Thanks for the Cavendish info bones.
In terms of ZYT, at least we have seen director buying in ARC which you would hope would be a differentiating factor. In recent years at ZYT all I can see is directors cashing in options at multiples of today's price. |
Cavendish broker note today reiterates their 180p target citing in-line interims and unmodelled pipeline of prospects, plus mentioning cash balance of £7.2M and attractive dividend yield of 5.1% at today’s 80p price. |
Agreed gleach23, I think the cash balance is such that the management “should be” compelled to be proactive with it and, perhaps, shed their “shy, conservative” cloak. I don’t want the management to rest on their comfortable laurels. As you say, a special dividend would not go amiss.
They should remember Zytronic, heaps of cash (£14M at one stage) with nowhere to go. Took them years to do a silly buyback (to conveniently help a couple of dormant institutions unload) but they ultimately neglected the business and failed to alter course. |
Thanks bones, yes I had caught up on the posts.
You have to suspect they may not quite make £1m adj PBT but with an EV of around £4m it should be close to an ex-cash PE of around 4 (as you say) with a 5% yield and the potential for a special dividend.
They mention the first half saw the return to a normal billing cycle for a large customer which presumably boosted the H1 cash number but if the H2 cash comes in at around the same £7m level then it does make you wonder what they might do with it in the absence of an acquisition. |
 gleach23, I didn’t really expect the drop in ebitda that was reported. For that reason along with the cautious comments, I sold on the day of the results, as posted at the time. I got an average of 94p over several sales. Loss of 15% overall.
This was simply a cautious move on my part. Then, it dropped a fair old bit further to 78p at which point I reviewed the interims and realised that the cash balance, which should not drop lower until the final dividend is paid in late 2025, was now around 70% of the market cap. With perhaps close to a £1M annual profit expected, that suggested an ex-cash PE ratio of barely 4, maybe less. So I bought the lot back as posted on 7th March. So, by a mix of judgement and maybe some luck, I “made” around 13p a share on the sale and repurchase. That recovered my previous loss so I will now hold for the finals later in 2025 and see what they say then.
I don’t claim any credit here. I sold on a conservative basis and re-bought on an opportunistic one. It doesn’t always work out but I hope ARC does! |
I had just gone away when results were announced and have had to take the hit for now.
I understand the comments about a change in tone regarding some downsizing by larger customers, and growth is proving hard to establish, but the other headlines were a 25% increase in cash (vs H1 2023) and a reiteration with confidence in full year expectations. Surely that hardly warrants a near 30% fall?
A large seller still appears to remain despite the high volume on the drop since results as one can currently buy in decent volume at 80p. I picked some more up today and will sit it out (made easier by the 5% divi).
A special dividend announcement with FY results would be nice. |
Bought some of these bad boys, dudes |
Decided to reinvest here this week with cash approaching 70% of market cap. Ex-cash PE ratio is, what, 3 or 4? Hard to see the downside on that basis. |
See https://www.arcontech.com/about-us/rule-26/ for % not in public hands and major shareholders |
Err Nigel Ridge has had most of those shares (508k) since it was an EIS investment. He has just added about 1% though |
Over 40% of shares not in public hands. Won't take much now for this to bounce back |
nigel ridge takes a 4% stake - veterean black rock fund manager |
Looking more like a takeover target here. Very cheap here and looks to be an over-reaction from the market, expecting this to correct over the coming weeks as the cash balance of the company continues to improve |
Cash of 54p per share ..looks like a takeover target at the current price .
And I'd be surprised if the CEO didnt top up his holding on any further price weakness too... |
As stated in others’ posts, I was also disappointed by the change in tone from the final results comments. Therefore, I reluctantly sold all my holding yesterday (at a 15% loss sadly). Yes, it might eventually have come good but I fear the pace of this growth will have slowed. I did not like the fact that large customers were reining in their spending (which could have an outsized effect on Arcontech’s business) and there seems to be stasis as far as the large cash balance is concerned. Hopefully they will do more with it than Zytronic once failed to do when they had millions burning a hole yet let their business die off rather than get proactive. |
This was by far my biggest holding and has incurred a big loss. I followed the Director in buying shares only to get stung. Very hard! I've trimmed my holding as I the comment on growth being tempered means the shares are good value regarding cash and safety but with no growth, the markets don't like them. AI will destroy many a company out there. Served me well over the years and still a large holding (for me anyway) but trimmed nonetheless. Suppose i'll have to wait until the Finals in September as news flow from this company is rarer than a chicken laying a golden egg. |
I suppose the reason for the fall is
Our expected growth is likely to be tempered by some downsizing at larger customers as technology and markets change
That coupled with NI increase and extended lead times means growth would have to be significant |
Market cap £12.37m Cash £7m |
Zero chance of M&A. Matthew is CEO but doesn’t have experience of M&A and has no one to integrate any acquisitions. |
They have always been cautious. Any benefit of acquisitions not in the price. |
A bit of a disappointment regarding the interims this morning. Cash hardly grew from the end of June with increased staffing costs. Saying that, my largest holding will remain as such as longer term this should deliver something. EPS for the year at about 8p gives a rough P/E ratio of about 7 or 8 taking into consideration the cash balance at about 35p per share. We need to see growth though. I followed the director in buying shares around the £1.20 mark so there is a long way to go to recover my losses. Hopefully they won't disappoint in September. Plus the dividend should be 4p giving a return of 4% at current prices. Couldn't get my head around the Lease liability jump in costs especially the interest aspect which seems to have caused the profits to be below last years. Saying that, they are cash rich and still forecast to earn £1M profit for the year. Comments welcome.... |
Thanks gleach23. Mine was the 4k. A small roundup really. |
I also added again today bones - I bought 2.5k then saw the 15k purchase so bought another 5k. This was after I had reminded myself that the CEO bought 60k at 119p in November. More demand evident on the Bid quote late on today and not much supply on the Offer (although we know this can change). |
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