Adept Technology Share Discussion Threads

[red ninja] 16/11/2020 13:57

Comment from Downing Strategic Micro IT interims (out early November) :-

AdEPT Technology Group PLC (AdEPT) (7.23% of net assets)
Cost: £3.59m. Value as at 31 August 2020, £2.65m

Adept Technologies is an independent provider of unified communications and managed services for the communications and IT sector.

Update to the investment case

Positive trading update and FY results for year ended 31 March 2020
Revenue increased by 20% to £61.7m
Managed services revenue increased 30% year on year
Managed services accounted for 81% of total revenue and EBITDA
Acquisition integration “Project Fusion” nearing completion
Net indebtedness
Progress against investment case
AdEPT provided an encouraging COVID‐19 trading update and positive FY results to 31 March 2020. Since the beginning of the pandemic, sales volumes have fallen significantly less than management’s predictions, partly attributed to the group’s beneficial public/ private split. While installations were lower, the group was heavily involved in the education sector where it worked on cloud migrations, helped by the Department for Education’s provision of additional funding to assist schools in moving to the cloud to support remote working. Debtors and cash generation was strong through the period, with debtor days falling from 48 to 42 days, and the group repaid an £8 million term loan which it drew down at the beginning of the crisis for liquidity purposes.

Full year results were equally reassuring, with revenue up by 20%, EBITDA up by 9%, and margin increased to 19%, while cash conversion was much improved to 82%. Recurring revenues at 75% were also stable. AdEPT continues to be lowly rated given the quality of the underlying model which combines moderate growth with revenue visibility, high margins, and low capital intensity. We suspect that the biggest turn off for the market is its debt levels, and we are engaging regularly with management over the correct handling of this since it can provide a significant barrier for potential investors who are even more wary of indebtedness in the current climate. The appointment of N+1 Singer as new broker may begin to generate new interest in the shares which offer great value at the current price.

[red ninja] 16/11/2020 13:35

Interim results out tomorrow, they say they have been weathering the storm.

[davidosh] 09/11/2020 00:51

Just to mention that Judith Mackenzie of Downing who are one of the key shareholders in Adept will be interviewed by me on MelloMonday tonight. She will also be one of the panelists on the BASH session.

The Mello Monday event starts at 6pm
The full programme is available on the website. In the MelloBASH... The analysts, fund manager and well known investors on the panel will give their honest verdicts on whether four/five companies are a Buy Avoid Sell or Hold at this current juncture in the markets.



All investors welcome and if you use the code MMV5 you will get a half price ticket. Great investor content and entertainment. We had nearly 400 investors attend last month so these are very popular.

[wanttowin] 30/9/2020 11:33

Certainly reassuring , very positive for the long term.

I suspect this will drift for a while and agree no reason to add, or take a position.

[blusteradjuster] 30/9/2020 10:04

Reassuring update.

Looks like cashflow will be directed at debt-reduction for the foreseeable.

Might get back in on results day although it might not take-off until the resumption of dividends (or rather the intention to pay one next time) so perhaps no rush.

[wanttowin] 10/9/2020 20:29

This has to be the most boring stock in my portfolio, will we ever see any action?

[red ninja] 02/9/2020 11:28

Comment from Downing Strategic Micro Cap IT Aug 2020 Investor Letter :-

hxxps://assets-us-01.kc-usercontent.com/8c961317-6aee-00a7-e4b6-ae38cd847d2d/0a0a04a3-83fa-4caf-ae13-d1644d72e7cc/PE3041_Downing%20Strategic%20Micro-Cap%20Investment%20Trust_Investor%20.pdf

ADEPT TECHNOLOGY PLC – provided a reassuring COVID‐19 trading update which
highlighted that sales order intake had fallen significantly less than management’s assumptions,partly attributed to the beneficial public/ private split which AdEPT maintains. While installations were lower, particularly in on‐site project work, AdEPT was kept busy in the education sector where it worked on cloud migrations, helped by the Department for Education’s provision of additional funding to assist schools in moving to the cloud to support remote working. Finally, debtors and cash generation was strong through the period, with debtor days actually falling
from 48 to 42 days, and the business was able to repay an £8 million term loan which it drew down at the beginning of the corona‐crisis for liquidity purposes.
AdEPT's results for the year to 31 March 2020 were equally reassuring. Revenue increased by 20%, EBITDA increased by 9% and margin increased to 19%, and cash conversion was much improved to 82%. Recurring revenues at 75% were also stable. AdEPT continues to be lowly rated, in our view, given the quality of the underlying model which combines moderate growth with revenue visibility, high margins, and low capital intensity. We suspect that the biggest turn off for the market is the level of debt in the business, and we are engaging regularly with management over the correct handling of this. While the overall quantum and ability to pay isn’t
concerning to us, optically it can provide a significant hurdle for potential investors who are even more wary of indebtedness in the current climate. We hope that the appointment of a new broker can begin to generate new interest in the shares which offer great value at the current price

[crispfin] 18/6/2020 08:18

Thanks Yupawiese. Would be happy to take any challenge as keen to understand any other risks.

[yupawiese2010] 17/6/2020 12:36

Crispfin - Excellent write up I commend you.

[crispfin] 14/6/2020 13:21

I think this is cheap at the moment and I have just got in. Key points for me are:

- Nice high margin recurring revenue stream is very attractive
- Good operating cash generation given low levels of capex - this combined with recurring revenue is a winner
- Fishwick's have a large stake and Ian's recent purchase is a big vote of confidence for me
- Big M&A opportunity in my opinion

Risks though are pretty clear:
- That debt pile needs managing. Its fine at current ratio to earnings but if it gets any higher I'd probably bail
- Could be a risk of more austerity / government spending cuts given the COVID debt so potential risk given Adept's increasing concentration on public sector
- The BGF convertible bond is potentially worth 7% of the outstanding common shares so that needs to be watched as well depending on what things look like when they convert it from a dilution point of view

I've done a full write up on Adept here - hxxp://crispfinance.com/idea-adept-technology-lon-adt/

I'm a buyer and long term holder at these valuation levels though

[spacedust] 09/6/2020 08:13

Yup this share goes up under the radar with not much interest. Before you know it the price will be 320p

[meenashah] 08/6/2020 14:24

PRICE CREEPING UP SLOWLY

[steve3sandal] 06/6/2020 14:01

I’d been in here a while but gave up waiting for the share price to get back to 2017 levels. Not generating enough cash for me and I think passed on the latest dividend. Good luck....they love to quote EDITDA but it’s not the same.

[spacedust] 06/6/2020 10:41

Yes a lot is happening

Director bought shares at 219p

Pandemic business increase etc

Pay8ng dividend

[meenashah] 05/6/2020 15:53

hello. anyone know if anything happening in Adept? lot of activity last couple of days

[spacedust] 05/6/2020 11:30

I love this share. Goes up slowly and boringly under the radar. Couple of weeks later you see your investment has gone up 30% to 50%.

Gradual sustained rise and no herds

[inthemix] 04/6/2020 18:11

It will no doubt, short term too.

[spacedust] 04/6/2020 16:24

Feels like this wants to get to 300p

[spacedust] 04/6/2020 09:47

I'm in. Had these years ago at 40p only to sell at 44p.....and regretted ever since

[inthemix] 04/6/2020 09:28

Good choice VV.

[value viper] 02/6/2020 09:06

Yep me too