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Really surprised share price hasn't moved steadily upwards since results, here we are again sub 130
Panmure Gordon have today reiterated their buy rating on Xchanging; their target price remains unchanged at160p which is pretty much bang on the average analyst target.
Xchanging has today announced a contract win with Standard Bank in Africa. Initially contract is for 1year, value of contract not announced.
Citigroup and Libereum Captial have reiterated their 'Hold' guidance with respectIve target prices of 150p and 145p. Analysts targets are averaging just short of 160p.
Sorry about all the typos on the below post, I hate typing on an IPad. The final words that got cut off were: ... historically saw, although that this had not happened for so long makes this of minor impact.'
Having now had the opportunity to review the mid year update in a bit more detail the following points are worth highlighting: - Xch will be exiting in the second half of this year three areas of significant revenue, two were planned exits: Xchanging Transaction Bank and UK HR Services, one: LME, was not. Despite this Xchanging is leaving its full year guidance unchanged which shows the enormous progress it has made in attracting new customers and taking cost out. -Xch has made a significant change to how it is accounting for revenue in Procurement (financial statements note 1). Previously where it acted as Principal (as opposed to Managing Agent) it would book all customer spend as revenue. As I have previously written this flattered revenues but depressed margins. They have now changed the accounting so that the customer spend is backed out of Xch's revenues. This change disguises the extent of the progress that Xch have made in growing overall revenues. -there is an interesting note about an exceptional receipt of £6M for early relinquishing the lease on Xch's headoffice at 34 Leadenhall. They have already exited their previous headoffice in Hanoveer Square undere this new regime but Leadenhall, whilst ridiculously expensive for what was predominantly processing centre for the Insurance business, had not been moved both because of the long term nature of the lease which presumably had exit penatlies and the complexity of moving that particular office with many specialist staff. They have clearly bitten the bullet on dealing with this complexity, perhaps because it has reduced as they has moved more to India already, and someone has played a blinder in leveraging the high demand for space in th City and getting paid for exiting. The notes also refer to this being an 'initial' payment which begs the question of how much more is there to come. Finally the note says that Xch will vacate the office by Mar 14, I would be interested to know whether they aree going local but to a cheaper area ( I.e so that all the existing workforce will stay) or further afield to reap very large savings but with greater retention issues to manage. In either case this will generate ongoing saving, it is just the quantum that is TBC. -they appear to have cracked the nut that was traditionally Xch's Achilles heel (sorry about the mixed metaphor) and are selling well (both in terms of what they have got over th line and what is in he pipeline). I suspect that a key enabler to this has been the decision to move from chasing the blockbuster deal 'elephants' in the old Xch speak, to many smallere deals. This has the additional advantage of derisking Xch as they have a less concentrated customer base, the downside of which was only to clear when LME were taken over and exercised their 'change of control' provision to exit the contract, the negative of exiting the elephant' hunt is of course that there will not be the occasional incrementally growth that we historic
JP MOrgan Casenove remain overweight on Xchanging however they have upgraded their target price from 166p to 177p.
I presume that what we are seeing today is market manipulation because I can't see the explanation for these price movements in the fundamentals nor in response to the excellent half year results. I would have expected to easily be in the 140s by now and seeing the 150s before too long. I will remain very long on this share as I don't want to get pulled into these silly games.
big trade....
ElProffessor Agree nice and steady is always the way forward. Very strange large sell just before the presentation started. Still think we will end the day in the blue. Then as you say just wait for the broker upgrades and institutional buys.
Ping Pong, I think that initial drop was just an uncrossing trade left over from yesterday. The trading board is pretty much all blue which kind of figures ; if you were waiting until today's announcement to decide whether or not too sell I can't see what in it would have made anyone decide to sell. We have the conf presentation to analysts in half an hour I would expect to see a further rise on the back of that. We will also have Ken Lever and David Bauernfeind meeting with analysts individually over the next week or so, we will hopefully see some price upgrades coming out of those and hopefully share price rises following. I suspect some institutions may also decide to up their holdings on the back of these results. Would be nice if the share price rocketed but as we saw last time that tends to then fall away so a slower rise may prove more sustainable.
Good news, share priced dropped initially. But is now making a slow and steady move up not like last time when it jumped up over 25 points. But its all good news for the future.
What is not too like? Profit up by 50 %, revenues up 7% and confident of hitting full year targets. All sectors doing really well in the first half except Procurment but which has the elements in place for a strong second half. We seem to now be well beyond recovery and into the phase of building a very strong and successful business.
Pp, Like you I noticed the large numbers of sells vs buys today but I am afraid I can't even begin to explain why the share then goes up although it seems not to be all that unusual nor the opposite where there are a lot more buys but the share then falls. As for motivation it could be that someone has made significant profit and being unsure about tomorrow wants to lock that in. For myself, as previously mentionned, I am very confident for tomorrow and so expect to see a further rise. Let's hope I am right!
Almost back up to where we where last week. There were some big sells today which had little impact on the share price thankfully. Cant be somebody closing off longs can it, they are showing as ordinary's so am a little surprised when we are so close to results. Any thoughts ElProf and role on tomorrow with some good results. Cheers PP
Xchanging Transaction Bank should not have any negative impact on valuation as the settlement that Xchanging received equated to lost profits for the remainder of the contract. LME was bad news as it was genuinely lost profit however the press release from Xchanging at the time stated that they were confident that they would compensate for the lost profit by overperforming elsewhere. I know what you mean about skeletons in the cupboard at results time however am confident that the new regime of Lever/Bauernfeind is more conservative and will hit any numbers they commit to. I doubt we will see any mention at the half year of further dividends although it would be nice if they did.
The recovery does seem to be going well, and there does seem to be more positiveness when reading news and along with the business award they received in May. But unfortunately for me I don't have the skills to work out what the LME and sale of the transaction bank will have on the short and long term share price. What also worries me when approaching results time as I have seen this before are skeletons in the cupboard. Shouldn't think negatively I know but its only human nature. What will be interesting and could effect the share price are dividends, will they award another and if results are good could there be a slight increase in yield, lets hope so. Cheers PP
Ping Pong, Thanks. The volumes remain tiny and the buys are a multiple of the sells. I am very confident that we will see a rise over the next few days the question is by how much. I am also confident that we will not see a downgrade of expectations but either a reiteration of slight nudge up in the mid year update. If that is enough to convince a few of the big funds to either enter or up their holding then we could see some substantial upside over the next fortnight as with the tiny volumes we have seen of late they will have to pay a significant premium to get the sellers out. ElP
Good call yesterday on the further drop today and price of 125p. I did see the sell price at 124p but like you said the spread was rubbish so I had wondered if you had bought or whether you would doggedly wait for the 125p buy price. The wife's ISA had some spare money so I topped up there too, now I'm just crossing my fingers for a good result next week.
Topped up with just over 3,500 more shares at 126.65. This may fall a further 1% today but think we are at or close to the bottom for this shake out and expecting a significant climb now over the next week or so with mid year due on Wed.
Following on from my note yesterday evening and this morning's fall I have just looked to buy but am getting quoted such a horrible spread I won't do it out of principle. If the spread narrows before the price rises then I will but if not I will let it pass. Spreads of 2% are just not acceptable for a share not far outside the FTSE250.
Hi Ping Pong, I was sorely tempted but the spare cash I had to hand in the various accounts was minimum so was not really worth the bother, combined with the fact I would not rule out a further fall to just above 125p tomorrow before a recovery next week. If we do see close to 125p tomorrow I will probably buy in then, notwithstanding what I said in the first sentence as it would be too good an opportunity to miss. If the MM keep swinging this share price like this then there is a good opportunity to make money provided I am disciplined enough to sell into the rises. Good luck for a quick and tidy return on today's punt.
Hi guys did anyone else use todays drop as an opportunity to top up.
This has nothing to do with either the economy or the company fundamentals but is simply about the market makers playing with the share price to accumulate a position ahead of the mid year annoucement on Wednesday. The volume today, like yesterday is tiny so would not create any significant movement even if they were all sells; as it is we actually have more buys than sells going on. The fact that the CFO bought a slug a few weeks ago at 134 suggest we are seeing an underpriced share at present.
This has nothing to do with either the economy or the company fundamentals but is simply about the market makers playing with the share price to accumulate a position ahead of the mid year annoucement on Wednesday. The volume today, like yesterday is tiny so would not create any significant movement even if they were all sells; as it is we actually have more buys than sells going on. The fact that the CFO bought a slug a few weeks ago at 134 suggest we are seeing an underpriced share at present, I would anticipate a strong upward movement over the next ten days.