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| Share Name | Share Symbol | Market | Stock Type |
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| Apc Technology Group Plc | APC | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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| 0.00 | 0.00% | 9.875 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
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| 9.875 |
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Posted at 12/6/2019 07:37 by igoe104 Nice acquisition, which compliments the current business.cquisition of Euro-Tech (Export) Limited APC Technology Group PLC (AIM: APC), the provider of design-in, specification and distribution services for specialist electronic components and systems, lighting technologies and connectivity products, is pleased to report that it has completed the acquisition of Euro-Tech (Export) Limited ("Euro-Tech"), a distributor and international reseller of electronic components. Euro-Tech sources and supplies a wide range of active, passive and electromechanical components, industrial products and consumables from major global manufacturers and quality assured sources across Europe to blue chip OEM and CEM customers around the world. Euro-Tech's products and services are complementary to APC's Locator business and will significantly enhance APC's capability in the sourcing of hard to find or obsolete and end of life components, products and systems. The previous owners and founders of Euro-Tech, Chris Smallwood and Phil Hutchins, will continue to work within the business, reporting to APC's Chief Executive, Richard Hodgson. Chris will assist with integrating the business for a period of time before retiring, while Phil will continue in his role as Sales & Marketing Director, driving the business's sales growth across the enlarged Group. For the 12-month period ended 30 April 2019, Euro-Tech's unaudited results will record revenues of GBP2.2m, gross profit of GBP0.75m, an adjusted EBITDA of GBP0.2m, a profit after tax of GBP0.1m and net assets of cGBP0.6m. It is expected that its profitability will increase following integration into the Group's business with the realisation of potential efficiency and revenue synergies. The consideration payable will be GBP1.05m of which GBP0.165m represents cash at completion in Euro-Tech and GBP0.14m is derived from excess working capital. 50% of the purchase consideration is payable on completion, 25% in monthly instalments over twelve months and 25% twelve months after completion. The Euro-Tech balance sheet at completion includes GBP0.35m of trade debtors, which will be rolled into the APC invoice finance facility with ABN and hence the transaction will be funded through the Group's existing financing facilities. |
Posted at 23/5/2019 10:08 by glasshalfull Morning guys,I wouldn’t get too hung up on the share price movement. The shares were 6.5p 3-weeks ago & were +60% at one point on Tuesday (mid 10.5p). There are a number of stale holders from the previous APC entity that will sell into strength & also the rapid share price movement in May will have brought in traders. Excellent post insider6 (post 1275). Thanks. Interim presentation now available I’ve had the opportunity to speak with management following results & congratulate them & the APC team on delivering as per the milestones they have provided to me over the 30 months I’ve monitored/ held the shares. Couple of points if I may: - * Acquisitions - They are currently in discussions with a couple of possibilities & would hope to conclude this year. However, they were at pains to point out that there would be no requirement to do so through a raise or placing. Any acquisitions concluded would be through their strengthened balance sheet. In other words, no dilution & any acquisition should be immediately earnings enhancing * APC Hi-Rel > Expertise in UK Space & now offer premier lines. Similar with APC RF & Microwave. Now one of the largest in the UK. * APC Time > Continuing to show v good growth & multiple opportunities across other sectors * Op Margin > Pleased that this is increasing as fixed costs under control. Also highlights synergies. Company are aiming to grow op margins further to c.10% in a few years so with stated £50m turnover aim in 2 1/2 years, this would hopefully generate £5m op profit There’s a lot more but reckon I’d be regurgitating many earlier comments. The one thing I do require to correct is that Wavelength derives 80% through commission. This was considerably higher than I thought & originally I believed their GP would equate to c.£1.5m-£ Hope this whistle-stop tour assists. kind regards, GHF |
Posted at 21/5/2019 07:50 by glasshalfull Good morning folks,Strong H1 FY2019 Well, I hoped the first signs would emerge of strong PBT & earnings growth with H1 results & APC certainly didn’t disappoint with metrics rising strongly across the board. A smashing set of results 😁 * Revenue +23.7% (£10.6m) * EBITDA +46.5% (£851k) * Adj Op profit +51.5% (£844k) * Adj PBT +71.1% (£657k) * Adj EPS +31.0% (0.4p) * Op Margin +21.5% (now up to 7.9%) * Net Debt reduced by (-£1.3m) (now down to [-£2.7m] with ALL remaining loan notes with a 10% interest rate extinguished) As a reminder Stockdale (Shore Cap) previously had a 12p price target & current forecasts indicate +35% EPS growth this year to 0.74p EPS (see below). So the company is bang on track with Adj EPS of 0.4p in H1. I’ll be interested to see Stockdale’s broker update following these positive interims. Especially so, as the Wavelength acquisition only in these figures for 3 months & APC are now focusing on realising synergy benefits in H2 following the integration of the 2018 acquisitions. Current forecasts (prior to any broker updates today) Yr end Aug Revenue Adj PBT EPS Normalised 2017 £15.56m £418k 0.27p 2018 £17.15m £683k (+63%) 0.54p (+100%) 2019e £23.06m £1.63m (+23%) 0.74p (+35%) 2020e £24.99m £1.88m (+50%) 0.86p (+16%) 2021e £26.16m £1.96m (+22%) 0.89p (+4%) Importantly CEO Richard Hodgson’s comments & outlook confirm confidence in the full year & indicate the company’s focus in in driving cash generative earnings growth. The statement also mentions the benefit of their 3 pronged growth strategy, especially when it comes to folding in small bolt-on acquisitions. Great to read that ALL 3 x acquisitions executed in 2018 are, “trading at a run rate higher than acquired levels” & have brought APC additional services (such as in-house testing) & the synergy benefits as 2019 progresses that I mentioned. Good to get some further info on their Wavelength acquisition, which was the final one of 2018. As mentioned, it contributed 3 months here & was acquired at the end of Nov 2018 for £500k. Importantly, we now get an idea to the scale of the Wavelength business which delivered a gross profit of £472k to 31.12.18 so likely to add circa. £1.5m revenues to APC on an annualised basis. Again, that’s only half the story & during February’s AGM the management team indicated that the acquisition brought with it a strong roster of International manufacturers that would help them them expand into the UK Space market. APC have commented on the explosive growth rate of this sector previously & its importance to the UK. The Space market is growing at a lick & set to rise from £14.8bn in 2018 to £40bn in 2030. So the right sector to be in! These interims also confirm that APC are operating in many other growth area’s that will mitigate the effects of any macro events. The operational review support confirms that APC Locator are operating in a market where they should see growing demand through the world shortage in components; RF & Microwave are enjoying strong market conditions with counter IED systems (think Gatwick disruption); APC Time now a one-stop-shop in the UK & provides solutions for the, “UK’s largest broadcasters”, which includes the BBC’s iP infrastructure upgrades across the UK & we also have APC’s Property Tech business which is seeing an increase in its customer base & we’ve already learned has worked on projects this year in The Shard & across Network Rail. APC are growing across the board! In conclusion, they are now delivering the growth many hoped. These are the first results where we observe, PBT, earnings, margins & cashflow rising strongly & I believe this is only the start. Management have kept a tight lid on costs & the strategy is clearly working. They have shown the ability to fold in earnings enhancing acquisitions & any additional ones should see earnings growth accelerate further. Well done to Richard Hodgson & the APC team 👏🏻&# Disclosure : I hold > 1% equity Kind regards, GHF |
Posted at 29/4/2019 09:42 by glasshalfull Good morning folks,I’m currently writing up the constituents of my (fantasy football) portfolio & now getting round to my marauding full back...APC! The table below doesn’t copy over v well from Twitter so here is a direct link I’ve shared my views extensively on this investment thread, so the write-up should be viewed as a brief resume of the investment case IMHO. Nothing more. (#3) APC (APC Technology Group) - Exciting Growth * Share Price 6.6p * M/Cap £12.1m * Enterprise Value £15.1m (£2.3m drawn under an invoice discounting facility of £6m) * Shares in Issue 182.6m * Stock Rank (Neutral) 37 (Quality 6 / Value 72 / Momentum 55) Background APC Technology was established in 1982 & listed in 1996. The share price reached the heady heights of 68p in November 2013 but came unstuck in 2015 as it attempted to diversify. The shares plummeted to a low of 5.7p in June 2017 following series of placings to shore up the company. However, a new management team arrived a couple of years ago & administered considerable mouth to mouth resuscitation, stemmed losses by disposing of a loss making business, restructured & slashed costs by over £2m on an annualised basis. This took the company out of intensive care & they are now executing on their strategy to drive growth. This has been evidenced with a return to profitability in FY17, then in FY18 further improvement in Revenue, PBT & Op Margins ⬆️ to deliver 0.54p EPS that equates to earnings growth of +100%. Not too shabby! Despite this positive progress the share price has been range-bound for almost a year. Perhaps the market are simply, “once bitten, twice shy” when it comes to APC & are looking for confirmation they can deliver consistently? 🤔 What do APC do? Well they design-in & distribute high reliability, durable & long lifespan components & systems for critical applications. We are talking product lines where the end-use equipment is operating in extreme conditions or is running applications where component failure would be catastrophic in industries such as Space, Defence & Healthcare. They operate in 3 main areas :- * Components (60% of sales)they engage with their UK customer base to design-in products sourced & supplied throughout the world into a range of industries which includes military, aerospace, medical & energy. They have also expanded their product portfolio to take advantage of the growing UK space industry which is forecast to grow from £14bn in 2015 to £40bn in 2030. * Property Technology (30% of sales) is growing organically at +10% per annum & includes project based LED lighting solutions for many of the major Facility Management (FM) companies plus the emerging Internet of Things (IoT) tech for smart buildings solutions for buildings such as The Shard & across Network Rail properties * Time Synchronisation (10% of sales) is growing organically at +30% per annum. APC Time is being developed as the “go to” brand in the UK as evidenced by their work in a number of areas such as the financial sector & in media with the BBC who have chosen their tech across their iP infrastructure upgrades How will APC grow? There are 3 core elements to their growth strategy:- (1) Sell more of the tech they have - sales team reorganised & incentivised (2) Sign & sell new complementary tech (3) Bolt-on acquisitions - acquired 3 complementary businesses during 2018 Management have nailed their colours to the mast & declared targets to TRIPLE the size of the company on a 3-5 year view. They indicate the group will be delivering £48m revenue in 3yrs & in 5yrs up to £75m. With improving op margins I’d hope they’d be delivering PBT of at least £4m & £7m respectively in this timeframe. Stockdale have a 12p price target or +80% upside on the current share price. The undernoted forecasts indicate +35% EPS growth this year. Yr end Aug Revenue Adj PBT EPS Normalised 2017 £15.56m £418k 0.27p 2018 £17.15m £683k (+63%) 0.54p (+100%) 2019e £23.06m £1.63m (+23%) 0.74p (+35%) 2020e £24.99m £1.88m (+50%) 0.86p (+16%) 2021e £26.16m £1.96m (+22%) 0.89p (+4%) In conclusion I don't think it fanciful to believe that APC will NOT ONLY deliver +35% earnings growth this year BUT also the strong possibility that we’ll observe future forecasts being upgraded as each component of their growth strategy becomes a reality. We have already witnessed a significant earnings upgrade for the company with the current FY2019e being upgraded by +30% in July 2018 from 0.57p EPS to 0.74p EPS following the acquisition of Aspen Electronics. The share price is only on a prospective PER of 8.9 for the current year which falls to a PER of 7.7 in the following year. It looks v good value IMHO. Disclosure : I hold > 1% equity Kind regards, GHF |
Posted at 24/2/2019 16:36 by insider6 The following is an extract from my post immediately after last year’s AGM.“GHF, thank you for mentioning that Stockdale had increased their target price for APC stock to 10p. I was unaware of this which brings me to the only negative point I have to make about APC. I believe that we own in general a thinly traded stock. PI's always have a part to play in generating shareholder interest but this is very difficult when there is no known broker covering the retail sector. I believe this is the last piece of the jigsaw required to get the share price on the move again. What better incentive for staff to see their stock options actually worth something rather than be underwater as I suspect is currently the case. What better incentive to show a prospective franchiser to show we are not mere wordsmiths? Whatever, I believe we are beginning to see the light!” Well we are certainly beginning to see the light and what’s more I expect it to burn far brighter moving forward. And of course this will be helped by APC’s new strategy concerning financial PR, outlined at the AGM, which is being gradually implemented. No one can have failed to notice the increase in traffic on APC’s twitter feed or the attendance at Mello in both Derby and London last year. There is a story to be told and with targets having been met 2 years running they have confidence to tell it. It was clear to everyone who attended the AGM that there was a high level of positivity amongst the directors and staff. In the past the Chairman had been very circumspect when asked direct questions but not this year. He was happy to talk to everyone individually and although he could not answer some questions through insider trading rules everyone left with a warm feeling that we are on a one way ticket. On a personal note, I am often asked if I consider it a good time to buy APC shares. My answer is always that AIM market is notorious for manipulation on financial message boards so I have no comment to make. I was asked that question yesterday and gave an unequivocal yes based on the gut feeling I came away from the AGM with. As Stockdale pointed out on their latest analyst note, APC trades on an EV/EBITDA multiple of 8.3 based on this years earnings forecast against a sector multiple of 12.2. For 2020 on price earnings ratio APC is 8.3 compared to a sector average of 18. Considering the positive vibes coming from the BOD during the AGM we will not have too long to wait before the share price starts to correct as the interim figures will be known in April. Hopefully this will give assurance to the City that APC is more than capable of meeting annual forecasts and further II’s will come on board. Recently there was talk on this board of Harwoods having sold because they did not appear as a major shareholder in the annual report. It was confirmed at the AGM that this omission had been corrected on the website and that they were adding to their investment. One of the attendees made the comment that APC should be congratulated for getting Harwoods on board. He thought it was a major positive and that they had chosen to invest in APC. I think it fair to mention that I do own a significant amount of shares in APC so I guess I must be considered somewhat biased. Nevertheless I am convinced that if APC do increase their financial PR shareholders will be very happy this time next year. |
Posted at 22/2/2019 17:20 by insider6 AGM 2019 ReportThe usual perfunctory AGM was followed by a Q & A session that lasted for 2 hours. The BOD’s answered every question thoroughly and confidently and I came away with a very warm feeling that future analyst forecasts would be met or exceeded. APC is not a company known for its liberal attitude to information but after the Q & A session the BOD openly engaged with all attendees giving the impression that they were very comfortable with the direction F19 was taking and extremely confident that forecasts would be met. Richard Hodgson gave his usual polished presentation concerning APC’s strategy going forward and this is now on the APC website for all to see. hxxp://apcplc.com/hi A major part of the open forum was concerned with the share price that has travelled conversely to APC’s profitability over the last 2 years. Since APC have openly forecast revenue to triple over a 5 year period it was a concern to everyone present that further acquisitions would require further fund raising. The Chairman stated that this would not happen unless there was an extraordinary reason and I got the impression that they are as concerned as we are about the depressed share price. So much so that now the findings of the operational review carried out over the last 3 years have been fully implemented attention will be given to improving the level of information given to the market. They will persue increased networking of new institutional investors, increase corporate communication through, RNS, investor magazines, online interviews, investor forums and by looking at paid for research targeted at Private client Investor Managers (PCIM) and Retail investors. They will also work with their stockbroker to develop a specific plan to deal with continuous sellers. This is a major positive deviation from their previous attitude. Exciting times ahead and I sense that there is much to look forward to over the second half of F19. |
Posted at 28/11/2018 11:02 by insider6 Like GHF and Playful I am an investor in APC so please do your own research before investing.In my opinion APC’s attendance at Mello London was rather unique in that they were the only exhibitor who displayed a significant range of hardware on their stand, maybe the reason that they appeared the busiest stand at the show. Senior managers who were happy to talk freely about the non-financial side of APC’s business staffed the stand and it is clear that everyone has bought into the Company strategy and share the Company’s vision on the future. The presentation given by Richard Hodgson in the Roskill room proved to be standing room only for quite a few interested investors. It was a polished performance but nonetheless very detailed and unlike several other company presentations this was about addressed markets, customers and opportunities in very fine detail. Every addressed market - components, timing products and Intelligent lighting and building control - is on a significant growth curve and new addressable opportunities constantly under discussion and consideration. GHF writes above, ‘I also spoke with a few attendees who have been watching the story unfold & now believe the business highly investable, when they were a little more circumspect at Mello Derby in April.’ I was not at Derby but from presentations at AGM’s over the last three years feel exactly the same. I have a feeling that yesterdays presentation will be available on APC’s website at some time but to actually put up a sales target figure of £50m in three years is commendable given the circumspect presentations of the past. Undoubtedly some of this growth may be down to profitable acquisitions and IMHO may involve dilution but considering the share price has risen by 26% this year, MC by 73% with a 37% increase in the number of shares in circulation this seams like a good opportunity all around. At system level I heard that APC Smartwave have been appointed a Premier Channel Partner for Advantech. As a Premier Channel Partner we are approved by Advantech to provide technical and commercial advice and sales of Advantech products to our customers. Each design in achieved by APC is protected and resultant business cannot be poached by other Advantech agents and distributors. Advantech’s revenue at the end of 2017 was £762M. They are a leading edge technology company addressing many markets but with a particular interest in IOT, one of the fast growing markets for APC’s Smartwave division. They provide amongst other things embedded computer systems that are at the heart of every IOT application and cost considerably more than the average electronic component because of their sophistication. Once designed into a project I imagine it is very difficult for a competitor to come along and dislodge the design and given that customer care and satisfaction is the baseline for every APC customer this should provide a tremendous income stream over the next 5 years. Anyone interested in looking at Advantech products should visit www.advantech.com Quite a lot of detailed information but plain to see how committed they are to IOT and in particular open-source architecture which is the theory of all blockchain systems. |
Posted at 17/10/2018 16:52 by insider6 Good news from Solid State today, a company I know quite well and believe to be very similar to APC especially with their electronic component distribution arm.According to the APC RNS 24/9/18 sales in the year ending 31/8/18 are expected to be in line with management expectation. Although we do not know what management expectation really is I doubt it will be less than the figure mentioned in Stockdale’s recent analyst’s note £17.5m. This figure displays reasonable organic growth considering the FBM acquisition was at the beginning of H2 and will probably not contribute more than £700k to the total sales for F18. Aspen as yet is still an unknown factor but I doubt their sales contribution will have been more than £500K at best. The RNS also reported that total orders received in the year were £23.5m which represents extremely solid growth over the half year figure of £9m, in fact 161% to be precise. Obviously Aspen have contributed to this number but the fact is APC have demonstrated they are well on the way to achieving their stated desire to achieve annual sales of between £50m and £75m in 3 to 5 years (RNS 25/7/18) and with further acquisitions those figures may yet prove to be conservative. A few caveats from F17 results announcement RNS 5/12/17 to support my viewpoint. ‘Lighting for Facilities Management. APC Lighting has delivered £750k of lighting in the last six months to a leading property management company across three of the several thousand facilities that they manage. This has been achieved since signing a new preferred supplier agreement in June 2017. The current quoted pipeline is a further £2.5m across what is still a small percentage of the remaining estate.’ ‘APC Time. New financial legislation, MiFID II, which comes into force in January 2018, has provided a boost in sales for APC Time, providers of time and frequency synchronisation. Under the new requirements, financial institutions and those involved in high frequency trading must comply with stricter limits for the time stamping of transactions. Significant orders have come from the London operation of a major French bank and an American multinational finance company.’ High-Reliability Electronics (trading as APC Hi-Rel) provides the technical sale of high-reliability, high temperature and high voltage electronic components into the defence and aerospace markets. APC represents a range of manufacturers in the UK market and works on projects that can run for 3 to 5 years. With these long projects, future bookings are a good measure of success. In the financial year 2017, bookings were £7.1m, which is a 34.6% uplift to 2016 total bookings.’ Well, as yet we have no breakdowns to compare if these impressive opportunities were capitalised on but the £23.5m orders came from somewhere. IMHO, in the world of Electronic Component Distribution APC is one of only a handful of Electronic Component Distributors in the UK that efficiently orchestrates sales on behalf of manufacturing principles. They are not the only ones but well up in the league table. The components they sell are best in class in quality and reliability and as such it was no surprise that they were recognised in the top 2% of suppliers to BAE at their Partner 2 Win symposium in the USA 6/3/18 (RNS 19/3/18). Dealing with companies like BAE formulates a culture within a company and I am sure this has been put to use in all divisions of APC and in their stated intention to expand further through synergistic acquisitions. APC’s stockbroker has a current target for the share price of 12p. I believe this is fair at this moment in time and that anyone buying today will reap excellent rewards in the future should the Companies projections be met. Certainly over the last year there is no reason I can see that they will not. |
Posted at 25/7/2018 08:01 by glasshalfull Morning everyone,APC Acquisition & Placing Courtesy to update that I took part in the placing & added substantially to my holding. I was v impressed with APC’s management throughout the process. They were eager to ensure that existing holders would NOT be diluted via a discounted placing. The positive aspects of the acquisition of Aspen & raise allowed them to conclude it at a price of 6.75p which was a premium of +3.8% to the mid-price of 6.5p of the shares during the last fortnight (it rose 0.25p just prior to close last night, so RNS only considers the raise at premium of +2%). It was apparent to many investors that this acquisition of Aspen will help propel the company into meaningful profitable growth & improve the balance sheet in one fell swoop. We observed that January 2018’s acquisition of First Byte (FB) is looking like an excellent addition. They have already increased turnover by +33% in the first 6 months of acquisition. With the well publicised worldwide component shortage I can only see APC Locator (with FB now fully integrated) growing substantially in the years to come. In Aspen I’ve every confidence that they have chosen wisely for this second & much larger acquisition & hopeful they will execute in similar fashion to that of FB. Benefits... This really is a fantastic deal for APC as it delivers: - * an earnings enhancing acquisition in FY18/19 with acquisition price on multiple equivalent to 3 x EBITDA * offers scale & cross selling opportunities via increased suppliers & customer base of which there is little overlap * brings in-house services that APC currently undertake via a 3rd-party * material cost savings through synergy benefits * material interest savings through removal of loan-notes which bear interest of 10% * provides additional working capital * brings new institutional holders on board to support future growth ambitions Why Aspen? Well it appears an excellent addition on a number of metrics as I’ve alluded to. Not only will it help to scale APCs existing Components business - which is currently c.60% of group sales - but APC were at pains to confirm they have an excellent reputation in the industry & the APC team know the business well, having courted the possibility of acquiring them for sometime. Importantly it offers a complementary RF & Microwave business to APC’s with a test & measurement equipment business & provision of in-house testing facilities. In other words the acquisition will allow APC to provide value added services to customers & suppliers of the combined business. This should be viewed as an important addition to APC, as they currently utilise 3rd-party testing & can immediately bring this in house. Therefore significant synergistic benefits which the FD anticipated will result in overall savings equating to a six-figure sum. Financials In terms of financials the deal is also compelling. Aspen delivered turnover of £4.3m in FY16/17 (30.06.2017), gross profit of £1.35m & adjusted EBITDA of £0.35m. They’ve just completed FY17/18 (30.06.2018) with EBITDA forecasted to have risen by +70% to c.£0.55m. The £3.2m purchase price appears an excellent price. Aspen has net assets of £2m including £1m of cash (which the seller will retain on completion of the transaction). Therefore the net purchase price is £2.2m. Excluding cash, and after synergies, the purchase price is expected to equate to 3 x EBITDA & will be earnings enhancing in FY18/19. APC are raising £2.5m to acquire Aspen & also placing £500k of shares with the seller, for total issue of £3m shares. It will only cost APC net acquisition costs of £2.2m, the deal has been structured as part cash + shares as the seller was looking to take equity in APC, with £1.7m cash + £500k shares (with a 1 year lock-in) going to the seller, which leaves £0.7m that will be used to repay the convertible loan notes which have a 10% coupon & remainder for w.c. purposes. So at a stroke APC will save considerable interest costs on the loan notes. The FD also confirmed that b/s improvements will help APC realise interest savings amounting to a six-figure sum...therefore we should witness the double benefit of cost/synergistic savings & interest savings Organic Growth opportunities While the acquisition & placing transform the business IMHO, it’s also worthwhile highlighting that the other c.40% of APC comprises Property Technology (c.30% of sales) & Time Synchronisation (c.10% of sales) which offer substantial organic growth. I’ve written about the growth opportunities of both previously & therefore won’t regurgitate. (see link if interested) I’m excited about the Property Tech side - which comprising APC Lighting, APC Smartwave (IOT) & EEVS - & which is growing substantially through a number of agreements they’ve established with a few Facility Management (FM) companies to offer a complete suite of services. The APC team have confirmed the growing opportunities in this area. Equally their Time Sync business is also growing significantly as a number of businesses are adopting time sync functionality due to compliance or tech requirements. This offers APC increasing opportunities across a number of businesses in the financial, broadcasting, power, telecoms & infrastructure markets. I was quite astonished to learn the types of opportunities & the number of industries & companies requiring time sync was quite staggering. I can see this side of the business delivering strong organic growth for the foreseeable. APC believe that both Property Tech & Time Sync businesses provide v good organic growth opportunities, well into double digit % over the months & years ahead. Further bolt-on acquisitions The management team alluded to the fact that the UK electronic components market is currently worth c.£1.5bn per annum. This is a highly fragmented market with hundreds of distributors, many of which are owned by people that are looking to exit & retire. This creates the opportunity for APC to offer an exit route to such owners & at the same time augment the organic growth of Property Tech & Time Sync, as a consolidation play in the Components market. It’s therefore important that APC demonstrate the benefits of the Aspen acquisition, similar to that of January’s FB, as this will no doubt encourage further investor support for future acquisitions & I believe could lead to a material re-rating of the company in due course. Conclusion APC have now moved from the aftermath of a significant 18 month restructure , returning to profit & the small bolt-on acquisition of First Byte in January, before releasing H1 2018 results that highlighted op profit +45% and spoke of further improvement. This is the next step on the journey. Pleasingly initiating a small raise at a small premium to the mid-price of the shares which will not only scale the business but also improve the b/s at the same time. A few posts back I mentioned Stockdale’s forecasts as: 31.08.2018 Turnover £17.51m PBT £0.68m EPS 0.42p (+57%) 31.08.2019 Turnover £19.78m PBT £0.94m EPS 0.57p (+36%) and envisage material upgrades for FY18/19 in light of this acquisition & accrued benefits. It has been a pleasure watching them execute their well publicised strategy and I look forward to the journey ahead. Disclosure - I own over 2% of the equity...so clearly talking my own book! Kind regards, GHF |
Posted at 05/9/2017 21:06 by glasshalfull APCCourtesy to mention that I've been a buyer in APC. It's been harder to find value in the market recently as momentum trading appears all the rage, but I've been suitably impressed with the drive & ambition of the new management team & hope this proves to be a rewarding long term investment. Background APC is a well established company of over 35 years. The share price reached the heady heights of 68p in November 2013.... & it's been downhill ever since, with the shares bouncing off 5.75p in June 2017 - fingers firmly crossed this was the low! This followed a couple of placings to shore up the balance sheet over recent years with the current share price of 6.75p equates to a market cap of £8.8m. At the end of H1 2017 net debt stood at £2.9m at (28.02.2017) for an EV of £11.7m. The company had plenty of headroom as the £2.9m net debt comprised £2.5m drawn on invoice finance facilities (£6m facility), £0.6m of loan notes (due July 2018) and £0.2m cash. While I would prefer the balance sheet to be stronger, the new team appear to have turned the business around & have slashed costs by over £2m on an annualised basis. Indeed, the H1 2017 results marked the first glimpse of a new dawn that followed change amongst most managerial positions. This concluded an extensive 18 month restructuring period which included the disposal of a loss making business & progress on refocusing the company. H1 2017 results highlighted the company delivering a pre-exceptional operating profit of £0.4m on turnover of £8.3m. Gross margin was 34% with net debt reduced by £0.3m. So, why invest now? Well apart from the first sign of a company turnaround & buying at what I hope is close to a low (share price is on its knees) my attention was first drawn to the stock when I noticed that a well respected PI had taken a notifiable stake in the company (>3%). I also noted the share register included notifiable holdings with the likes of Bob Holt at 3% (Chairman of Mears Group); Mark Blandford via Rockridge Investments now at 11.4% (Sportingbet founder); the savvy small cap investors Hargreave Hale now at 16.6% & Octopus at 6.6%. Quite an enviable list for any small cap company. The CEO, Chairman and some other notable investors recently subscribed for shares in the company. They invested £125k & £250k into APC during March & May 2017 respectively (at 6.75p), thus showing their confidence in APC while boosting the balance sheet at the same time. I've subsequently spoken at length with APC & v impressed with CEO Richard Hodgson who I believe is implementing the steps that will lead the company into a period of sustainable profitable growth. What do APC technology do? "APC Technology Group PLC provides design, specification and distribution of specialist electronic components and systems, lighting technologies and connectivity products to the defence, aerospace, industrial, real estate, logistics and healthcare sectors." They describe themselves as a “design in” distribution business focused on the high end electronic components sector alongside a division delivering LED lighting. In English, my understanding is that APC's engineers engage with their UK customer base to "design in" the products that are supplied by a distribution base that comprises companies from throughout the world. We are talking product lines where the, "end-use equipment is operating in extreme conditions or is running applications where component failure would be catastrophic." Think power components for the military or aerospace or....the ExoMars Trace Gas Orbiter launched from Kazakhstan by the European and Russian Space Agency in 2016 that used the DC-DC converters supplied by APC. The companies (suppliers) that APC distribute on behalf of may be small in size or operate in niche markets which negates the need for a UK distribution & admin base. In other words, APC provides a number of value-added functions that not only includes the supplier with an end market to sell into, but also the addition of value added services such as the modification or design-in of the products supplied to meet the end customers requirements. It may also include the provision of an admin, importation & logistic function to assist the supplier e.g. the UK defence & aerospace market is highly regulated & requires accreditation and certification which APC can progress & gain on behalf of the supplier. Worth mentioning that the company may be a beneficiary of BREXIT as the complexities of dealing with the UK end user market of the UK may be more problematic for ROW companies without a UK base or specialised distributor like APC In the 2016 Annual Report the company indicated exclusive distribution agreements with over 60 manufacturers of electronic components and systems for the UK market. This included components for flight critical systems, power distribution in civil aircraft, high voltage components for power supplies, custom filters for harsh environments, satellites and space exploration, transportation and hybrid vehicles and extreme temperature oil and gas components. The following presentation from April 2017 provides a summary of the APC proposition & their addressable markets in p4 & p5. Where is growth coming from? As mentioned APC are an established company with c.£18m turnover per annum via a number of longstanding suppliers and end customers. With the cost base realigned (£2m costs removed on annualised basis) the company is now profitable & indicated during its release of H1 2017 results that March 2017 bookings stood at £2.1m and hopefully operational gearing should now be emerging. The first signs of the growth strategy emerged in the RSN Reach released last week with the appointment of a Business Development Director & securing 3 new distribution agreements in RF & Microwave and also High Reliability products. Worth mentioning some other snippets, such as their launch of APC Smartwave last year to provide Internet of Things (IoT) products. APC also highlighted via their web site the growing requirement of companies to meet MiFID II legislation by the Jan 2018 deadline & the increasing focus on subsidiary APC Time's relationship with supplier Meinberg to meet the requirements. Forthcoming trading update? I believe that the company may issue a trading statement in the near future in respect of the 2017 year end which occurred last week (31.08.2017). Any update will hopefully confirm the progress highlighted in the interims, indicating the business both stable & profitable, while confirming the growth drivers in 2017/18. If APC can drive growth, maintain gross margins of c.35% & generate cash, then with operational gearing kicking in I don't believe it fanciful to think that APC could generate profits of £1m+ EBIT moving forward. Such performance would bring the company into sharper investor focus, although it looks as if a number of focused investors have already taken positions. Well, I hope that proves to be the case!!! Disclosure I have a modest holding. Please DYOR Kind regards, GHF |
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