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Hi Moorey, Sorry to hear that you have taken such a pounding on this one; it is always a difficult decision whether to crystallise a loss or to hold on for recovery. I know that I have held on far too often and taken ever increasing losses. For me if I had bought at £1.85 I think I would be tempted to hold at this level for at least a partial recovery. Ultimately it is a question of whether you feel the factors that led you to buy at that price have change so substantially as to make the share bad value at half your original purchase price. What is for sure is that investing sayings don't help as for every one that tells you do to something there is another one that tells you to do something else. The one suggestion I would have, if you have not already sold and have not watched it already, is to invest 45 minutes in watching the mid year results presentation (easily found on the Xch web page). Having watched it twice (I always do this, once to get the sentiment and once for the facts) I am reasonably optimistic (see previous two posts). Of course there is reason for concern, perhaps most fundamentally that Xch laid out a strategy based on BPS being the cash cow and Technology and Procurement the engines for growth, only to now tell us that one of those engines is looking decidedly questionable. Ultimately however Procurement is a minnow in Xch and I think people are getting overhung up on it, in addition they are double counting having already hammered the share price at the Q1 announcement concerning Procurement's problems.Overall I like the fact that the heavy capital investment has been done (acquisitions, tech investment and restructuring) and that not only are the sales pipelines starting to fill nicely but much of the tech sales should have awesome margins. No investment is ever risk free but if I had a pile of free cash I would be severely tempted to make a heavy purchase in Xch at this price. By the same logic therefore I am keeping my significant holding invested at this price too. Good luck with whatever decision you make. El Prof.
.... The real excitement however comes from Sales. The signs are there, some subtle others less so, that Xchanging are turning the corner. In the revenue and profit bridge that David Bauernfeind presented, the two numbers that jumped out at me were for revenue growth. The revenue growth per se was £23.3M for the half year with the profit impact of revenue growth at £12.6M. That makes a margin of 50% which is staggering. Separately Ken referred to the sales targets that were set for both in year sales revenue and total contract sales revenue as having been delivered on an slightly exceeded. He also referred to the maturing sales pipeline and interestingly that none of the Xuber opportunities have gone away, that they are progressing as anticipated, that Xchanging is at preferred supplier stage for a number of these and is even at contracting on one or two. Total Objects has had more wins in H1 than in all of last year. In short this is a different language to that which we have seen in previous results. Now I accept that there may be some positive language been rolled out to counter the bad news on the Procurement front but I don't think that professional accountants like Ken Lever do irrational exuberance. The most exciting of all his comments was that the growth prospects are such that Insurance Software could see £100M revenues over three years with margins at 25% and that Applications Services could also see £100M revenues over that time frame although the margins would be lower. He then referred to a blended margin rate for the two businesses in line with the current BPS margins which would suggest over 20%. So what does the future hold? I am pretty sure that it is up as I agree with Ping Pong and PhonixChi that this is now pretty cheap. As for tomorrow and the next few days, I hope that people move quickly away from the emotional phase and look at the facts. When they do they should hopefully realise that this sell off is overdone. With regards to returning to what I see as fair value I fear that could take a little longer as the market is not going to give Xchanging the benefit of the doubt for a while yet. I get the feeling from the way that Ken Lever was talking in today's presentation that we will hear some positive news on Xuber sales before too long and that should help. Ultimately the best hope for quick share price growth has got be acquisition by either a company that can the value and potential that the market is currently missing or that has a business model for whom the synergies are appealing at this price.
We can be pretty sure that Tom Lehrer was no thinking of Xchanging when he wrote 'The Masochism Tango', not least because he did so over 25 years before Xchanging was founded, but shareholder in this company could certainly adopt it as a theme tune. On the whole I am pretty relaxed about today; now don't get me wrong, I enjoy having a quarter of the value wiped out in a significant holding within the pace of an hour as much as the next man, but therein lies the important point. The market got the mid year statement at 7a.m and by 8a.m has written a quarter of the value of the company off. Had anyone read beneath the headlines? To me it smacks of a knee jerk reaction possible out of fear that this is February 2010 all over again. After all there are couple of important elements in common: a large write-off and the CEO departing. The write off in procurement is interesting but little more. It does not relate to the recently acquired technology procurement businesses, Spikes Cavell and MM4, but to the legacy procurement business; in short this is one of the last write offs in tidying up the old mess. The departure of Ken Lever is hardly a surprise (good call a few months ago Filshare); he is not a young man and he had been there for nearly 6 years of which over 5 as CEO. He is an accountant who came in to be CFO and who got the top job. Ken has many qualities but I think he would agree himself that he may not be the world's slickest salesman. He has done a fantastic job in cleaning out the Aegean stable that was Xchanging's accounting and has also done the heavy lifting on cost out and simplification. As he said himself at the end of the today's presentation, the next stage of the Xchanging journey needs a new profile. This is clearly a good natured departure otherwise he would not be hanging about for six months until his successor was in the chair - remember David Andrews' departure, it was announcement and out on the same day (with the out becoming I suspect before the announcement). Now you can't get away from the fact that the Procurement results are not pretty. They have clearly got problems to sort out and these are about more than just cost out, however Procurement is a minnow. It makes up less than 6.5% of the group's revenues. To me the more interesting news today was the positive stuff. Both BPS and Technology are having record years and are performing in line, or ahead of targets. Look at the margins here: BPS is up from 18.4 % to 21.2% and Technology from 5.7% to 7.8%. In terms of revenue, despite the headwind of £28M in Insurance (this is the fall off in revenues that everyone knew were coming this year - and importantly this is the last year of them), the BPS revenues are just down £8.1M (from £142.1M to £134M) and profits are up from £26.1M to £28.4M. In Technology revenues are up from £47.1M to £52.4M with profit up from £2.7M to £4.1M.
Didn't see this coming, and the director deals are hardly the value to blow you away or give you confidence. I would have thought with all the m&a activity at the moment, there might be other outsourcers who'd like to get their hands Xchanging's virtual monopoly in the Lloyds market. I said succession planning was a risk when ken got his NED role, so I'm kicking myself now. Still I've stayed in xch when it's been lower than this ( then got out around 1.80 and back in around 1.27 i think,) and small changes in volume do make this one volitile periodically, so will hang on until it comes back, am sure it will.
Have you seen the difference between buy/sells today, over 9.9 million buys against 525 thousand sells, at 3.26 there where over 7.8 million shares bought, some very chunky buys indeed. So i'm now getting the feeling today's negativity was done for a reason, which i'm sure we will find out over the coming days. Just can't believe there was no change in share price. Anyone any thoughts and what's been happening ????
Sorry Prof, my patience has run out with todays 25% drop in price to sub-100. To answer your earlier question, I bought-in at 184 (1st tranche) and again several times with my final purchase at 154. So far, this purchase has been my worst decision to date.
It doesn't matter how good the product is or what the potential future growth will be; the market has given it's verdict. This board is hopeless and beyond redemption. The only hope for those willing to hold on is that at this price level a bid opportunity exists. Unfortunately, any bidder will have to negotiate with these numpties - who will probably expect to be retained! Time to swallow my pride and a substantial loss. Thanks for nothing Ken Lever.
Yes something similar for me, i'm in at about 1.20 and have watched rise to 1.90 (was waiting to sell at 2.00 sound familiar). I also topped with a 5k buy this morning and a couple of spread bets. But it should with time and patience and of course a new CEO improve quite a lot. So remember a lot of deep breaths and patience and we should be okay, unfortunately today it just looks like a bomb site !!!!
What really frustrates me is that I went in about five months ago at £1.28 to make a fast 10% Got that spot on and was at target inside a week. Like a greedy tw*t, I held on though and went for more. Now look! My own fault. Never try to catch a falling knife they say, but have just gone in for another 5k's worth because, yes, by any standards they now seem a bit too cheap. (I say by any standards but the only standard that really counts is the current market price!!!) Anyway, let's see what happens. Good luck....
pheonixchi I think a lot of people will have lost a lot of money, including ourselves !!!!!. Just got to hope for a decent bounce back over the next couple of days
I'm sure Unwin will be thinking long term, but they badly need to find someone who the 'City' like, to try and bring some much needed sentiment to this company. But how much of a rush will they be in to find a successor which may also govern how long it will for this share price to bounce back. I do know one thing though and that is the share price is now very cheap, lets hope we see others thinking the same !
Well thats whatever wind I had knocked out of my sails.I dont think there are many companys that consider their shareholders as a priority, although profess to do so.Sowhat do we do now? I have just looked and have held these since 2010, and at best within the last year broke even, tho im back to familiar territory now, firmly in the red. Im just gonna hold folks , disappointed but gonna hold.
Too right, PingPong. But the board have cost themselves a lot of cash today. Unwin must love Lever this morning, as he is around £25k light on his most recent investment at around the £1.28 mark! I tell you, horse racing is straighter than this stock market lark....
Don't think the board have ever considered shareholders, certainly not for the last 18 months/2 years. And its not the first time they have been poor in timing news, press a new press/media officer is needed
The sell off this morning seems to have been overdone, not sure if they're pricing at Ken Lever leaving or under performing results, but if results are poor then why price so much in on Ken, doesn't make sense
What a stupid reaction in price to the news of Lever's pending retirement. However, whilst it had to be announced at some point, doing it alongside a mundane half-yearly report has caused a big loss to many shareholders. OK, it will probably come back in time but to my mind the apparent lack of understanding by the board over how the market regards this outfit is probably demonstrated by the timing of this announcement. Thoughts anyone?
Rns tells us Ken Lever is leaving at the end of the year. Only skimmed the half years, but looks fairly disappointing, no real good news to drive the share price up. Really important for xchanging to get the succession right, and keep focus during H2, whilst searching for the replacement.
Maybe some people selling off as worried about what might be announced on Thursday? Am hanging in, hoping a rebound will come post 30 July and may even top up if it falls much further. I still beleive fair value is much closer to (or above) £2 but Xch need to sell themselves better, both to customers and investors !
Moorhey, I am sorry to read that you are sitting on a substantial loss. Do you mind the question as to what your average point of entry is? It is true that the past since Nov Xch has been a pretty unpleasant ride and it is certainly true that since IPO it has been a bouncy one. My view is that it is currently significantly undervalued. The volumes traded of this stock are comparatively low so it can swing massively based on sentiment. The Q1 update was pretty much taken as a profit warning despite the fact it said no such thing. It basically said that one segment was a bit behind but would make it up within the year. Even if it does not given that it such a small segment at present (although great growth potential and the awards are testimony to this) any shortfall will easily be made up by the other sectors. As Fil has pointed out we get the midyear update next Thu (30th Jul). I don't think that it will be spectacular but I do expect them to say they will hit the numbers they originally committed to for the year (which is also what they said in Q1 but nobody listened). I expect to see a gradual increase in the price thereafter as the realisation dawns that the numbers are solid. The analyst are still calling an average of £2 and as I have said before I think that it not far from fair value. Ken Lever always said that this was the last year with a head wind from big contracts falling away (£28M in the Insurance space) thereafter we should see Sales contribute more to growth rather than arresting the decline. Add to that the fact that the investment has been made in technology and acquisitions and we should also now see far more of sales dropping through to the bottom line as profit. In short I remain confident although like you I confess that my patience does at time wear at little thin.
Must admit that I'm losing patience with this company. I've been a shareholder for 18 months and I'm looking at a substantial paper loss with no light at the end of the tunnel.
...seems the best hope for this share, which is currently becalmed... It's lonely on this Board!!
Australian-based financial services platform provider, GBST Holdings Limited has entered into an alliance with British-based business technology provider, Xchanging plc. The announcement released by the two companies said they were investing time to leverage opportunities within their existing clients and expand into new segments of the capital markets securities processing and wealth administration sectors across Australia, the UK, Asia and the USA. (24/6/2015).
In the 4-5 years he has been there, Ken Lever appears to have delivered on stabilising the business and getting rid of lots of complexity and bad parts of the business. This should leave them well placed to start another growth phase at last. I do wonder if his non exec role, means he is starting to look to his next challenge, in which case the sucession could a risk, and that is the only cloud on the horizon to me.
Prof. I also have some (also historic) knowledge of xchanging and agree with much of what you say. I think the current share price is very low, and topped up recently. Generally xchanging doesnt see high volumes traded, so we could languish here for another 6 months, or it could suddenly jump back to 1.50 or even 1.90 once the markets start to take more of an interest again.
Part of me wishes he would focus on Xchanging however the fact that the Board have given him the green light and the fact that he feels he has the bandwidth to do this suggest to me that both he and the Board are confident that the heavy lifting at Xchanging has been done and that all is on the right track. If there was a worry that Xch would miss its numbers this year then I can't see that this would be happening. Let's hope that the AGM tomorrow is a positive affair and that we see a return of confidence.