Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
When a company gets bid for and then it is turned down, it's amazing how often said company falls to a bid again at some point in the future. I've had quite a few of these in particular Kentz where I made many thousands. Iomart (IOM) where I made quite a bit when it was bid for before managing to sell before the bid fell through I think is one of those and been building a stake in it. It's six months since the last bid for it and it would be little surprise to see another one come along - the last bid interest was around the 300p mark and I suspect the company could be bought for that. Or 270 will do! Hell, I'll take 250 ! So I have bought a few more IOM, and noted the price has been steadily rising since it hit around 170. Looks like others feel the same! Even if it isn't bid for it seems to be reasonably priced around 2 quid. I hope to hold now and be patient.
AIM listed Iomart Group Plc is one of the UK's leading providers of cloud computing services. They facilitate data hosting services so that clients and the end user can have access to data and web services in a secure manner while reducing costs and complexity. Our view Under/over valued? Iomart has been involved in cloud computing long before cloud computing became fashionable. It is one of the UK's leading companies in an industry that is expected to grow fairly rapidly as companies and consumers generate more data and become comfortable with having that data located offsite. First half revenues grew by 28% to £31.5 million while adjusted profit before tax climbed 27% to £8 million. However, these were short of the markets expectations and the shares were punished. The miss was caused by no growth in their smaller operation, Easyspace. Despite this setback, we don't believe this changes their longer term growth prospect and believe that the lower price and earnings multiple of roughly 14x represents an attractive entry point for investors looking for capital appreciation and willing to accept a higher level of risk. Bullish points • Iomart is exposed to the rapidly growing cloud services sector and has a leading position in the UK. • They own and operate eight data centres spread out across the UK, six in the US and one in Dubai and Singapore. • This business is operationally geared, they can take more business for relatively little cost. A large portion of the revenues are recurring. Gross and net margins are high. • They offer a 100% uptime guarantee on the hosting service and engineer services so that there is no single point of failure. • They have partnerships and programmes with some of the largest computing businesses in the world such as Microsoft and Dell. • Hosting to government departments has promise, as they have generally held off so far using cloud services on security concerns. • Iomart management turned down a takeover approach recently, however we believe it still remains a potential takeover target. Bearish points • The company has been taking on more debt in recent years (but it remains manageable). • Security or hacking breach will hurt the company's reputation significantly. • Rapid expansion of facilities and services requires large investment outlays and will hold back earnings potential. Comment updated 19 December 2014