Fd Technologies Public Share Discussion Threads

[moorsie2] 24/6/2016 10:45

Good buying opportunity - fundamentals are the same for this firm

Also could easily relocate 5 miles south into Euro land if in the medium term such a scenario would be better for business

[flybyknight] 24/6/2016 09:03

Share price not doing well on this news.

I wonder how many of the contracts are paid in usd.

Good time to buy?

[moorsie2] 03/6/2016 16:57

120K shares sold today at 20.00

The last major shares disposed off were

376,000 shares at 1520 - 1525 price on circa 6th April
273,000 shares at 1586-1588.5 price mid April

Will be interesting to see if this is the end of this disposal..

This will be the reason for the retreat from 21.50 to 20.00

[moorsie2] 03/6/2016 07:51

Wexboy - good luck with your investment analysis and strategies.

You have been regularly well off not just on FDP but on a number of other shares you have "assessed". If you were using real money to back up your assessments over the last 5 years you would have lost many many fortunes.

I always questioned your competency but no one can be so wrong all the time so I really do question now your motives and ethics.....

[wexboy] 02/6/2016 16:23

2016 – The Great Irish Share Valuation Project (Part II):

Company: First Derivatives (FDP:LN)

Last TGISVP Post: Here

Market Cap: GBP 494 Million

Price: GBP 2,038p

My last write-up was bang in the middle of a sickening price reversal. While FDP got nearly sliced in half at the time, my price target’s been massively adrift ever since. Clearly, I was wrong to speculate FDP’s consulting business* might eventually grind to a halt – as banks continue to retrench, we’re actually seeing an increasing reliance on IT outsourcing, while reduced head-count & market evolution demanded ever greater technology capacity & automation. [*Let’s not forget consulting (64% of revenue) remains FDP’s primary business, and its margins are far less scale-able than software]. And revenue’s continued to forge ahead, at an average 28% pa in the last three years, assisted by FDP’s serial acquisition strategy (three new acquisitions & a consolidation of Kx Systems in the last 18 months, or so). Earnings growth trailed though, as FDP essentially bought revenue/technology (rather than profits…with new Big Data & IoT opportunities also being touted) & the share count’s been diluted almost 25% in the last couple of years. [Even on a revenue basis, those acquisitions look damn expensive – averaging over 7 times sales, vs. a 4.2 P/S multiple for FDP]. But FY-2016 was clearly a real gang-busters year, boasting 41% revenue & 33% EPS growth.

However, we’re still seeing a huge disconnect between EBITDA & operating free cash flow margins (Op FCF: Operating cash flow, less net PPE/intangible expenditure). But presuming software is the ultimate driver of the business, EBITDA will become increasingly relevant: A decent compromise for now is to use an adjusted margin, averaging the latest 19.9% EBITDA margin & Op FCF margin of 7.2% (noting a prior year margin of just 2.6%) – a 13.6% adjusted margin deserves a 1.33 Price/Sales ratio. And noting FDP’s financial strength (with net debt of just £15 million), we can adjust for (surplus) cash & also add a debt adjustment. [Based on this adjusted margin, I calculate another £23 million in debt (at an assumed 5% rate, for acquisitions etc.) would still limit finance expense to 15% of adjusted margin – as usual, let’s apply a 50% haircut, just to be conservative]. Of course, we also need to value FDP as a growth stock: While earnings growth has accelerated to 33%, we should still recognise the huge/ongoing disconnect vs. cash flow (& reported earnings, which are now about 40% lower than adjusted diluted earnings) – limiting ourselves to a 20.0 Price/Earnings ratio, based on adjusted diluted EPS, seems only prudent (or maybe even generous):

(GBP 0.517 Adj Dil EPS * 20.0 P/E + (117 M Rev * 1.33 P/S + 15.1 M Cash + 23.1 M Debt Adjustment * 50%) / 24.2 M Shares) / 2 = GBP 893p

Again, First Derivatives looks massively over-valued. Which reflects the fact it’s one of those stocks where investors will inevitably have a totally binary positive/negative perspective, depending on which figures & accounting statement(s) they focus on – not unusual for a serial acquirer. As long as revenue (& earnings momentum) is maintained, growth investors will ignore anaemic cash flow, potentially fudged accounting, dilution, any potential increases in leverage, and keep buying at almost any price…the optimistic outcome is for FDP to eventually grow into its valuation. On the other hand, if something goes horribly wrong here, and/or investors’ expectations are dashed, my new fair value may end up looking pretty generous for what could become a pariah stock…

Price Target: GBP 893p

Upside/(Downside): (56)%

—

For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog.

[moorsie2] 25/5/2016 21:29

Mach100 - I still see value upto 22 based on published information. if there is even better news in the pipeline then more.

I expected it to rest at 2025-2050 so I have been surprised how strong the buying has been

[mach100] 25/5/2016 16:07

You revising up your TP Moorsie? Getting close to 22 quid but still powering ahead!

[moorsie2] 25/5/2016 09:29

hell - what do I know!! buyers now above 2100

[moorsie2] 24/5/2016 14:18

Ask will be above 2000 very soon.

Bid also


can see this settling down around 2025-2050

[johnroger] 24/5/2016 14:04

Some one keen buying in 500 lots at 1980

[moorsie2] 18/5/2016 16:52

Happy to help :)

[mach100] 18/5/2016 16:45

Thanks Moorsie for crunching the numbers. You have called this perfectly so far. Looking at the buys, the last three were at 1925p, the MM's have a cheek putting the bid at below 1900p. Pure manipulation as there have been no sells for that amount for at least an hour. I had meant to sell these at 1650p but hung on partly because of your analysis Moorsie. Definitely more to come and I will reappraise at £20 though your £22 makes sense to me!

[moorsie2] 18/5/2016 16:33

The true valuation is starting to be considered here

Still value upto 22 in my analysis but DYOR..

[moorsie2] 17/5/2016 14:45

It took a few days and even weeks for the most recent profit update notice to filter through to higher share price -

[from8to800] 17/5/2016 09:37

Rather quiet for such good numbers. Odd...

[moorsie2] 17/5/2016 08:54

Quick numbers ....

My valuation of 2200 is based on

24.5 M shares (few more stock rewards issued)
22 per share = circa 550M market cap

50% growth in Ebitda sames as this past year = 34M

550/34 = 16 times Ebitda for a fast growing tech company

on a forward multiple of 10.5 for the year ending Feb 2018.

[moorsie2] 17/5/2016 07:19

who knows how the market will react - but I am very happy with the following

1. Sales and ebitda outperforms consensus

2. Ebitda margin is increasing !!

3. Sales growth is increasing

4. Key account wins in last financial year to have a bigger impact in this year

Financial prudence and good controls still in place.

I could easily justify a valuation of £20-22 per share based on high growth , good margins and emerging technology sector

[mach100] 17/5/2016 07:13

Sparkling results with strength baked in. You almost scripted the results in you last para. £19 today? At least on the ask.

[moorsie2] 17/5/2016 07:07

Beat the consensus on Turnover and EPS!

And a strong start to the year stating results will at least match market expectations - expect another profit update by half way

Good results! Well done FDP

[moorsie2] 16/5/2016 10:18

Anybody's guess how the share price performs tomorrow and the rest of the week.

Usually follow the trend of "buy on speculation and sell on news" - and this trend has been the way approximately 70% of the time with this share. However there have been those minority of times as exceptions...

I would like to think we will beat the sales and EPS consensus tomorrow and have a commentary quite bullish about the start to this year and visibility for the year. This is more important to me and my stockholding than any short term variation in share price as I do not intend to sell..

[mach100] 16/5/2016 10:10

It has come off the boil a little today as I guess people take money off the table after a strong run up. They may regret it slightly tomorrow of course but of course if growth slightly disappoints it may be shrewd. Still feel there is more to be extracted so today's slight drop is probably healthy in the long run.

[moorsie2] 16/5/2016 08:56

Thanks -

So key numbers are

34% Sales growth to 111.5M

EPS at 50.18 up from 38.8 - 12 months ago

[moorsie2] 16/5/2016 08:36

24 hours to annual results - does anyone have the consensus forecasts??