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Ndn71 - I think your assessment is probably right. I see this as a positive in that the management see more value in the company than the current SP suggests and therefore better to buy back and concentrate rather than issue and dilute.

There has been a lot of chat on this BB on the intrinsic value of DT and the target price assigned by the three brokers. These brokers will have used Discounted Cash Flow Analysis (DCF) and the outcome will depend mainly upon the Discount Rate (DR) used, the time frame (years of analysis), Revenue and Costs per year, Tax Rate and the Terminal Value (assumed value of DT in the last year of the analysis). The result is, of course, only as good as the assumptions and without a knowledge of these it is impossible to know whether the target numbers they produce are credible or not.

If anyone is interested, I have updated my simple DCF model (that excludes CAPEX as this is not a major factor) based upon my latest thoughts on what is possible and to demonstrate the sensitivity to the assumptions made on the valuation. My base case assumptions are now:
Analysis time: 10yrs.
Discount Rate : 10%
Revenue GR: 50% year-on-year for first 3 yrs then decreasing linearly to 15% in Y 10
Margin: -5% Y1; 0% Y2, 7.5% Y3 the linearly increasing to 25% in Y10
Tax rate: 20% flat
Terminal value: 15 x net earnings in Y10

This gives a Present Value (PV) per share of 883p. So a SP of 883p would, on the basis of the assumptions, give a 10% average annual return.

Some sensitivities on the PV: DR 15% = 578p: 20% increase in RGR each year = 1440p, 20% decrease in RGR = 528p: 20% increase in margin = 1061p: 20% decrease in margin = 706p

So the PV is quite sensitive to the assumptions made and of course it will not turn out like this, but, to me, I don’t feel the assumptions are too unrealistic not to be able to give a glimpse as to what SP is justifiable. I remain a long term holder and would be comfortable with a SP price up to about 800p but consider it speculative never the less. The next few quarterly results will give a better indication.

Sorry wrong board

There has been a lot of chat on this BB on the intrinsic value of DT and the target price assigned by the three brokers. These brokers will use Discounted Cash Flow Analysis (DCF) and the outcome will depend mainly upon the Discount Rate (DR) used, the time frame (years of analysis), Revenue and costs per year, tax rate and the terminal value (assumed value of DT in the last year of the analysis).

I have updated my simple DCF model (that excludes CAPEX as this is not a major factor) based upon my latest thoughts on what is possible and to demonstrate the sensitivity to the assumptions made on the valuation – a accurate forecast is of course impossible given the many unknowns. The base case assumptions:
Analysis time: 10yrs
Discount Rate : 10%
Revenue GR: 50% for first 3 yrs then decreasing linearly to 15% in Y 10
Margin: -5% Y1; 0% Y2, 7.5% Y3 the linearly increasing to 25% in Y10
Tax rate: 20% flat
Terminal value: 15 x net earnings in Y10

This gives a Present Value (PV) per share of 883p. So a SP of 883p would give a 10% annual return.

Some sensitivities on the PV: DR 15% = 578p: 20% increase in RGR each year = 1440p, 20% decrease in RGR = 528p: 20% increase in margin = 1061p: 20% decrease in margin = 706p

I remain comfortable that at least something like my base case assumptions can be achieved so I remain a long term holder. in his speculative share. There is further huge potential for their technology IMHO.

The problem, Bladerunneruk is, as I see it, that inflation is 5% so cash is making -4.8% in real terms and like a cancer just keeps on eating away at one’s wealth if all is held in cash in a low interest environment.

Equities are one of the only hedges, but one must, IMHO, take a long term view of at least 5yrs and not put too many eggs in one basket if you cannot afford to accept loses. Also one must be incredibly selective, as only a very small %age of world stocks are of sufficient quality to be worthwhile as long term investments. And, of course, all this money printing has driven equities and property, as the only real alternative to preserve wealth, to mad heights. Certainly a dilemma.

Speculative stocks like DT are not for everyone - high potential reward but also high risk. If a company has inherent good potential it is more a question of patience than luck, but luck, is certainly an ingredient.

Best wishes - we live in crazy times.

Although I am sure here is a general awareness of some of the difficulties associated with share trading, it is perhaps worthwhile reminding ourselves of some of the dangers. Take care.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5422017/

https://www.investopedia.com/articles/investing/071713/downward-spiral-trading-addiction.asp

Yes an interesting interview with the head of MI6 on R4 this morning highlighting the need to work closely with private companies which is a new approach for them. Apart from being good for the likes of DT, I wonder whether this will have any effect on the ML extradition decision .- national security at risk?

Thanks Nidec - interesting article - just the type of insight that adds value to this BB. Thought the bit about PEFs recycling their capital faster particularly relevant. When were our VC investors going to make their move?

N99 - excellent article - interesting in his assessment that the difference between the Cambridge cluster and MIT is in the marketIhg acumen. Hope he continues to ram that message home from behind the scenes - PR, brand management and feet on the ground. I still am confident in the technology but quoting 28% for the CAGR is the type of mistake they cannot afford to make.

The ML affair and consequences for DT are well covered in the risk section of the IPO Prospectus. It cover the risk to reputation, SP, and potential liability - another case where we were warned. They did not rate the risk as high.

The only authorities that can prosecute in criminal case in the Uk would be UK authorities and they have already decided there is no case to answer. Civil cases are party to party so they can be but again only under UK law as far as I understand it.

Claire, when in the company I worked with we were getting flack from the press- unwarranted in our opinion, - we brought in crisis management consultants from the US who came up with two equations that served us well.

Firstly that: Perception = Reality. The message was don’t push reality - manage perception.

The second was: one negative = 3 positives. In other words to manage a negative, be it reality or perception, you need to come out with at least 3 strong positives counter it.

DT could do well to take heed.

Claire, the problem as I see it is that there are no buyers. There are still plenty of potential sellers - Summit still hold 18% so together with ML, KKR and Ventruvian they control > 40% of the stock and they will be moving on sometime.One positive is that they haven’t baled out so they must see some future potential for a SP rise.

This is what bothers me about the RNS this morning and has dented my confidence somewhat - it does not project a complete picture of DT’s recent CAGR progression and is therefore IMO misleading. The CAGR calculated progressively from FY18 to projected FY22 is falling and to obtain a higher intrinsic valuation it must stabilize and then grow again fast and soon. I am still confident can be done but…..the next few updates will be crucial IMHO.

For the years: FY18; FY19; FY20; FY21; FY22(projected)

The revenue GR% is: xx.x; 72.5; 45.3; 41.3; 38.0

And revenues are/ would be ($m): 79; 137; 199; 282; 388

So the CAGRs % from FY 18 are:

FR18-19 72.5
FY18-20 58.3
FY18-21 52.4
FY1-22(p) 48.7

Formulae of course is:
((end value/beginning value) to power (1/n)-1)*100

Tim87 - in SETS (the automated trading system of the lse) at any one time there is a given spread between two numbers, say 100 and 101 and the computer algorithm will assign a buy or sell depending on which side of the midpoint the actual deal lies. If the deal is 100.5 it would not be able to assign a buy or sell so assigns unknown. That is how I have always interpreted it but I am open to correction.

Jayne– It must have been a tough decision to bail out at this late stage but those are the traits of great investors – following their instinct, taking tough decisions and moving on or moving back in again when circumstances change – time will tell I guess. Personally I think it sill has a great future but will indeed probably have strong headwinds for some time with the accompanying rough seas. I hope you will continue giving those of us staying invested through thick and thin the benefits of your technical and other insights as you monitor progress from afar. I have appreciated these inputs as I am sure have many others on this BB.

Now that I understand which KAL you mean, I like his philosophy and his fund has done well in the past - but IMO his fund has grown too big for a small company fund – where his expertise lies - so he has moved too far away from his knitting and his team is under-resourced. He doesn’t always come across that well IMO, but what he says usually makes sense to me.

The problem with gold, of course, is that it does not make any productive money and is no longer as sensitive to world disasters as it used to be. But like one of the Three Piggy’s houses made of stone it is solid stuff with many uses - unlike Cryptos (IMHO). I have been in and out over the years and always tried to get a balance between the physical metal and gold mining companies operating in stable locations that also generate cash. Currently I am not heavily invested but am looking to going into it gain. And don't worry I am not invested in armament companies even though they may offer interesting possibilities.

Best wishes and thanks

Berylfu, here it is. It s from a reasonably authoritative source but I cannot guarantee the authenticity like everything else posted on this BB. From what I glean from the LSE site it though, it seems to be a correct interretation. Hope it helps.

https://www.proactiveinvestors.co.uk/companies/news/81/idiots-guide-to-the-london-stock-exchanges-setsmm-0379.html

Berylfu, remember MM or ‘O” buy and sell trades are reported separately and whether it is recorded as a buy or sell depends on which of buy-spread it occurs. When I see two of the same number I suspect one is actually a buy and the other actually a sell as over time there has to be a match and it would be risky for MMS to hold too high an inventory unless -they too, are in the trading Game for their own account. But of course I cannot be sure but 6.48m into or out of an inventory would have been huge.

Had it been an A or UT trade it would anyway have been recorded as one single trade but recorded as a buy or sell based on a different rule. Trades recorded as “O” will eventually record twice the total volume as “A” or “UT” trades for the same actual total volume of trades. All designed, or not, to confuse the unwary.

I once came across an article that explains all this far better than I can, and if you are interested I will try and find it again and post it.

Jayne - I know little about KAL so I am not in a position to make a comment - I would need a through understanding to do so. But since you mentioned it I will take a look as I still need to keep the grey cells active and a few more high risk/high reward investments like DT would be fun. Like you, perhaps and however, I do not see DT as that high risk in the long term as it seems to tick many boxes, but who knows what obstacles lie ahead.

Most of my long term stocks are lock-and-leave types that don’t need any attention and most of my global stocks I leave to managers whose investment philosophy I clearly understand.

I used to have about 25% of my portfolio in speculative stocks, but now I have only a small amount in the risky/uncertain ones - I am more into wealth preservation and struggling to reposition my portfolio in the face of inflation. So I am tinkering with shifting into stocks that have pricing power like Microsoft and Adobe all now on a subscription basis and difficult for customers to switch away from or competitors to replicate - and in the UK, heaven forbid, NG where regulators will probably allow them to increase prices with the COL. And of course into those with strong balance sheets, high return on capital, recurring customers and with that defensive moat that will allow them to survive through thick and thin. The world is becoming increasingly unstable IMO whether climate or autocratic regimes so maybe gold is the thing to hold.

Personally I think it is the next few quarterly updates will give us a better understanding of the long term future of DT, and it will be that information that will have the most influence on the SP. IMO we need to see a continuing upswing in revenue and free cash flow growth, and all the underlying indicators including, ARR, customer numbers , margin etc. I don’t expect the next update to shoot the lights out - I still hope I am wrong - because the new employees in marketing still need training, but following on from that…….. I remain optimistic that DT will have a great future and look forward to that confirmation.