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All the broker recommendations of late have been good with target prices from 160 to 174. Personally I'm not worried of a FTSE retrace (when it finally does happen) as I think it will be a reasonably gentle affair. Also the further down the FTSE food chain the less of an effect of any price movements. The FTSE has increased 7.5% in the last 3 months and XCH has declined nearly 9%. So hopefully when the FTSE does retrace XCH will increase simples ! (I only wish it worked that way) But I do find when the FTSE does lower there tends to be more interest in your smaller companies. As pointed out with the good news of a directors buy lets hope it creates some interest.
DIRECTOR BUY !! Nice.
I doubt many CEOs do post on these boards, I was just using them as an example of someone very informed about a stock. It is good indeed to find someone else posting on this share as the BB has been dead for some time. That in itself tells you something about the share, namely that it is being poorly followed and so could see big swings and big interest in terms of posts as was the case here back in Feb 11 when the previous CEO resigned/ was pushed and the massive goodwill write off happened. Today in fact the share was very subdued in terms of volume which means we have probably seen the bottoming out of the current decline with hopefully some renewed increases now over the next week or so. Interestingly two lots of analysts, Liberum Capital and Espirito Santo have reiterated their buy recommendation on Xch at respectively 165p and 160p. My only nervousness around Xch at present is the fact that the FTSE is at a five year high so a retrace is a significant possibility and that could carry Xch down with it. Then again Xch has quite often behaved inversely to the FTSE 100 and 250 indexes.
You can re-read it as many times as you like but you will never spot any errors until you have hit the post button. I do read many bb's and hope for as many varying ideas as possible because somewhere in the middle is the truth. You can always spot as you said the genuine and informed as they don't ramp or de-ramp telling you how fantastic the company is. As you can see I don't post a lot so its nice to see a nice down the middle opinion especially on this quiet board. I was also aiming for about 150 as that would be just over 20%, which is what I try to aim for. I bought TIG at around the same time which sells software for insurance and fleet business's which has reached its 20 % but I think I will keep hold of it for a little longer as I believe there is still a little more to come. Do you really believe any CEO'S post on these boards, personally I wouldn't even think they would bother to read them never mind post on them.
Apologies for the pile of typos in the previous post, I was rushing and did not get the chance to reread and correct for posting.
Ping Pong, Thank you for your very generous words. Do however be careful as to what you believe on this bbs. You don't know whether the person posting is the CEO i.e. very well informed but with a definite angle to push, some weirdo with unthought out views or someone genuine and informed (rare but obviously worth listening too). I would obviously put myself in the last category but as the two previous ones would do the same that doesn't help you so you should treat what I write with the cautious scepticism. Xch has still some up side (as per my valuation of 150 fair value at present and more with either new contracts or a takeover) but it is not the 2 to 3 time bagger it what 18months ago. For me the question now is whether it is the best opportunity in town or is the better risk reward elsewhere and I don't know the answer to that one yet. If the sp gets back up to 145-150 I will probably sell 25-50% of my holding and then reduce to around 25% of my current holding at 165-175 and hold the rest longer term. I do day short term trade it or at least I do the first part of that which is to buy more on the dips but am lousy in discipline in selling after a significant rise so then tend to just keep holding them when they inevitably fall back again. Perhaps that is why I have so many of them.
Yet again thank you for your knowledge, you can spend hours reading up on a share before you purchase it and you have probably given me more concise information than all the stuff I have read before, cheers. Do you still believe there is plenty of upside to XCH, obviously dependent on acquiring good contracts. Do you ever day/week trade XCH when it does have its large swings, or are they simply tucked away until that rainy day.
Yes I have been invested here for a while, having bought a lot when they were in the 50s and kept buying as they have risen and any risk of financial collapse has disappeared. You are right that they are prone to large swings; they are a reasonably untraded share, other than when major news comes out, which means if anyone wants to accumulate or unwind a significant position it tends to move the price. The sale of XTB appears to have unsettled a few people so we could see a few days of decline before a renewed drift up. This is what we saw after the announcement of the termination of the LME contract. Actually the two are quite different events in that LME was purely bad news as £25m p.a of revenue was being lost, whereas this is neutral to good news. Neutral in that all the future profits for the remainder of the contract are being paid to Xchanging and good news in that the simplification of the Xchanging structure both organisational and financial, which was a really complex thing in the David Andrews days, makes it easier for a potential acquirer to see what they are getting. Furthermore for a company like Capita the interest will be in the Uk end of the business not the German end. In short the sale of XTB makes an acquisition more likely albeit I would not like to quote any odds on it happening or a time frame.
I take it you have been in XCH for quite a while, you seem to have quite extensive knowledge of there dealings. Have only been in since last December and bought as a recovery play, still can not decide if they will stay as a long termer, they do seem prone to some rather large swings in price. But for now they are in profit and generally seem to go in the right direction price wise. Much happier with slow and steady rather than big swings.
'Issue' may have been a loaded word as you are right it makes it sound like a bad thing. Ultimately whether a bid is good or bad depends on at what level it is at. Even a low level bid can be good if rejected by the board because it tends to drive up the share price as the market increasingly sees the company as an acquisition target. I would say the current share price is undervalued by c 5-10%. If you take fair value therefore at being around 150p and accept that there would a bid premium of around 20% then you could be looking at 180p a share. Yes i would take that however whether Xch could climb to more under its own steam over the next 12mths or so depends on whether they can announce any sizeable deals or a significant number of smaller deals.
Would a bid not be good news, or do you see more value long term being on there own.
'bid' not 'bit'
Given the mess Xch got into a couple of years back with the debt post the Cambridge acquisition and the market's fear that they would breach their banking covenants their desire to have their debt under control is fully understandable. One issue with debt free companies that generate lots of free cash flow, as Xchanging now does, is that they can be a very tempting acquisition target. It is still in my mind that an IBM, a Capita or possible even a Serco could put a bit in for them.
How to invest the money, like you say no need for a further dividend (even though that's always nice), paying off debts is always a good idea for long term growth. Was almost going to suggest a share buyback, but then realised to much debt and in the long run paying off debts is always the best thing to do.
Well Ping Pong I agree it was a roller coaster of a day. With regards to being just one pence down I think relief is more the word than luck. It certainly looked awful first thing this morning but that was just a knee jerk reaction before people had digested the IMS. KL says the sale of XTB is positive for shareholders in that it brings forward the revenue that would have been earned albeit it also brings forward the drop off in revenue. Interesting to see that they are talking about using the money to pay of the bank loan and to invest in future growth; there is no mention of a pay out to shareholders. The question for me is therefore what will they invest the money in and are they likely to do so wisely. My guess is that it will go into Insurance software development. It seems to me that the strategy of the company is to have that as the core business with technology as an enabler and then procurement and to a lesser extent financial services (they still have FDB and Kedrios) as secondary service lines. If Xch can really embed themselves as the provider that underpins the Insurance market worldwide (a bit like having a copyright on the internet) then they will be onto a real winner and the share price will soar. I think that is what they are trying to do and they are probably in the best position of any company to do so thanks to having been running the Lloyds of London back office since 2001. Success is not guaranteed but as someone with a good slug of shares here I would rather they have a shot and it and reinvest the money from the XTB sale there than give me an exceptional dividend of a few pence per share. In short it it a vote of confidence in KL and DB and I have confidence in them based on their track record over the past couple of years.
a rollercoaster day, very lucky to be only a penny down, just wish i'd topped this morning. GLA
Wouldn't expect any earth moving events today. My bet is that the junior MMs who have drawn the short straw of being at work today are not only bored but hungover. They will seek their amusement where they can and see if they can get this share to it's year high on the last day of the year. Either that or it's another game of minesweeper!
The last 12 months (or actually slightly over) have been good to this share and hence to me with it more than doubling. I like what I see of the turnaround and the new conservative approach at Xchanging. It seems the market does too, having said that I reckon there is a lot further to go which is why I continue to hold. I suspect the March announcement (full year 2012) will be strong and that we will see a continued steady rise between now and then in anticipation. Xchanging seem to be developing a pattern for timing their large wins to come out at the same time as full year or quarterly results. I would love to see a real big one announced in March however the fact that the CFO traded just recently means no current lock out for insiders which in turn means they can't presently be finalising anything too big. Still I am confident of £1.50 by next summer. Don't have a clue what was behind the two enormous trades today or the other very large ones. Would be interested to hear if anyone has any insight.
biggy....
buy......
Xchanging (XCH) Director name: Mr David Bauernfeind Amount purchased: 39,800 @ 119.90p Value: £47,720
Xchanging: JP Morgan raises target price from 108p to 129p, neutral rating remains unchanged.
New Product Launches In September we launched a pilot scheme for our new settlement services offering, Netsett. Modelled on a service already provided to the London insurance market, Netsett is designed to provide net settlement services to the global insurance market using Accord messaging standards, in partnership with Deutsche Bank as settlement bank. In October we launched our redeveloped suite of insurance software products under the business name "Xuber". Xuber addresses all segments of the Property & Casualty insurance market and forms the core of the insurance offering we are taking to the US market. Strategic Development Yesterday, Thursday 8 November, we announced that Xchanging's Italian subsidiary, Kedrios S.p.A. ("Kedrios"), acquired 100% of AR Enterprise S.r.l. ("AR"). The acquisition has enabled us to address Kedrios' long term weak strategic position in its market and accelerate financial improvement, creating a profitable company with a significant market position and greatly improved growth potential based on leading technology. As well as resolving a strategic issue, the acquisition now means Xchanging no longer has any loss-making businesses.
New Business During the period we won a £65.5 million five year follow-on contract to continue providing the Insurers' Market Repository. Previously an annual contract, the new arrangement provides greater earnings visibility and confirms the strength of our relationship with the London insurance market as we invest in new technology to continue developing this key piece of London market infrastructure. Yesterday, we announced further that Xchanging has been awarded a contract by Lloyd's to build the platform for the Lloyd's Claims Reporting Suite ("CRS"). The CRS will provide Lloyd's and managing agents with a set of online dashboards carrying claims management information. In September we won a further technology contract with Gatwick airport. Building on this strong customer relationship the additional contract is for four years and covers the provision of telephony services. In Procurement we have won a three year contract with Grupo Panrico S.A., one of Spain's leading bakery companies. This builds on our Spanish procurement presence, following our entry into this market with the 2011 L'Oréal contract win.
Commenting on today's announcement, Ken Lever, Chief Executive, said: "The period since our half year results has seen further positive developments. We have won a number of contracts and launched two new products. We have also achieved a satisfactory strategic resolution for our formerly loss-making business Kedrios. We still have much to achieve, but this evidence of progress is very encouraging."