for the new year. This is obviously bargain basement territory, and makes this share a clearly attractive buy, even after this morning’s 14% rise. Obviously just my personal opinion.
My opinion - it’s a bargain! That’s assuming you think performance can be maintained. I don’t think we need to worry about cost inflation, or supply chain - Volex seems firmly on top of those issues, and might even benefit from competitors struggling, allowing Volex to expand its margins possibly?
I’m so glad I held the line on this one, and didn’t let fear of further losses induce me to panic sell. We’re in a very difficult market right now. Everything (almost) has dropped a lot, and we simply don’t know if that’s due to deteriorating fundamentals, or just the background noise of nervous holders selling through fear.
Decision-making is particularly difficult for all of us right now.
The share price has been relentlessly falling, which of course makes us all worry that things might be going badly. The reason I’ve been fairly comfortable holding Volex, is because the company recently agreed substantially increased bank facilities. That matters, because banks are all over the management accounts, and would not be expected to increase lending if things were going badly. So that was an important sign, that the market seemed to ignore.
Sure enough, things are going well. Today we’re told -
Results ahead of expectations
Volex is pleased to confirm that the Group's revenues and underlying operating profits are expected to be ahead of consensus market expectations1 for the year.
The Group expects, subject to finalisation of the accounts and audit, revenues to be in excess of $605 million (FY2021: $443 million) and underlying operating profit2 to be in excess of $55.0 million (FY2021: $42.9 million).
1. The Company has compiled forecasts from four analysts with current market forecasts for the 52 weeks ending 3 April 2022 for revenue to be in the range of $575.0m to $586.3m, with a consensus of $581.2m, and for underlying operating profit to be in the range of $53.8m to $54.6m, with a consensus of $54.2m.
So before we get too excited, profit is only slightly above expectations. Still, to have achieved that in a time of supply chain turmoil, and heightened inflation, is impressive.
Strong demand -
Volex has continued to trade strongly, delivering robust organic revenue growth, including a significant contribution from the Electric Vehicles sector, where revenue has almost doubled. Demand has increased during the year with greater visibility of forward orders as customers look to secure manufacturing capacity.
That last bit that I’ve bolded sounds highly significant. It sounds as if Volex could be a beneficiary of supply chain problems, in that customers are committing more forward orders. This probably also means Volex has improved pricing power, since customers presumably are more likely to accept price rises, in return for certainty of supply, in a disrupted world.
Inflation - once again, Volex has confirmed that it is successfully passing on cost rises to customers. Management has been telling us this for a while, but again for some bizarre reason, some investors have ignored this, and made the incorrect assumption that Volex must be suffering from higher copper & plastic prices.
Acquisitions - four have been done this year. Volex seems to have a disciplined approach to making acquisitions (not over-paying, and only buying companies that are a good strategic fit).
This should have led to a re-rating for the shares, but in this small caps bear market, the valuation has actually been falling, which doesn’t make sense at all to me.
Directorspeak - sounds upbeat -
Nat Rothschild, Executive Chairman said, "We have delivered an excellent performance in a challenging environment and are now well ahead of t
up 12% early doors....
Strong trading update against backdrop of increasing uncertainty and macro problems. Not sure if it’s enough to reverse the downward trend in sp so remain on sidelines for now. Bought my original stake at 70p in 2019 but sold most of it way too early around 150p. Great company but lower entry points seem likely.
Should FLY............
after underperforming for so long
Can see this marching forwards again chasing previous ATH’s, very pleasing progress.
great reassuring trading update. no issues from demand, inflation, Russia, etc
And I think this will follow suit very soon.
Time to buy
I also think the trading statement tomorrow will be pretty good. There is still plenty of demand in the economy despite the doom and gloom.
I have a very strong gut feeling about this company so going to add more today sp seems oversold in my view. Plus expansion doing well.
Wednesday is the day. I was hoping to add before but none ofmy other shares are ahead enough for me to sell. Still if the sp doesn’t move up to much I can wait as the sp is quite low.
Which hopefully puts a spring back into the shares.
on LT metrics imv
this is soooo cyclical
Thanks for the information.
Not got the funds yet to get more but hopefully that will change in the next couple of weeks.
Yep , nothing to worry about. In fact as the sp has dropped on quite low volume it would be a good time to add. Fundamentals are good .
Does it state that a shareholder has sold some shares - they did hold 5.2% and now hold 4.9% ?
Am i reading it right ?
Appreciate the clarity.
(If so I think they have made a mistake… lol… it is surely going to bounce back when sector sentiment changes ! - Elon is taking over the world and he needs Volex’s help ! )
Why musk, they already have the hier to the Rothschild fortune running the company.
Ok it’s the house broker Cana. saying 510p buy back in January. This a fast moving well run business that’s predominantly in EV & data Cloud, the BOD as a stack of skin in the game. We were 495p just a few months back. This definitely extremely good value at anything under 400p. I think it’s a very good share to be holding or putting in an ISA (As good as they come).
Ok it’s the house broker Cana. saying 510p buy back in January. This a fast moving well run business that’s predominantly in EV & data Cloud, the BOD as a stack of skin in the game. We were 495p just a few months back. This definitely extremely good value at anything under 400p. I think it’s a very good share to be holding or putting in an ISA (As good as they come).