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Hello, what's your thoughts on the decline of the share price, general market conditions have been good and yet the share price has continued to drop. Is this going back to it being in a consolidation year and the markets expecting much more from XCH.
Just watching L2 and several OT's (Not O or AT trades) occurring for 9 shares (6 so far today). Anybody seen anything like this before?
for the third day in a row
'There' not 'their'. Back to year one grammar for me!
PingPong, Sorry about the delay in responding, I have not been on the pages for a while. I think that the share prices has taken a bit of a beating because the rise was based on significant optimism around growth and that the results, while excellent for the year just gone, basically said 2014 will be a consolidation year with new sales being required to fill the gap left by the contracts that have already been announced as departing. In other words growth is delayed until 2015. My own view on valuation, even with this delay, is that the share is worth £2 and possibly £2.50. Interestingly the analyst consensus, although I rarely pay too much attention to their views, has remained pretty much unchanged at £1.85. The dividend was at the lower end of what I expected and I worry a little that our two accountants are falling into that classic trap of thinking that it is their money, not the shareholders. If they are able to put it to go use to turbo charge growth then OK but if they fritter it away,as the previous management team did on the Cambridge acquisition, or invest in unwanted technological developments for the insurance market then we have a problem. I believe that they will invest wisely but this is their on my 'risk register' for the company. With regards to the immediate share price movements I think Dan is right that the sell off is now overdone and so would expect a stabilisation before a climb back into the £1.70s perhaps even the early £1.80s. You do also have to bear in mind that the market has fallen c 5% since Xchanging's results so their fall of c 12% is only a beta of 7%.
Just about touching on oversold now, expecting this to bounce slightly (or at least level out) in the coming days. Interesting 7m buy earlier also!
Hello ElProfessor what's your interpretation on the results and the drop in price afterwards, the results seem as predicted were the MM 's expecting more hence the drop. The wording in the RNS did seem a little downbeat don't know if you felt that negativity or its just me. Good call on the dividend you were almost spot on, at least the positive thing with that it was a150% increase, again don't know if MM 's were expecting more. They do seem to have a lot of cash on hand, which should have been very positive, just wondering if they have something in mind for it. But just like you have suggested before the company is run by two accountants so they will never do anything sparkling just nice and steady, and isn't that what we want.
Ping Pong, I would expect a further rise tomorrow possibly breaking the £2 but I am not convinced it will then stay there. The big question mark for me is what they declare regarding dividends. They will increase them vs last year and I would like to say we will see 4p a share (yield of c2%) which would only cost £10M however I suspect we will see 2.75p.
Any thoughts on this for tomorrow, it has risen quite nicely since the trading update, do we expect more of a rise ? with new information or is there the possibility of a slight pullback as quite often happens when results are released
Nice broker recommendation from Investec £2.10, definitely looks like the start of a re-rate.
ElProfessor thanks for the information and your thoughts, couldn't agree more. I was thinking the other week when it reached 1.62 to sell off one of my top ups, then thought why as this is only going one way and that I should at least wait until February or beyond. And I will be keeping my main holding for years to come.
Last year we saw a late push in December taking this to a year high close on New Year's eve of 125p. Clearly we have seen significant upside since then, although not that much above the FTSE 250 index (I know Xch is no longer in there but it seems a far better fit than the Small Cap and beside I am hoping to see it back in next year). Most of what I wrote about on 07 Nov, when the share price was 131p, has come to pass, and we are now at 160p which is where, in the opening line of that post, I had said I thought we should have been then. With this also being the current price to which analyst consensus has now moved it may therefore seem illogical to want to revise my previous view for next year. I think however that we are starting to see a fundamental rerating of Xch and as such could see a p/e being applied far closer to Capita's, which is 17 times earnings estimates, (see article referred to on the HL website in my post of 22 Nov) rather than the discounted one that has been applied since the bloodbath of Feb 11 when David Andrews resigned, and £100M+ of goodwill was written down. Given how cautious our 2 accountants at the helm are and given that they nudged expectations up at Q3 I would expect further good news at the full year. If you combine a p/e uplift with full year earnings ahead of even post Q3 consensus, then we could be in for significant upside to the valuation of Xch perhaps to as much as 250p. Now this is all very good but I don't think the markets are ready to take Xch there yet (although this is a share which in it's heyday was north of 300p and on a a higher p/e than Capita) but I could see around 200p in the next twelve months. The other possibility of course is that, now that the US quagmire has been tidied up (not sure you tidy quagmires but hopefully the point is understood) and Xch has simplified its accounting and commercial models, Xch becomes a takeover target for one of the big boys, motivated either by its juicy procurement division (3rd biggest player in the world) or the way it has managed to hard wire itself into the back office of Lloyds of London. If the takeover were to happen (and I would put the odds at no more than 20%) then the 250p could be seen next year.
Finally realising its true potential
trades...buys by the look of it.............
Hargreaves Lansdown have reproduced on their site a share tip from the Investors Chronicle in Xchanging. It list Xch as a speculative recommendation but it very positive about the upside potential highlighting the cost out being undertaken, the many recent contract wins and a PE which is half that of Capita. They also talk of likely growth of 20% year on year between now and 2018 (although not sure how they can say that). Worth a read!
Colinco, Not sure why that bothers you so much. The non-controlling interest share of profits is stripped out in the declared profits (I think that you acknowledge that given your last sentence). The non-controlling interests are (well obviously non-controlling) which again clearly you know. What is it that is concerning you? All the best ElP
Although the figures look good for this company, only 40% of net profit is attributable to the non-controlling interest. I'm not saying that the operating profit cannot increase from the current level, I'm sure it will, just that the distribution of net profit is a major put off, and probably what is holding back the share price. All else equal, a company which reported 50% of the operating profit reported by XCH but where 100% of net profit was attributable to the non-controlling interest would have a higher share price.
ElProfessor is your prediction coming true ???, great news today and now cant wait until full results in February. Nice to see the share price getting to where it should belong. Ye ahh
Great sum up ElProfessor, lets hope your predictions come true. I do find XCH' s closing price odd, all week it has closed above the offer price and today it closes below the bid price. Not very interesting or relevant I just find XCH closing price seems to do strange things.
PingPong, Who knows. If you had asked me back when the full year results I would have said we would be at the 160p by now. If I was to try and analyse what has gone and call the next few months I would go as follows: -full year results delighted people hence 150p but then just as we saw some profit taking which took us off those highs the loss of LME freaked people hence the tumble to 130 and then sticking at 125-128. -volumes became terribly low as people lost interest in what is a pretty small market cap company. Those that had ridden the share from 50p had made a great profit and went elsewhere while those who got in more recently got bored with lack of movement. -eyes have been elsewhere hence blind to the many contract wins, albeit it small that have been notched up recently. -Xch is doing everything it said it would. At the half year Ken Lever said everything was doing great expect procurement which was a bit behind however he was not worried because there were a lot of negotiations that were advanced and the would come through in the second half. -Guess what - what Ken said would happen has happened. -Q3 results next week will be good. I always like Q3 results because they are usually overlooked as they just relate to a quarter so not so sexy as full year or even half year however the key point is that they are issued around 6 weeks away from full year. The management therefore know pretty much to the pence where the full year will be. If Q3s are strong then you know the full year in Feb will be strong and so you can often get in ahead of the upswing with minimum risk. - I predict that on the back of excellent Q3 results (not overhyped because of course we have our two accountants a the helm so they will continue to squirrel away into provisions for the any unexpected events and to smooth future profits) we will then see a steady climb until full year results in Feb which will be excellent. -the share will then overheat at 160-170 in the few weeks after that and fall back by c 10% before starting a steady climb over the year to finish at c180p. Let's see how I do on this particular piece of crystal ball gazing
Are we finally going to see some movement, preferably towards that 1.60 mark you have discussed as a fair price for this share.
Great news but will it do anything to help our ailing share price.
Xchanging has signed a new five-year technology contract with existing customer, London Gatwick Airport Read more: http://www.digitaljournal.com/pr/1529921#ixzz2hzyYPfg3
Global contract win announced with Diageo, fund manager announces 25% increase intake and that they see this as a great cheap play on the outsourcing market and yet the share price remains in the doldrums. I guess that is August for you as is the complete absence of volume. Let's hope that come early Sep when decision makers in the investment companies are back they will price in all this good news since the great mid year results and the price will rise accordingly.
has it's dog and this is one of them. Saw a brokers pig flying with a price of 160!!