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Remember, share prices are as much about sentiment as about profit. When current pessimistic sentiment improves with improving market outlook then I think VLX will be one of the first to take off.
Also; If VLX can increase profitability in this harsh environment then what will they not be like when the environment improves. I think last year's £5 share price high will look low in the not too distant future. Only my opinion!
My opinion - I’m long-term bullish on Volex, because Nat Rothschild seems to have done a cracking job of restructuring & transforming this group both organically, and through acquisitions. It’s got a good spread of businesses in different niches.
So far, so good, today’s update sounds very good to me, given the macro picture. As noted before, Volex has some positive industry tailwinds in its EV, medical, and data centre markets. So I’m hopeful the underlying growth there could offset tougher macro conditions. Plus of course, rising selling prices generates revenue growth even if volumes remain static or fall slightly.
We have forecasts confirmed today, which means this valuation data should be something we can rely on - in particular a forward PER of 13.3 looks attractive to me, for what seems a resilient, and growing business.
Thumbs up from me.
https://app.stockopedia.com/content/small-cap-value-report-fri-19-aug-2022-placeholder-952867?order=createdAt&sort=desc&mode=threaded
SUBSCRIPTION ONLY......hence the copy and paste
Strange times ! Your figures show how strange. I did think it was going to continue to creep up as it has done over the last few months.
Normality will return . Just have to wait. Main thing is if performing well under these conditions… will do even better when the ‘wider’ good times return.
This time last year VLX were giving profit guidance of $50 million profit and folks were chequing up to buy the shares at £4.30 ish. This year VLX have given guidance of between $62- $64 million and folks are hardly interested at £3.04.
Try the RNS icon that might help. :-).
Half year results - was it due today - 28th July 2022???
Re. ATH…..yes correct, should have referred to the 52 week high circa 495p which I remain confident we’ll revisit , but not this year !
PS. Thankfully bought in after it collapsed from its ATH, when it was pennies I recall.
Continues to creep up every so slowly.
Makes a nice change in my portfolio ! Lol.
Long may it continue !
All time high
All the high was somewhere around 20 quidany years ago.I don't see that happening again in the near future
Yes the InYantra has enormous possibilities and the owner wants to make it really fly. He’s clearly super smart so it’s very synergistic. The SP is doing now what it should have done when the results came out. It’s very weird trading patterns but worth a lot more that 300p that’s for sure. Might be the private client broker upgrades ahead of the open publications buy recommendations or something.
Yes there has been slow but steady support over several weeks now, long may it continue. May take some time to revisit the ATH but happy to wait as confident we’ll get there .
Finally some recovery in the share price! About time
Expecting increased revenues from inYantra ,latest Indian acquisition supported by serial entrepreneur Rajat Khare founder of Boundary Holdings who also has an interest.
I’m not sure there will be any short term pain at all because although global they make a lot of cables in China, so a lot build costs using a weakening RMB, sold in USD and reported in GBP which is nearly parity to the USD now. Per the Scott post points out copper is hedged in all customer contracts pricing so whilst there is hit lag on the way up there is delay lag as spot price of copper reduces which is now trending as one can see. I think the C level team are super smart in buying both upwards and downwards integrated acquisitions so cost to produce become internally cost controlled and with global risks ever present Volex can move sites & raw material sources as well (Most of their competitors cannot). The new acquisitions will need a little time to optimize as is normal although we can see they are all immediately earnings enhancing. I think the interims will very interesting in another 6 months time with copper and currency tail winds baked in. This isn’t a share for the very short term but could and I would say should be back to 500p in a year if markets normalise. (That’s a big “IF” of course).
I’m not sure there will be any short term pain, although global they make a lot of cables in China, so a lot build costs using a weakening RMB, sold in USD and reported in GBP which is weak against the dollar. As the Scott post also points out copper is hedged in all contracts so whilst there is hit lag on the way up there is delay lag as copper comes down which it is trending to do. I think the C level team are super smart in buying both upwards and downwards integrated businesses so cost become ever tighter controlled and globally they can source everything internally now so little to no margins going on purchased items down the road. The new acquisitions will need a lite time to further optimize as is normal. I think the interims could be very interesting in another 6 months time. This isn’t a share for the extreme short term but could back to 500p in a year if markets normalise. (That’s a big “IF” of course).
Agree. Short term I think there is more pain ahead but over long term this should pay handsomely.
you are spot on the money redninja...group of similar companies like volex who are extremely high quality but will not be going anywhere fast. however....5 years time if you hold sensibly they could make you very well off. good thing is i think they have seen their deratings take place...don't think the downside risk now is very severe, especially with volex.
if nat rothschild, who could put his money into any elaborate PE fund or hedge fund that he likes, is throwing his net wealth at this...then I'm happy!
I should point out the decrease in earnings per share is due to the to some degree to the companies investment in future growth. So one for a medium term hold. I hold quite a few, but have also been trading them along the way.
Given the high inflation/high interest rate/ recession heading economy we are entering I cannot see them soaring in the short term.
It's no mystery.
The results were good in terms of revenue, but not in p/e terms ie earnings per share actually went down 30c -> 25.2c.
Thus yes show good growth, but not earnings growth .
Then Times + other tipsters backed them and share price rose.
Wonder what the hell happened this morning for the sp to tank and then spike back up to 230+.
(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on integrated manufacturing specialist Volex from 440.0p to 380.0p on Friday, stating the group's five-year plan was "ambitious but achievable".
Canaccord Genuity noted that Volex's performance in its recently wrapped up trading year was in line with expectations, with full-year revenues up 39% year-on-year at $615.0m and adjusted pre-tax profits growing 24% to $51.0m in "a record year" for the company.
In terms of the group's five-year plan, Canaccord said Volex's new 2027 targets would take revenue to $1.2bn, with a 9-10% margin range, with at least $200.0m of this revenue target to be M&A driven.
"This means Volex would require revenue to grow by 10% CAGR to reach its organic target ($1.0bn), which in our opinion provides an ambitious but achievable goal. We think pricing power, production efficiencies, and accretive M&A mean margin ambitions could prove to be prudent, albeit we are cognisant that EV growth will likely dilute the mix," said Canaccord.
While the Canadian bank maintained operating margin expectations for Volex's 2023 and 2024 trading years, which were set towards the bottom of the company's 2027 target range, it also noted that higher interest charges had driven adjusted pre-tax profits 2-3% lower and guidance that the firm's tax rate will increase also resulted in a roughly 10% adjusted earnings per share reduction for both years.
"On a cal. 2022E basis Volex trades on a P/E of 11x and EV/EBITDA of 7x vs sector averages of 18x and 11x, respectively. Our sector average-based TP of 380.0p (a market-driven decrease from 440.0p) would see this unwarranted discount, in our opinion, eliminated," concluded Canaccord, which also reiterated its 'buy' rating on the stock.
What sent analysts into ecstasies was a new five-year plan aiming at doubling revenues by spring 2027 while maintaining profit margins at 9 to 10 per cent. The company expects only $200 million of the $600 million extra revenue to come from add-ons.
In addition to the UK, Volex already operates in the US, Canada, Mexico, Turkey, India and elsewhere, so it will continue to be sensitive to currency movements. However, its position near the technological cutting edge should keep it fairly impervious to macroeconomic headwinds.
Rothschild gives himself about a dozen years to develop Volex to maturity. He sees the shape of the business being roughly maintained, although electric vehicle supply should rise to about a fifth of revenue, helped by innovations, for example in charging cars from home.
The main downsides concern the competition for talented labour, and competition in Volex’s markets from thousands of similar small businesses around the world. Given the size of some of its customers, there is always the prospect of Volex becoming a takeover target for a bigger company that wants a ready-made package in this corner of the commercial landscape. But that should do investors no harm.
SPONSORED
The shares are held by an impressive group of American and British institutions. All being well, they will be joined by others.
HSBC sees the p/e ratio falling from 11.7 now to an attractive 8.8 for the year ending March 2025, which assumes no further per-share earnings setbacks.
Copied from Ijamon post on advfn :-
Times conclusion:
Despite all this promise, the share price has fallen from 493p to 235p since last September, suggesting that there are sceptics lurking in the undergrowth. Nevertheless, on balance that decline looks more than anything like an opportunity to climb aboard at what may prove to be a historically cheap level.
ADVICE Buy
WHY Plenty of potential for an exciting ride under a well-motivated and experienced management
Cable maker Volex is in a position of power
William Kay
Friday June 24 2022, 12.01am, The Times
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Volex is a company of many moving parts, and most are travelling in the right direction. New management, under Nat Rothschild, took over five years ago and is transforming the business into a power cord and cable supplier for computers, printers, games consoles, kitchen appliances, data centres for medical and industrial uses and — most enticingly of all — electric vehicles.
That is a lot to keep an eye on, but it is comforting to have a Rothschild in charge, especially when he owns 24 per cent of the shares.
Revenue for the year to April 3 jumped from $443.3 million to $614.6 million, though that was inflated by four acquisitions. Any investors coming in now will have to get used to that, as takeovers will be a major plank in the strategy for several years. Net debt jumped from $27.3 million to $95.3 million, which is likely to keep growing and require some financial dexterity to manage. Volex has just arranged another $200 million line of credit, which will be by no means the last.
Underlying operating profit rose more slowly than revenue, from $42.9 million to $56.2 million. Thanks to the expansion and a higher tax charge, earnings per share were 16 per cent lower, at 25.2 cents. That suggests the management may need to keep their enthusiasm under control.
Electric vehicle revenue virtually doubled during the year to reach $100 million or nearly a sixth of the total. That proportion is set to keep increasing, and may encourage the top team to unload some of their less exciting activities. “We continue to see significant opportunities,” Rothschild said. “The infrastructure and acquisition investments we have made in FY2022 are focused on our pursuit of further growth, capitalising on the leading position we have in attractive sectors. With an exciting acquisition pipeline and access to funding, we will continue this successful strategy.”