Aeorema Communications Share Discussion Threads

[ramas] 24/11/2015 17:37

This is getting silly ... If you are going to invest you need to do your research and if the cost of a train ticket is a roadblock it's probably best to stick to a tracker fund. There are plenty of shareholder Luvvy stocks out there and I question most of them on their intentions let alone the distractions of their core business.

[clocktower] 24/11/2015 17:04

Many stakeholders cannot attend AGMs due to the distance and cost of travel but if they were to webcast them one could get the measure of the outfits to some extent and that applies to all listed companies.Maybe they are camera shy.

[ramas] 24/11/2015 16:39

Looking at the wrong shells ... Anyway we agree to disagree, I'm not intending to talk much about AEO the business is running well and I am here for the duration and will add the odd penny or two if opportunity presents. Definitely recommend to attend future agms for PI shareholders for all aims as you can better gauge what the business and importantly the directors are about.

[old thumper] 24/11/2015 16:23

With the savings of SG salary and website costs I'd like to see £150k profit H1 and aiming for circa £550k profit and 6p eps for the year. This should allow the 4p dividend.

[susiebe] 24/11/2015 16:04

ramas many thanks!

[clocktower] 24/11/2015 15:58

Thank you ramas but I do not agree with your "shell value" these days, there are plenty of those out there, in fact I think they can bring more pain than gain to the buyer as they come with baggage in most cases.

Target remains 20p as H1 may not come up to full expectations imo.

[themattbarnes] 24/11/2015 15:49

thanks Ramas.

figured that was where a shell valuation came from. Agree its nothing they will need to worry about here, was just curious as to estimated shell company values.

Thanks again.

[ramas] 24/11/2015 15:46

If you want to list on aim then it's going to cost you that amount maybe more once everything's added up ... So it's better to get an established business and save the hassle and focus on your business. Pure option value here and worth knowing about only.

[michaelmouse] 24/11/2015 15:32

ramas - Thanks for taking the time to share your thoughts from the meeting. Sounds encouraging, and just the type of stock I like.

[themattbarnes] 24/11/2015 15:20

ps, Ramas. I hear a lot about "shell companies" etc and value of shells that have assets, but what makes a shell worth anything with assets striped out?

Is it just the fact it is a public company and that affords it some base value?

[themattbarnes] 24/11/2015 15:11

Good write up Ramas. Thank you for taking the time to post it.

[ramas] 24/11/2015 14:09

Here is my Aeorema AGM review. These are my observations from the meeting which i unashamedly produce in non-wordsmith bullet form and in no particular order of priority ....

1/ very low turnout of PI’s which was a shame maybe next year we will have a few more. All resolutions were duly passed – no surprises there – on to the Q&A
2/ I presented an enterprise valuation of 13p once you deduct non AEO specific assets of 20p (post dividend cash, assumed flat H1 £100k profit and a shell valuation of £550k). this represents a p/e of 3.71 and i suggested could be due to the old chestnut of earnings visibility. Some discussion followed and i suggested there can be room for improvement and still respect some very good reasons for not shouting about everything ....there was consensus to this view and there will be some thought given to this topic
3/ IMO fair value today should be p/e of 10 plus assets or 58p. The benefit of attending the AGM is that i am more relaxed about a re-valuation timetable. The team will keep doing what it is doing, win in the market place, grow organically maybe with the occasional blip, unafraid to try new things within a financially astute set of controls. If it takes another 2 years of profits , increasing dividends for the market to take note then so be it – those with smaller holdings will likely be able to leverage up and make 10% into 30% with the annual ex dividend trading window which has been proven for 2 years now
4/ Why not go private ? The company has no intention of going this path and indeed there is a recognition of its intangible ‘shell’ value and the benefits of attracting great talent and be able to reward/bonus via options and remain aligned with shareholder interests – remember Mike Hale takes no remuneration / nominal amount. Dilution to date has been very reasonable but to expect none in a talent driven business is non sensical (my view)
5/ OT raised the question of AEO buying its shares in the market – because of directors significant holdings this is not a viable route without risking a full privatisation – see earlier point why this wont happen. So we will continue to suffer drip feeding sells – no directors have been selling .... period. There lies the opportunity to buy a big yielder at excellent value – imo dyor of course
6/ I presented a rough and ready competitor analysis and some discussion followed – i may post my analysis in due course . This is no doubt a competitive market place but the business AND budgets are out there as big companies look to accelerate AND reward executive performance. AEO have a USP which i wont call out - while obvious it is also sensitive information best kept out of competitors ears IMO
7/ The new website is making a difference
8/ current trading – no comment Sad smile but i am assuming a flat H1 to be conservative ie £100k profit
9/ The new office is great and encourages collaboration - even better the costs were very reasonable – expensed over 4 years negligible impact – see the accounts.

Over the 3+ years i have been invested in AEO i have witnessed the transformation and got to better understand their reason for being. The founding and new directors are self actualised and doing what they love, its infectious and for me almost guarantees organic growth over multi year horizon , distributing the rewards to shareholders and staff alike. Aeorema to me is a great blend of financial astuteness , passion, talent fully aligned to shareholders interests. We all agreed in the room the market might still take a little longer to ‘get it’ - in the meantime its an unlikely AIM yielder with a well respected broker / Nomad

In conclusion to me AEO is undervalued maybe its the earnings visibility question, maybe its liquidity but you know i am genuinely i’m cool it. My portfolio is balanced and i can still buy more when Mr Market provides good value – as part of a portfolio its a 10% dividend banker i would say. I don’t see any reason why next years dividend floor wont increase to 4p. The trend seems to be keep £1.5M buffer and distribute all profits each year as dividends no reason why this wont continue. Acquisitions dont make sense in a talent focussed industry and will be the best way to destroy value, Organic is the watchword, one day Aeorema may well be bought out in which case it wont be on a pe of 4 !! this stock is illiquid so its not one to put cash you might need quickly !!

And finally its all my opinion, absolutely not a recommendation and you should do you own research – Enjoy aim but tread carefully

[old thumper] 24/11/2015 09:07

The shares have grown less than 10% over the years (to my memory) but if that's a worry for you perhaps do a little research and let us know.

But to me any increase in the share base had little affect over the years. In fact the main issue was for Steve Quah's 300,000 which brought another director onto the shareholders listing, a positive to my mind!

[clocktower] 24/11/2015 08:28

Agreed OT. :-) However, how many shares were in issue 5 years ago and how many now with how many options outstanding in each case?

[old thumper] 24/11/2015 08:23

CT, The LSE website show the 5 year figures, not many AIM companies can match that.

hXXp://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B4QHH456GBGBXAIMI.html

As for H1, all the staff were all busy, whilst the BoD were keeping it close to their chests I'm happy with the feel of the company. But the money comes more in the second half and ramas is better placed to explain this stuff than me.

[clocktower] 24/11/2015 07:57

Thanks OT, Is it 5 years of revenue growth and 1 year of declining profits already.

Did you get any inclination of any projects that would have contributed to growth in profits in H1?

Make sure your not caught with your pants down OT but thanks again and I look forward to hearing ramas views.

[old thumper] 24/11/2015 04:06

CT, The AGM shows a dynamic, focused and positive company, blimey I'm becoming a ad person.

But no, now the company has cleared the decks, SG etc, the company is focused on organic growth, 5 years of revenue increases I see no reason this won't be the sixth.

The refurb was well spent as the office seems much bigger, brighter and airy.

The company are keen to listen to any investors points, perhaps you should raise some of your issues with them directly.

Here's to another year of growth, revenue, dividend and profits (this time)

One day the markets will spot AEO with their pants down, can tire kickers take that chance?

[clocktower] 23/11/2015 16:15

Thanks ramas.

[ramas] 23/11/2015 15:56

I'll post a summary later back to back meetings rest of today

[clocktower] 23/11/2015 14:10

Hopefully someone will post a review of the AGM.

[clocktower] 19/11/2015 08:08

It is done and is available OT but few boards have the balls to do it.

Now we know where RTI used the money:

[old thumper] 19/11/2015 04:50

CT, The webcast idea has got me thinking. As if they can do it for themselves there's a business out there for smaller companies desperate for PR trying to get new investors / money on board.

A half day filming getting any AIM CEO's gospel word out must be worth £50k'ish

Mind you I could knock up something on Betamax.

[clocktower] 18/11/2015 13:28

We know one of your talents is picking good stocks and another is making money ramas.:-)

OT, If only they would webcast the AGM, with a question time that can be instantly seen on screen, so we can all get an idea of the quality and honesty of the BOD. they like to talk tech but not use it so their stakeholders can put them through the mill imo.

RTI did not just sell their stake at around 33p to put it to better use, as it seems they are still sitting on it.

[ramas] 18/11/2015 11:24

Lol OT ..... I do think the website has levelled the playing field to AEO competitors in terms of cyber presence . I did an exercise looking through the eyes of the customer and AEO would always be invited to pitch from that perspective, then it's just about winning your fair share. What you can also see in the recent vid is the passion , wouldn't mind working there myself if only I had some talent.

[old thumper] 18/11/2015 09:48

CT, I see the video is aimed at prospective new clients showing how AEO is a friendly, fun and approachable company. I'd say the time was well spent.

Perhaps a Video of the AGM would show to new investors how smart the existing investors are :-)