Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Digitalbox PLC (AIM:DBOX)
Andrew Hore, editor of the AIM Journal
Our 2021 winner, who did not enjoy such a rocket-powered ride in the past year, has plumped for the digital media company that owns satirical website the Daily Mash and student publication The Tab, as well as Entertainment Daily.
“Management has shown that it can take these digital brands and improve advertising income,” says Andrew.
With the recent acquisition of another provider of satire and humour, thepoke.co.uk https://www.thepoke.co.uk/, for an undisclosed sum. The Poke’s editors make use of humorous content from social media, and it has more than three million monthly sessions, generating revenues of £170,000 in 2020-21.
Digitalbox is forecast to make pre-tax profit of £1.2mln this year rising to a pre-tax profit forecast of £1.5mlm in 2023, an estimate that predates the Poke acquisition.
“At 8.75p, the shares are trading on 11 times 2022 earnings,” he adds. “There may be concerns about the general advertising market, but Digitalbox has proved to be resilient and it is highly cash generative. Cash could equate to one-third of its market capitalisation by the end of 2023.”
https://www.proactiveinvestors.co.uk/companies/news/1001562/17-stock-picks-for-2023-the-proactive-xmas-tips-contest-1001562.html
Well illiquid company so not a big trade in company shares.
The issue which is putting off investors is the debt. The company is aiming to deleverage over next 18 months at which point we'll see how much of the £31 million senior debt and the around £6 million loan notes they have paid off.
If you choose your moment you san buy within the spead ie I picked up 3000 at £1.11 whilst the spread is £1.05-£1.20.
I also note although the company may be good value no real management or large fund buys,
Yes Phoenix is bailing out of a large position so that has driven the share price down.
However, Phoenix were also scathing about William Speigel and the poor way he has treated shareholder.
In addition, although the program management updates are encouraging.
No real new on legacy or the financial position ie uncertainty reigns.
On the other side of the coin Scopia Capital Management LP have taken around an 8% holding.
National World plans to take a 4% stake (worth £1 million) in The News Movement a youth orientated start up.
https://www.thetimes.co.uk/article/montgomery-writes-himself-into-youth-news-start-up-9kk05pcvn
Fridays Times had an article on the possible Reach offer had snippet :-
"A source who knows Montgomery told the Times that National World was prompted to make a statement after speculation, but it's interest in Reach was at an early stage. 'It is almost off the scale.'"
Thus, it doesn't really sound that any sort of offer is imminent.
Judith Mackenzie (Downing) on HSP on Vox Markets : minute 9:48
HTtps://www.**********.co.uk/articles/vox-markets-fund-manager-series-judith-mackenzie-of-downing-asset-management-f6461eb/
Judith Mackenzie (Downing) on FLO on Vox Markets : minute 39:28
HTtps://www.**********.co.uk/articles/vox-markets-fund-manager-series-judith-mackenzie-of-downing-asset-management-f6461eb/
Judith Mackenzie (Downing) on HSP on Vox Markets : minute 33:07
HTtps://www.**********.co.uk/articles/vox-markets-fund-manager-series-judith-mackenzie-of-downing-asset-management-f6461eb/
A bit more detail on the Canon - Adept deal. It sounds promising.
HTtps://www.canon.co.uk/press-centre/press-releases/2022/10/canon-uk-forms-strategic-alliance-with-award-winning-it-managed-service-provider-adept-technology-plc/
Canon UK forms strategic alliance with award-winning IT managed service provider AdEPT Technology PLC
United Kingdom, 17th October 2022 – Canon UK is proud to announce it will be launching a new offering which will deliver exceptional quality Managed IT Services to its customers in partnership with AdEPT.
This exciting alliance will combine Canon’s renowned portfolio of print, imaging and software solutions with AdEPT’s award-winning managed IT services and technical knowledge. The partnership will allow Canon customers to have access to a wealth of different IT services as well as expertise around digital strategy, unified communications, print, and IT infrastructure management.
Initially, services offered will include IT health checks, cyber security assessments, cloud readiness and network evaluations as well as wider IT audits. A full portfolio of IT solutions as well as counsel on meeting compliance standards, effective hybrid working practices, process optimisation and supplier consolidation will follow in 2023.
The offering will be delivered through an alliance with AdEPT Technology PLC (AdEPT), one of the UK's leading independent providers of managed services for IT, cloud-services, unified communications, connectivity, and voice solutions working with organisations across a wide range of sectors.
Craig Leverington, Canon Business Services Director, Canon UK & Ireland said: “With cloud adoption and digitisation now commonplace across almost every organisation and sector, it’s vital our customers are fully supported on their digital journey. With many years’ experience working with large organisations to optimise IT infrastructure, we’re excited to have formed a partnership with AdEPT on this new venture.”
Phil Race, CEO, AdEPT Technology PLC said: “Technology systems have so many moving parts, and many organisations are seeking out counsel on how to rationalise, optimise and reduce complexity, and in turn reduce cost. We’re thrilled to be partnering with Canon to offer its customers expert support, and the best technology solutions to drive success for the future.”
Canon IT Services, powered by AdEPT will be available for select Canon customers from October 2022, before being expanded to its wider customer base in the coming months.
Snippet from Investor's Champion tipsheet. They seem to thing there is value here :-
"The balance sheet remains in great shape with gross and net cash at 30 September 2022 of approximately £105m and £75m respectively.
In terms of outlook Watkin Jones has good revenue visibility coming into the next financial year with c. £270m of revenue secured and expects demand from institutions for residential for rent assets to remain robust. However, they also believe it is prudent to assume that margin pressure because of purchasers' elevated borrowing costs will continue into FY-2023.
In response, one analyst has cut forecast adjusted pre-tax profit goes from £55m to £49m for FY22E and, adopting a prudent stance, from £75m to £50m for FY23E. Earnings per share are reduced to 15.5p (-11%) and 15.8p (-30%) respectively. The forecast dividend remains at 8.7p for FY22 and 7.9p for FY23.
The shares fell 34% on the day of the news and have now fallen c64% from January highs of 282p to only 100p. This results in a current year earnings multiple of only 6.3x and dividend yield touching 8%.
Watkin Jones is not structured like a traditional house builder, forward selling its Build to Rent developments and holding limited land-bank inventory. Return on equity is therefore more than double that of traditional house builders.
The shares have now fallen back to the March 2016 IPO price of 100p which looks overly harsh, with revenues, profits and cash flow having risen substantially since then. Its capex light operating model has seen free cash flow over the 5 years to Sept 2021 average £39m per annum, equivalent to a free cash flow yield of 15% at the current valuation, although free cash flow is forecast to be a negative £23m in the current financial year."
Downing Strategic Micro Cap. I.T. July factsheet comment :-
"AdEPT Technology (+3.7%) reported a robust set of final results with impressive revenue recovery, up 18% to over £68 million, and underlying EBITDA up 21% to almost £12 million. Cash conversion was also strong, but senior net debt increased after the payment for the Datrix acquisition. We believe that AdEPT remains attractively positioned with over 70% recurring revenues and exposures into public sector, healthcare, and cloud services. We believe that high debt levels remain the biggest barrier to a re-rating of AdEPT and welcome management’s recent commitment to de-leverage."
I should point out the decrease in earnings per share is due to the to some degree to the companies investment in future growth. So one for a medium term hold. I hold quite a few, but have also been trading them along the way.
Given the high inflation/high interest rate/ recession heading economy we are entering I cannot see them soaring in the short term.
It's no mystery.
The results were good in terms of revenue, but not in p/e terms ie earnings per share actually went down 30c -> 25.2c.
Thus yes show good growth, but not earnings growth .
Then Times + other tipsters backed them and share price rose.
(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on integrated manufacturing specialist Volex from 440.0p to 380.0p on Friday, stating the group's five-year plan was "ambitious but achievable".
Canaccord Genuity noted that Volex's performance in its recently wrapped up trading year was in line with expectations, with full-year revenues up 39% year-on-year at $615.0m and adjusted pre-tax profits growing 24% to $51.0m in "a record year" for the company.
In terms of the group's five-year plan, Canaccord said Volex's new 2027 targets would take revenue to $1.2bn, with a 9-10% margin range, with at least $200.0m of this revenue target to be M&A driven.
"This means Volex would require revenue to grow by 10% CAGR to reach its organic target ($1.0bn), which in our opinion provides an ambitious but achievable goal. We think pricing power, production efficiencies, and accretive M&A mean margin ambitions could prove to be prudent, albeit we are cognisant that EV growth will likely dilute the mix," said Canaccord.
While the Canadian bank maintained operating margin expectations for Volex's 2023 and 2024 trading years, which were set towards the bottom of the company's 2027 target range, it also noted that higher interest charges had driven adjusted pre-tax profits 2-3% lower and guidance that the firm's tax rate will increase also resulted in a roughly 10% adjusted earnings per share reduction for both years.
"On a cal. 2022E basis Volex trades on a P/E of 11x and EV/EBITDA of 7x vs sector averages of 18x and 11x, respectively. Our sector average-based TP of 380.0p (a market-driven decrease from 440.0p) would see this unwarranted discount, in our opinion, eliminated," concluded Canaccord, which also reiterated its 'buy' rating on the stock.