Elixirr International Share Price (ELIX)

I agree. I think the almost certain CGT changes are causing much of the recent selling. She has certainly done a lot of damage to confidence. Not long now. Hope she doesn’t mess with ISAs, perhaps she will abolish stamp duty on shares bought in an ISA, wishful thinking?

Given the quality and growth of this company, it is hardly surprising that institutions want some of the action. However, with a limited free float and strong shareholdings by Directors, PDMRs and all staff, the only way they were going to get stock was through a capital increase (not needed) or getting existing holders to sell. With the secondary placing, my guess is that shareholders are nervous about the potential budget changes next week and have decided to take some money off the table. £25m sold to institutions very quickly.

Today's acquisition of Hypothesis Group seems strategically sound and a company that ELIX has been working with already, so obvious cross-selling opportunities. Hypothesis is working with five of the Magnificent Severn, so no problem with debtors!

ELIX retains its staff by encouraging them all to have skin-in-the -game and be part of the whole story. Likewise, the CEO of Hypothesis, who is buying £0.5m of ELIX stock to become a Partner. Contracts are with quality multinational partners. Medium-term I can see the big players fighting over this quality company.

Looking more interesting

Cavendish say " FY 2023 results showed the power of Elixirr’s differentiated model with revenue up +20% and adj. EPS up +22% in a market subdued by global uncertainty. With net cash of £18m, a positive outlook statement, a proven ability to broaden services and strengthen market position by acquisition in a c.£250bn market and an FY 2024E P/E of 13.2x (excluding cash, 14.4x including) we continue to see significant share price upside and make no major changes to our forecasts (EPS edged up +1%) or target price. "

Worth flagging the below news from last week as I believe it's highly relevant to ELIX;

https://news.sky.com/story/london-listed-consultant-alpha-fmc-draws-takeover-interest-13126764

AFM is trading at 435p this morning, valuing the business at £497m with FY24 EPS forecasts of £29m PAT & 22.5p EPS, so on a P/E of 19x.

ELIX is currently valued at £286m on FY24 forecasts of £21.7m PAT and 40.6p EPS, so on a PE of only 15x

I see very little reason for such a discount to exist, if anything ELIX should be more highly valued given that AFM's FY23 operating margin was ~10% whereas ELIX's was ~24%. ELIX is also growing significantly faster.

If AFM is taken out above it's currently trading level then I suspect money could flow into ELIX and re-rate it back to where it traded in mid 2022, albeit the 780p ATH was a PE of ~25x, so the relative valuation now would still be substantially cheaper.