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“ As a result of the strong summer trading performance, benefits from VAT and rates relief and the impact of the acquisition of Lightwater Valley, the Board expects this financial year to be an exceptional opportunity for the Group.”

It is more liquid than it’s size would imply. I think that’s in part because there have been an awful lot of natural sellers lately, mainly all the people who were hyped into the stock last year and then tricked into placements. Then you have long-term holder like Octopus giving up, and probably a lot of inventory with m-ms as a result. Plus maybe the Appledore shares. I don’t know of any hedge fund that would be able to or want to short a company with a mkt cap of £20mln. Too difficult and not worth it.

Sorry my mistake, still a load of nothing

Ah sorry

Most probably I do! Though can’t see what you mean specifically here. My last 3 posts are not all about VLX

Long post warning!

Global EV sales look set to rise 98% this year from 2020. Tesla, reportedly a Volex client, remains the largest manufacturer with almost 15% market share in H1 ‘21. About 60% of 2021’s EV are set to take place in H2. It will take total ‘21 EV sales to 6.4 million vehicles including hybrids and commercial. I would imagine that the vast majority of EV purchases either include or trigger the buyer to purchase a mains charging cord, for which Volex claims to be the market leading producer. I don’t know what they wholesale the mains power leads for. You can buy them online for about £100. I’m guessing it’s $50-$100 wholesale revenue per item but I could be way off. That would imply the sale of between 500,000 and 1 million units last year, which is around the same as the number of Tesla sales, or could mean they have contracts with other major EV makers (VW, GM, Renault etc). All of this looks pretty positive for near-term earnings surprises and reinforcing the recent share price gains.

The really explosive growth in EV adoption looks set to come in around 2025 onwards as the law changes loom. At that time Tesla alone is forecast to be selling 5 million cars a year. By holding their market position Volex could be looking at ten or twenty fold increases in EV power revenues. Some people have not yet got their head around the fact that almost all cars will be electric within 10-20 years. It’s a very exciting landscape for Volex and I have no doubt serious profit growth is coming.

Nevertheless they are rightly quite cautious on this part of the business. The question is to what extent they can defend market share and margins in the long-term in a cut-throat commoditised manufacturing business with not many barriers to entry except scale and a head-start. Remember, Volex have been here before when they were a big player in iPhone charging leads, an absolutely huge growth market. But the competition is fierce and crowded, there are few patents - in the end it’s a fancy wire. But if they can build an unassailable position in EV the upside will be absolutely mind-blowing and we’ll be looking at a multi-billion business eventually.

Conviction increasing according to today’s Telegraph’s Questor Column…

By Richard Evans
(Telegraph) -- No Questor Aim tip has performed anything like as well as Volex. Shares in the cable maker have more than quintupled in the three years since we added them to our Inheritance Tax Portfolio. As ever in these circumstances we find ourselves wondering if the share price has got ahead of itself and we need to sell before bust follows boom.

Nick Hawthorn is in a good position to help us decide. His employer, Downing, is one of the largest shareholders in Volex and has excellent access to the company’s management team – “we speak to them at least once a fortnight”, he says.

This column is a strong believer that actions speak louder than words and Hawthorn’s are unambiguous: Volex is the largest holding in both the Downing Strategic Micro-Cap investment trust – at a highly unusual 17pc – and the Aim portfolios the firm runs on behalf of clients who, like readers of this column, want to minimise their inheritance tax bills.

“It was a high-conviction holding three years ago but we have even more conviction in it now,” he says. The company has performed “exceptionally well” during the pandemic, according to Hawthorn, but he says there are many reasons to expect more.

“I think it can continue to benefit from its ‘buy and build’ acquisition strategy,” he says. “There’s a huge number of ‘mom-and-pop’ outfits that Volex can consolidate. It tends to buy them on cheap multiples such as six to eight times Ebitda [earnings before interest, tax, depreciation and amortisation] whereas Volex itself is valued at 12-15 times Ebitda.” Those businesses therefore become immediately more valuable once they are part of Volex.

“We expect the company to produce at least $30m (£22m) of free cash flow a year and it also has bank loan facilities, so even after it has paid its dividend it should be able to fund one or two new acquisitions a year,” Hawthorn adds.

Volex is also one of the biggest suppliers of cables to the electric vehicle market. “The electric vehicle arm made $50m of sales last year at a margin of about 10pc, the group target, and management has said it expects $70m this year,” he says. “We think this is too low because it ended its 2020-21 financial year at a rate of $8m a month.”

Prospects also look bright for the company’s healthcare division, which supplies cables for scanners. Hospitals need more scanning capacity to help clear their backlogs but installation programmes have been disrupted by the pandemic, Hawthorn says, leading to an even bigger need to invest now. “Philips Healthcare, which Volex supplies, has experienced a 30pc increase in order intake coming out of Covid and lockdowns,” he adds.

Finally, the firm has a strong position in high-speed “active” cables for use in data centres, where the need for ever greater speeds has shortened product lifespans from about six years to two. “Volex has an installed base to upgrade

Would expect a post-summer trading update in the next couple of weeks. Lots to be optimistic about, trading conditions at the pier and park should have been pretty favourable overall.

Yea, great vote of confidence, especially as the pair of them already have a shedload of shares, and have made several million quid on their holding in recent years. That’s what I call alignment of interests.

Announcement this morning….

Volex has announced today that it has signed a share purchase agreement for the acquisition of the entire issued share capital of Irvine Electronics, Inc. for a total consideration of $16.4 million

Founded in 1990, Irvine is a US based manufacturer of electronic solutions supporting long-term projects in the defence sector with other significant customers in aerospace, medical and complex industrial technology sectors. It has a 50,000 square foot manufacturing site in Irvine, CA which provides ample capacity to grow and is accredited to stringent international quality standards.

The acquisition strengthens Volex’s existing profile in North America, adding further capabilities and capacity in California to complement the Group’s existing operations in Washington state and Mexico, creating a compelling value proposition for customers in the region with vertically integrated manufacturing solutions through enhanced printed circuit board assembly capabilities.

Commenting on the acquisition, Nat Rothschild, Executive Chairman of Volex said, “”The acquisition of Irvine increases our geographic coverage and technical capabilities in the key North American market. Our strategic intent is to develop Volex’s presence in the defence and military aerospace markets, adding further blue-chip customers involved in long-term programmes and partnerships.

With advanced manufacturing located in Southern California, in the center of one of the most dynamic electronics manufacturing environments in North America, Irvine will enhance our footprint, further complementing our total integrated manufacturing solutions strategy and strengthening our global capabilities in new and existing markets.”

To answer the question: adjusted for splits, consolidations etc: the share price in 2008 was about £420 (yes pounds) in today’s terms. More recently, in 2014, it was about £12. Towards the end of 2016 was the last time it was above £1. This company has been a relentless and on-going investor capital destruction machine (worse than a -99.9% return) . For the management it’s a very different story of course, they have made tens of millions and are highly motivated to keep the investor-to-manager cash funnel show on the road. “Big RNS coming in a matter of days”. Yawn.

From today’s Times…

If you own a laptop, vacuum cleaner or television, it is likely that at least part of it was produced by Volex, a maker of high-spec cables.

The AIM-listed company, which traces its roots to the 1890s, also makes cables for charging electric cars and scanners in hospitals, and wiring for data centres.

Cables have become big business, helping Volex to transform from a small-cap horror story to one of the bright lights of London’s junior market. Until a few years ago, it had been all but written off. The share price fell from a high of £20 in 2000 to a low of 39p in 2003, a drop of 98 per cent. This prompted a switch to medical and industrial sectors.

It was the arrival of Nat Rothschild, the financier, as a shareholder, non-executive and then executive chairman that transformed its fortunes. He began building a stake in 2008, and now owns 26 per cent, making him the largest shareholder. On Rothschild’s watch, Volex has increased its prices and ditched low-margin businesses, which helped to boost its operating margins from 2.8 per cent in 2017 to 9.7 per cent.

Now the turnaround is under way, Volex is targeting growth. It has 17 factories on three continents, and employs 7,000 people, including in Basingstoke. Its fastest-growing divisions make parts for data centres and electric vehicles. The latter represent 12 per cent of revenues, rising 193 per cent to $53 million in the year to April 4. Volex is increasing production capacity, particularly in Asia.

The company has done well over the past 18 months despite lockdowns. In March last year, when professionals were forced to work at home, its customers reported a surge in demand for laptops, monitors and printers. Then there was a shift to home entertainment. Once families had built up savings, sales of white goods soared as homeowners renovated. The question now will be how long the spike in consumer spending lasts. Either way, Volex is diversified enough to benefit. As hospitals are opening up, its medical business should rebound.

In the year to the end of April, Volex reported its best profit performance for 20 years. Pre-tax profits rose 84.9 per cent to $29.4 million on revenues up 13.3 per cent to $443.3 million. It also increased its dividend by 10 per cent to 3.3p.

Volex’s acquisition of European power cord-maker Deka is likely to be repeated with further bolt-on deals. HSBC has a target of 445p on the shares, while Stifel is predicting 410p. The shares closed at 357p on Friday, valuing the company at £565.4 million. This is one to watch. Buy.

Cannacord upgrades Volex…

• Increased guidance provides an early upgrade: While we flagged upside risk
to our estimates in June, the early guidance upgrade (FY22E underlying operating profit to be slightly ahead of previous $50m consensus average) suggests customer demand and visibility across consumer electronics/white goods, EV, data centres and medical is stronger than we expected. Accordingly, we have increased both our adj. PBT and EPS estimates by 7.4% in FY22E, 5.0% in FY23E and 3.3% in FY24E.
• Navigating supply-side challenges: The group has successfully passed through copper price inflation and continues to manage supply-chain headwinds, including freight. There is no suggestion of margin dilution relative to previous guidance levels.
• Market read-across suggests positive outlook: We note recent results and commentary from leading medical equipment, white goods and EV OEMs which, in our opinion, suggests further financial outperformance could be on the cards for Volex as structural demand drivers and the COVID-19 recovery continues to play out. To this point we note that Q2 order intake for Philips Healthcare's Diagnosis & Treatment vertical increased 29% y/y, with strong double-digit growth in Image-Guided Therapy, Ultrasound and Diagnostic Imaging.
• Maintain BUY, increase TP to 475p (from 440p): Our target price is based on CY22E sector P/E average of 25x applied to our respective EPS estimate

Yes, but there’ll be a lot more value destruction and cash extraction between now and whenever the assets have to get flogged. I assess value to kick in at 9p.

They don’t have the b@lls to look investors in the eye, nor a recovery story that would withstand scrutiny. Do we all agree that compensation at any level above a small fraction of last year’s would be borderline criminal? Not that I expect that to bother them.

The PM’s big speech on levelling up yesterday was very thin. The only spending commitment was £50mln on new football pitches. A government supported national shipbuilding revival seems a very distant prospect indeed….

“ Boris Johnson’s flagship “levelling up” speech has been criticised by experts for containing scant new policy as concern grows among Conservative MPs that the guiding principle of his premiership risks becoming little more than a soundbite.

Two years after first committing to levelling up, the prime minister travelled to Coventry to deliver a freewheeling speech heavy on rhetorical flourishes but light on detail, and urged local leaders to send in their own suggestions…… some MPs are beginning to worry about whether the plans have any substance.”

Hi - I am not a shorter. I was a big long, now I’m a much smaller long, I resent selling my remaining position here and would now rather see some kind of shareholder action. I hear people talking about shorters. I think it’s very hard to do any meaningful short selling in a micro cap stock like this, where there is no liquid market in borrowable shares to short sell. You can sell a few on CFDs but it would likely be quite small fry. I’d be surprised if short-selling was the issue with the share price. More likely there’s just a big unwind of old buyers like me and those who participated in one of the earlier new issues (guilty) who have woken up and smelt the coffee or done more research. That and a total lack of any positive momentum in the business or price. I am posting here to exchange points of view for Infa and registered on LSE to do so. I may well be wrong in my assessment. In some ways I hope I am. I’m always listening to other viewpoints. Final point: I see a lot of people questioning motives of posts on here. Maybe that’s what some people do, but I think they’re wasting their time: in my experience these message boards have a much more limited influence on the share price than people realise. When someone posts a genuinely new piece of material information here (rare) that is picked up by large investors then maybe it could move the dial. But punters like me screaming “this is rubbish / brilliant” is just noise.
If a Killick decides to sell a few million shares it will move things, but message boards won’t hardly ever feature in their decision making. If I thought my posts could change the SP, then I’d start talking bullish as I have several grand at stake!

Poker - absolutely right, I misquoted and should not have relied on my memory of why I originally though it was a weak statement. But now I see the actual phrase again, I remember why I was so suspicious: the words are very selective. ‘Annualised’ means they could be breakeven (in cash terms only) for a very short period, perhaps a month and maybe even less and still claim the target was hit. Given the lumpiness of the cash outgoings and incomings that should be easy to fix and wouldn’t necessarily mean anything positive in terms of financial health. It sounds to me like a slippery target from a slippery and desperate management.

Poker, problem is the corner Infa have painted themselves into. They have bought serially-failing and highly capital intensive businesses. Revenue does not equal profit, and as we have seen recently it more likely means loss. I dread them winning more scraps of shipbuilding business which will require them to raise more capital and incur losses until such time as they reach serious scale (imo never). The management saying they ‘expect’ breakeven on an ‘ongoing basis’ by year end is empty guff. The company looks screw&d. I think there’s a battle looming where Wood and co will extract as much cash as they can for themselves, probably award themselves a lot of options at the new price (ie reward themselves for the SP fall), and quite possibly take the business private for themselves and others (not you and me) taking the valuable assets such as ML and a few bits of yard land at knock-down prices, and trash-canning the rest. If this happens, there will have to be an attempt at some shareholder action but AIM is somewhat rigged in favour of the company execs.

This is a sobering (long) read..

https://www.lrb.co.uk/the-paper/v43/n14/james-meek/who-holds-the-welding-rod