Volex Share Discussion Threads

[z1co] 19/4/2024 07:45

Volex, which makes power cords and charging plugs for electric cars, said annual sales were lifted by contributions from a cable harness maker it bought last June. It charged up 5.2 per cent, or 15p, to 303p.

[z1co] 18/4/2024 20:53

Prior to today's trading update analysts were expecting it to generate earnings per share of 36.5 cents for the year ending 31 March 2025. At today’s share price and exchange rate, that equates to a forward-looking P/E ratio of just 10.5.

That forward P/E will be even less after the expected upgrades.

[z1co] 18/4/2024 18:15

Market & Company News

Volex rises as revenue and profit set to exceed market expectations

18 April 2024, 11:04Source - Alliance News

Volex PLC shares rose on Thursday, after it said it expects its annual performance to be ahead of market expectations.

Volex is a Basingstoke, England-based specialist integrated manufacturer of critical power and data transmission products. Its shares were up 6.0% to 305.39 pence each in London on Thursday morning.

For the financial year ended March 31, revenue is now expected to be at least $900 million, an increase of 25% over $722.8 million the prior year.

Further, underlying operating profit is now expected to be ‘slightly̵7; ahead of analyst expectations, citing $84.2 million. In financial 2023, Volex reported an underlying operating profit of $67.3 million.

‘This performance underscores Volex’s ability to secure additional customer commitments and deliver new projects, whilst maintaining robust financial and operational discipline,’ Volex said.

It added that operating profit margins improved in the second half of the year. Volex said that this was partly a result of product mix, including the contribution of Off-Highway sales, offset by accelerating investment in future strategic growth initiatives to support increased, long-term customer demand.

Executive Chair Nat Rothschild said: ‘Our ability to continue to deliver strong growth in challenging markets is a testament to the quality of the team, our strategy and our ability to respond to the needs of our customers. We enter the new financial year with confidence and optimism thanks to the strong momentum generated in the current financial year, improving market conditions in the Electric Vehicles and Consumer Electricals sectors, as well as an abundance of opportunities in the new Off-Highway sector.’

Volex is scheduled to publish its annual results in late June.

[ali47fish] 18/4/2024 17:39

lombard odier has added to holding

[johndoe23] 18/4/2024 15:55

Downing still selling?

[z1co] 18/4/2024 15:04

$billion revenue for the current year and profits of over $100m.

Debt is not the reason , most likely background seller/s hence the muted reaction.Have bought more this afternoon.

Far too cheap.

[craftyspeculator] 18/4/2024 14:50

Honestly vikeshm1 - leverage of 1.3 is very manageable. Most companies can sustain leverage of up to 2.5x comfortably, and often up to 3.5x for cash generative companies. If you earn £100k a year then you can probably repay a £300k mortgage...it's the same principle. Volex earn £100k a year and have a £130k mortgage to clear - no stress

[ymaheru] 18/4/2024 14:45

@vikeshm1, they say cash flow was very strong, so I’d suspect over $40m off that $173m figure.

Volex’s calculation for net debt includes inventories etc (I think). I’m really only concerned about cash and that appears to have done very well, so if I’m reading it right, it’s very good news.

[johndoe23] 18/4/2024 14:19

What's wrong with that leverage?? More than comfortable.

[vikeshm1] 18/4/2024 14:15

guys the reason shares are in a downtrend and disapponting response today is the massive debt which
no 1 has mentioned including the motley fool which just wants to sell you tips

Debt over 173m dollars at half yr results & over 143m exc leases and this statement
tells us it won't come down much from 1.3 to 1.1 "leverage" - therefore the current price i think is
2 high and will keep declining till debt reduces.

i would be interested buyer if debt went under 120m

[sundance13] 18/4/2024 14:05

Depends how bad but minimum 15-20% fall probably.

[johndoe23] 18/4/2024 14:02

Disappointing reaction. Wonder what a profit warning would have done!!

[eagle eye] 18/4/2024 11:54

Well done to Nat and everyone at Volex.
Great trading update and excellent outlook too.
I would expect the shares to tick up over the next few weeks as investors gradually wake up and digest the news.

[z1co] 18/4/2024 09:54

The second half of the year saw continuing increases in organic revenue, a result of leading positions in attractive, diversified end-markets that possess structural growth characteristics. Exposure to a number of growth sectors, provides the Board with confidence in the Group's ability to make strategic progress even in volatile market conditions. The acquisition of Murat Ticaret also delivered significant incremental revenue, in a largely new end-market.

[blusteradjuster] 18/4/2024 09:49

Beat me to it, zho.

It would be in people's best interests to read the whole update AND understand it.

zho 18 Apr '24 - 09:05 - 6934 of 6937

[74tom] 18/4/2024 09:28

I mean it's very simple really, a business with 10% operating margins can beat top line by $40m and *only* add $4m to the bottom line...

Looks at the past results, underlying operating margins are as follows;

2019 $21.6m on $372.1m revenue = 5.8%
2020 $31.6m on $391.4m revenue = 8%
2021 $42.9 on $443.3m revenue = 9.7%
2022 $56.2m on $614.6m revenue = 9.1%
2023 $67.3m on $722.8m revenue = 9.3%

So if 2024 was $88.4 on revenue of say $905m, it would imply margins of 9.8% and be entirely consistent with the 5 year trend...

[z1co] 18/4/2024 09:06

74tom

That post is suggesting the poor chap was and is still SHORT

[pcok] 18/4/2024 09:06

Reason the profit not such a big increase clearly explained by the stated investment to prepare for future increases in demand. Continuing to lay the foundations for a successful and growing company into the future shows a well run outfit planning for bigger things. This will rerate.

[zho] 18/4/2024 09:05

>>the problem is that the bigger profit beat was only a small ebit beat>>

Perhaps because "In response to increasing customer demand, the Group invested in the further expansion of its global manufacturing base" which I took to mean that Operating Profit would have been higher without additional investment to create "additional capacity to facilitate growth"

[74tom] 18/4/2024 09:03

I take it you haven't done the maths on that Aublune...

First half revenue was $397.5m, on which they reported an underlying operating profit of $37.4m, so margin was 9.41%

At $900m on the nose for full year (it'll be higher), H2 revenue = $502.5m, and if they are slightly ahead of the $84.2m consensus (I'd take that to mean ~5%), then full year underlying operating profit would be $88.4m

That would mean H2 delivered $51.1m on $502.5m revenue at a margin of 10.15%

They even say in the RNS "Operating profit margins improved in the second half of the year"

So no, you need to do more work before coming to incorrect conclusions!

[z1co] 18/4/2024 09:02

Never the less consensus underlying operating profit of $84.2m will also be slightly ahead of expectations.

The market likes company's that beat profits in the current environment.

Share price will rise strongly after the slight pull back at the opening.

Brokers upgrades will also help in the uplift.

[ali47fish] 18/4/2024 08:59

so aublune what is your conclusion

[aublune] 18/4/2024 08:53

the problem is that the bigger profit beat was only a small ebit beat

beat by revenues b $40m+ and maybe on ebit by like $1-2m

ordinarily you would expect operating leverage and a BIGGER percent profit beat on ebit not way smaller

Margin pressure

This is why I dont think it will kick higher than 305p by the close and may drift

read between the narrative spiel from the company

good performance but thats a lot of extra revenue lifting for only a slight profit beat. imagine if they hadnt beaten on revenue