Touchstar Share Discussion Threads

[rivaldo] 18/4/2024 07:44

WH Ireland's 140p valuation seems reasonable and probably conservative imo.

With a cash pile of 37p per share, and 10p EPS forecast this year, a 140p share price would put TST on an ex-cash P/E of only 10.3.

Given this record of PBT and EPS I'd say even that multiple is perfectly reasonable.

And the PEG is just 0.28, which is ludicrously cheap:

2021 - £0.2m PBT
2022 - £0.4m PBT
2023 - £0.7m PBT
2024 - £1.0m PBT (forecast)

And for EPS:

2021 - 4.0p
2022 - 6.6p
2023 - 7.6p
2024 - 10.0p (forecast)

[russman] 18/4/2024 06:59

too small to be listed.
bulk up - acquisition risk.
or
sell up - net cash, strip out HQ overhead, might attract a foreign predator.

[smithie6] 18/4/2024 00:26

..there is a case I think for merging some small UK listed technology companies to reduce overall costs of dirs, being listed, dirs cars, etc

And reduce some common costs such as marketing, reception staff, accounts staff, etc
& try to benefit from cross selling

And as a bigger group try to get sales abroad and become a bigger fish.
Although TST on its own did amazingly well in '23 in growing it's sales outside of the UK.

How many small UK listed companies for example do
CCTV camera systems or human access control or vehicle tracking.
....I could name a few...

[cocker] 17/4/2024 23:01

If WH Ireland say 140 it must be true. If only brokers bought upto 80 percent of their target price, then we could all be millionaires.

[rivaldo] 17/4/2024 22:45

WH Ireland today reiterated their 140p price target (increased recently from 120p).

They summarise:

"Full year results: Recurring revenue strategy delivers further profit growth

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning’s full year results reflect the outcome of a multiyear strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m.

Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software license and hardware maintenance revenues, whilst also charging a fair rate for customer requested software updates. Each of these strands continued to grow in excess of overall revenue growth in FY2023, delivering further improvement in gross margin, reaching 63.6% in H2 2023 up 19bp from 61.7% in FY2022A.

With FY2024E reported to have started to plan, we expect this strategy to drive further organic growth in the coming years, with additional potential for expansion into new overseas markets and strategic M&A.

Trading on an FY2024E PE of 9.5x and EV/EBITDA of just 2.6x, underpinned by £3.0m of net cash (37.5% of market cap), we see scope for the shares to continue to move higher as further growth is delivered. We see fair value at 140p."

"WHI view:

With recurring revenues reaching a new high of 40.4% in the period, we are encouraged by further progress against the group’s strategic aims and believe this should help drive continued organic revenue and profit growth in future years. With the potential from new overseas markets, product improvements, and M&A, we see scope for the shares to continue to move higher as further growth is delivered. We see fair value for the shares at 140p."

[cocker] 17/4/2024 17:59

Shareprophets have a piece on TST today. Improved financial performance and yet share price down 6 percent today, Why?

[smithie6] 17/4/2024 13:23

I agree....although we know that one poster doesn't !

[rivaldo] 17/4/2024 11:45

WH Ireland's numbers are as follows:

2021 - £0.2m PBT
2022 - £0.4m PBT
2023 - £0.7m PBT
2024 - £1.0m PBT (forecast)

And for EPS:

2021 - 4.0p
2022 - 6.6p
2023 - 7.6p
2024 - 10.0p (forecast)

I'd say this is rather impressive progress! And all now backed up by the £3m cash pile and 40% recurring income.

[varies] 17/4/2024 11:04

Whilst these results are much as expected and only modest progress is suggested for the current year, we should recognise that many small companies listed on AIM have suffered terribly in the last couple of years and that TST's performance has been relatively very good.
I had hoped for a final dividend of 2p rather than 1.5p but hope to see steady increases from now on.

[kinwah] 17/4/2024 10:46

TST has always been illiquid and the share buybacks don't help that. It's just a matter of time before an acquirer crunches the numbers and offers an acceptable price. It's probably the right time for the two largest shareholders who together hold about 22% of the company to cash in their chips. TST is just too small to be a standalone quoted company.

[cocker] 17/4/2024 10:31

Short term traders in the last few days ,oh come on your better than that Rivaldo as I think your comments are a case of clutching at straws. The best we can all hope for is a buy out at a decent premium to current sp, which would be remarkable given the performance

[rivaldo] 17/4/2024 10:03

WH Ireland have increased this year's forecast to 10p EPS (up from 8.7p EPS).

PBT is at £1m, up from last year's £0.7m.

The dividend is also increased to 2.75p (from 2p).

The cash pile is forecast at £3.1m, from £3.4m due to the raised dividend and likely further £300k of share buybacks.

You have to assume that WHI would have been guided by TST in publishing these numbers, and IM is generally pretty cautious in his assessments.

There may have been a few short-term traders exiting who bought in the last few days, and TST's volatility is obvious in the small number of shares traded against today's drop. Certainly short-termers might look at the order book and possible H2 weighting as reasons for doubt.

But overall TST looks in fine fettle imo given the macro climate, and well backed against a derisory £7m m/cap given its high recurring income and £3m cash pile.

[pireric] 17/4/2024 09:20

I'm guessing the order book is the reason why the share price has reacted like this, even if they do make the point about lead times normalising

Eric

[rivaldo] 17/4/2024 08:14

In addition to the above, there's also:

- growing recurring income now above 40% of turnover
- a big increase in overseas sales to almost 10% of turnover from just 1.3% in 2022
- usage of AI which TST has already been using "for several years"
- growth potential via cross-selling etc in CCTV and fire alarm systems
- further growth in overseas sales from a standing start, with "a number of export opportunities in 2024"
- and potential for M&A using the £3m cash pile

[rivaldo] 17/4/2024 07:31

Today's results reflect TST's excellent value, with PBT up 60% to £675k, 7.63p EPS, a 2.5p dividend and a £3m cash pile equivalent to 37p per share.

If you strip out the cash, then TST are on a historic P/E of just 7.6.

Most importantly, TST have confirmed that 2024 has "started to plan" and "expectations are unchanged", so WH Ireland will presumably reiterate their forecast of an increased 8.7p EPS for this year.

Plus the £3m cash pile is actually understated given some customer payments received in early January 2024 and a delayed customer go-live date deferred until 2024 (which will presumably also help 2024 revenues).

[packman8] 10/4/2024 09:25

From last trading update in March final results are scheduled on or around 17/4.

[rivaldo] 08/4/2024 13:21

Cheers - reads well. Good to see the following re both the further rollout and expansion of requirements:



"As an NSI Gold system provider and installer, British Sugar were reassured that they had invested in a quality solution and are now looking to use the Newark site installation as a global standard to rollout out to the remaining three sites.

British Sugar are also considering extending the solution requirements, working with TouchStar to include full support and regular preventive maintenance to enable a futureproof, scalable, and robust CCTV system"

[cocker] 05/4/2024 13:34

Nice contract with British sugar for cctv

[cocker] 28/3/2024 14:38

TST is not a bad company as I have said many times David, just one that thinks plodding along is acceptable. Where as my YU holding has basically gone into orbit and one fella investor like myself , managed to build a decent size stake there at below a quid, I must add the lucky guys holding is greater then mine .