focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Re the prior post on valuation, he's used a straight 25% tax charge on Shire's £3.64m contribution to VLE after intra-group management charges et al.
Firstly, the tax charge is unlikely to be precisely the full 25% due to capital allowances and super deductions. Let's call it a conservative 22%. Secondly, imo we should use Shire's PBT before intercompany charges etc, which is £3.86m. Thirdly, let's be a tad more generous and use a P/E of 8 given Shire's terrific track record and apparently excellent competitive position.
That gives Shire a £19.3m valuation. Add in the £23.74m cash and the total is £43.04m, which is around £18.50 per share.
Happy to be corrected/struck down!
Having listened to the presentation, here's a few points I thought were interesting (in no particular order - any corrections welcome!):
- MWE have had a "very strong" start to 2024
- defence-related reveues were up to 44% of the total last year
- MWE are one of only 2 competitors in India for 5G backhaul business, as one other was disqualified last year for concerns over quality
- the October 7th attacks caused much destruction of not only telecoms equipment and towers, but also agricultural equipment and irrigation systems. Orders to replace these are now coming through
- more fountain projects are likely, firstly in Israel and then internationally. These have very nice recurring income
- Israeli defence budgets are being "increased dramatically"
- all R&D is expensed, not capitalised
- MWE are ready to look at more acquisitions, which will only be profit-enhancing
- the dividend has grown 110% since 2018
Here's the presentation:
Https://www.youtube.com/watch?v=rnbttewQ4qU
You can register to watch CAPD's post-results LSE presentation at 9.00 am tomorrow. Which I assume means the 2023 results will be tomorrow morning (following the positive year end trading update).
Broker consensus is usefully noted in today's RNS - pretty handy against a £175m m/cap and with an additional $50m or so of quoted investments in hand:
Https://uk.advfn.com/stock-market/london/capital-CAPD/share-news/Capital-Limited-FY-2023-London-Stock-Exchange-Presentation/93478501
"Capital Limited consensus summary - 14th March 2024: Below is a company compiled consensus summary, reflecting the estimates of our covering analysts. Analysts include Peel Hunt, Stifel, Canaccord Genuity and Tamesis.
FY23 Consensus ($m)
Revenue 318.4
EBITDA (adjusted for IFRS 16 leases) 89.2
Operating profit 55.1
Net profit after tax (Adjusted for investment gain/(loss) 35.3
Net Debt 71.7"
Should generate some more interest tomorrow:
Https://www.investorschronicle.co.uk/ideas/2024/03/12/a-payments-business-that-s-returning-cash-to-shareholders/
A starting point for discussions re valuation posted from Jeff256 elsewhere - will have a think myself about this tomorrow:
"Well, the pie business is making £2.73m after tax. Apply a PE of 7 on 80% ownership and we get about £15.3m. Add £23.74m cash and we get £39m
Approx £16.90 per share."
Great to see a number of buy trades at 900p reported after the close - and a £173,507 uncrossing trade at 899p, which hopefully augurs well going forward.
I've been buying some of these recently. My final buy appears to have perhaps cleared out some stock and caused a tick up?
AEO looks very cheap at these levels considering both the progress made and the NAV security of the cash pile, plus the opportunities both organic and inorganic offered by that cash.
I'm not expecting this H1 to offer fireworks against the prior year given the renewed H2 weighting due mostly to Cannes Lions in June, but the results should be good enough to prompt a re-rating from these levels given the confidence in the general outlook and the current rating.
I was very impressed by the presentation at MelloLive late last year, and also like the extremely clean accounts and straightforward strategy and US expansion.
Another buy from Lincoln - bigger this time at 1.16m shares. That's around £25k spent by him so far in these two transactions - not bad at all:
https://uk.advfn.com/stock-market/london/dekel-agri-vision-DKL/share-news/Dekel-Agri-Vision-PLC-Director-PDMR-Shareholding/93473295
Ex-Schroders fund manager Iain Staples is very positive on RNWH - about 11 mins 45 secs in:
Https://podcasts.apple.com/gb/podcast/the-exchange/id1569138869?i=1000648512846
The reference to "enhancing shareholder value" could also mean perhaps a tender offer to shareholders, at say around £15 per share, i.e around the current NAV.
This could be alongside another acquisition given the huge cash pile.
Either way, hopefully it's time for a little excitement around here.
Here's the rest of Simon Thompson's tip:
"Strength from the military side of the business more than offset a slight dip in revenue from MTI’s 5G backhaul antenna solutions due to slower installation rates in certain markets.
However, as soon as 5G is rolled out in India (a key market), the requirement for MTI's products will be substantial. Also, the group’s automatic beam steering antenna solution that adapts to any small movements caused by different climate conditions is now entering into production after successful testing by key original equipment manufacturers (OEMs).
A climate change winnerA climate change winner
MTI offers investors exposure to the themes of climate change and water conservation through wireless water management systems, too. Water scarcity is a real global problem. Last year, the UN Water Conference reported that global
fresh water demand will outstrip supply by 40 per cent by 2030. This level of challenge underlines the importance of water conservation and the solutions that MTI offers customers (agriculture, municipal authorities and commercial entities), which can reduce water usage by 30 per cent.
In addition, MTI has been expanding its services beyond efficient water usage across public parkland and green open spaces, having recently completed a project to monitor and partially control 40 urban fountains for a municipality in Israel. It could become a valuable future revenue stream for a division that increased operating profit by 8 per cent to $2mn last year.
Admittedly, contract delays at two loss-making projects led to profits reversing at MTI’s electronics division. However, the directors report that increased defence spending by governments is creating a strong market environment to operate in, partially from the Israeli defence forces and partially from international markets via the Israeli systems houses. To this end, MTI’s electronics division has been completing several design wins for both new and existing customers. It augurs well for future sales. House broker Shore Capital expects divisional operating profit to bounce back 25 per cent to $1.95mn in 2024 and contribute to 9 per cent higher group operating profit of $5.1mn (£4mn).
On this basis, MTI is rated on seven times 2024 operating profit to enterprise valuation of £28.4mn. A 6.1 per cent dividend yield and a £0.5mn expansion of the share buy-back programme are also supportive. Trading around the level of my last buy call (‘MTI boosted by defence spending and offers 6% yield’, 15 August 2023), MTI’s shares rate a buy."
TST is a transformed company, with rising sales, profits, a £3m+ cash pile, new software and other products now commercialised, substantial recurring revenues, international sales prospects and a vision led by an experienced Chairman.
Plus a very positive outlook statement for this year.
TST managed to raise margins such that PBT increased 60% and is expected to increase another 40% this year, to give a £1m PBT against an £8m m/cap.
TST are now on an ex-cash P/E of just 7.0 for this year. Jim Slater's PEG is only 0.48.
These indicate that TST is now on a bargain valuation.
MWE have just been tipped by the Investors Chronicle's Simon Thompson:
Https://www.investorschronicle.co.uk/ideas/2024/03/11/mti-is-a-smart-play-on-the-defence-spending-boom/
"MTI is a smart play on the defence spending boom
This technology group is rated on a single-digit earnings multiple even though it is delivering double-digit profit growth, and offers a 6.1 per cent dividend yield
March 11, 2024
by Simon Thompson
Annual pre-tax profit up 12 per cent to $4.8mn
EPS rises 9 per cent to 4.58¢
Net cash of $8.1mn (9.2¢)
The latest results from Israel-based MTI Wireless Edge (MWE:40p) highlight the benefits of diversification as growth from the technology group's antennae and water management systems units more than mitigated a weaker performance from its electronics division.
The antennae business sells 'off the shelf' flat and parabolic antennas as well as custom-developed antenna solutions to a range of commercial and military customers. Buoyed by a sharp rise in military sales, divisional operating profit surged from $0.3mn to $0.8mn. Current events around the world suggest that requirements for military equipment will continue to grow in the coming years as western governments increase their defence budgets, too. Moreover, the conflict in the Middle East has triggered an increase in demand that should lead to higher stock levels of all military equipment being maintained by the Israeli government going forward. Defence-related work now accounts for 44 per cent of group sales.
etc"
Cavendish have increased their target price to 300p (from 270p) this morning.
The trading update is out - and it's terrific. The £25m m/cap looks ridiculously cheap imo against:
- a PBT of £4.75m!
- Shire Foods made a core PBT of £3.86m (up from £2.78m), up almost 40%....
- the cash pile is up to £23.74m, against a £24.8m m/cap!
- NAV is up to £14.82 per share and £37.5m
Even better:
- investment opportunities are improving
- and re Shire:
"We have been encouraged, however, by the levels of new business opportunities we are seeing in Shire and remain cautiously optimistic for the remainder of the year"
The final sentence is also interesting - perhaps they're suggesting special dividends here?
"we are focused on enhancing shareholder value and, inter alia, continue to monitor and review our ongoing requirements in terms of the cash required to deliver our strategy"
In the year when JL so sadly passed away, congrats to Nick in particular.
Crikey, DKL must be cheap :o))
It's taken a long time, but finally we see some director buying. Good to see the CEO buying 500,000 shares. The share price has evidently reached a point which can't be resisted. Hopefully we'll see other directors stepping up too.
The H1 results can't be faulted, with EPS up over 16% and the cash pile up 33% to over £11m.
And FNX are promising a special dividend or further buybacks with that cash pile.
Note that:
- December was a record month and H2 has started strongly
- 99% recurring income
- major new product now released
- further international growth being promised
- "strong pipeline of commercial opportunities, including significant enterprise deals in the UK and overseas, which provides the Board with confidence in the ongoing success of the business"
Love the management here. They underpromise and overdeliver and have barely put a foot wrong.
There's been 23 (count 'em!) different buys this morning of 1 share each at 9.39p and now 9.49p.
I know some buy 1 share to attend the AGM, but that's just a one-off. Can someone educate me as to why this happens?! Is it really a code to signify something as some think (this always seems like the usual b.lcks conspiracy theory to me). At least the share price has ticked up a nice 0.45 today.....