Arcontech Share Discussion Threads

[red army] 11/11/2024 19:34

Yes - I like this one as making money in a growth sector whilst having money in the bank a endorsed by directors buying. What is there not to like?

[bones] 11/11/2024 17:05

Good finish 121-125 with a couple of weak hands achieving 122+ selling 5k each.

The director purchase adding 0.5% of the company to a long held 7% is a decent signal. £71k is a fair whack to pay for a small cap director. He didn’t have to do it! A good sign of the business health and suggests the bright outlook flagged in the last update has not changed.

[gleach23] 11/11/2024 12:26

I couldn't get a quote either spig so I put an order in for 1,500 shares which got filled. Might be worth trying that next time?

Incidentally, it's good to see the situation remain the same with the share price having ticked up to 114-120. Can't currently get a quote to buy 150 shares yet good demand evident on the Bid (can sell up to 11k just under 117). No doubt helped by the 10k buy @ 120 when the share price was 112-118.

[spig69] 11/11/2024 11:53

Struggled to buy any this morning. Couldn't even get a quote for 1167 shares so I settled for 667. With a recent Director purchase of £71K at £1.16 per share, another quality share I am happy to hold for the long term.

[gleach23] 11/11/2024 08:29

Looks like it was the CEO and his wife buying last week then - 60k at an average of 119p to take his holding to 7.44%. Better than a tip :)

I topped up last week on noticing not many shares available to buy and had a few more this morning for the same reason (along with the news of the CEO purchase).

[bones] 07/11/2024 14:10

More often than not, a mystery rise with a flurry of small buyers is the result of a tip. I don’t have access to Investors Chronicle but Simon Thompson has been a fan of ARC for a while. Maybe he said something this week? I’ve checked Shares mag (via AJ Bell) and there a no mention I can see in today’s issue. I’m not complaining!

[spig69] 07/11/2024 13:22

Does anyone know of the reason for the rise today? My best performing share by far this year. After owning some complete dogs this year, this has been a really good investment and I can still see considerable upside. News is rare with this company. They just seem to get on with it

[spig69] 08/10/2024 14:14

I also think the future is rosy and am happy to continue holding for the longer term as the share price, with a bit of good news, should well exceed the recent highs achieved. Throw in the progressive dividend policy and all that cash on hand, this is one of my more exciting and profitable shares to hold. I will re-invest my dividends early next month regardless of the price.

[bones] 08/10/2024 12:46

I’m now unlikely to make the AGM tomorrow.

As for the share action, it is very ARC to see a determined rise be followed by a gradual drift down and that seems to have flushed out a few sellers who didn’t want to sell when the price was much higher even though nothing has changed. Perhaps some people are playing safe ahead of various rumours about the 30/10 govt budget.

I’m very positive here. Reading the board’s notes from the last RNS, it is a volley of positivity about the company’s improved prospects and surprisingly upbeat given their conservative nature to pronouncements!

I was particularly taken by the talk of soon having a full package to offer clients in competition with the other data suppliers rather than being a provider of add-ons. That has much potential especially as they noted how clients are using cost as a sufficient reason to switch despite the short term inconveniences.

[bones] 17/9/2024 19:10

AGM is on 9th October; I might try to make it.

[bones] 10/9/2024 18:10

The cash balance is big now and suggests they should do something with it. They often talk of looking at acquisitions but usually say nothing fits their requirements. I’m not sure how serious they really are as it rarely happens. So, how about a special dividend or buy back? Maybe if the next year produces the growth they hope will materialise?

I recall ZYT which used to have a humongous cash accumulation and they never used it well. Earned low interest and their business matured and withered. That was a case of an established “old” management not having a dynamic approach to business or reacting when things went sour.

I do think the cash in ARC should be put to better use soon. 5% interest doesn’t rock many boats. I hope the management are not too fusty and accustomed to their comfy surroundings!

[bones] 10/9/2024 17:56

Sounds like a plan gleach! What really prompted the post was how similar this stock is to TRD. Embedded management, no fund raises, steady “boring” business model, rock solid integrity, specific markets, illiquid share that’s rarely publicised.

In late 2023, the chairman of TRD spoke glowingly of prospects after a long period of flat business. There was barely an RNS raised after that yet the share price silently went from 100p area to 300p (with a few ups and downs) and on unspectacular volume.

The minute the ARC results were out last week, I could picture a similar scenario and piled in. So far so good but I think early days. I can see 200p easily and maybe 300p on a follow up positive trading update.

[gleach23] 10/9/2024 16:50

Thanks bones - a quality post and food for thought.

I would hope for a clamber back over 150p in the not too distant and over 200p if the next update continues current momentum.

[bones] 10/9/2024 16:40

A little comparison exercise.

The final results in the 2019 year were the last reasonably upbeat ones before the twin hammer of Brexit and Covid hit in early 2020. Since then, the business has struggled to gain traction and chugged along fitfully.

2024’s final results seemed to snap the spell with both an increase in numbers and a much improved outlook.

To compare:

Final results 2019 (last ones before Covid downturn):

Financial Highlights:

Revenue: £ 2,966,788
Profit before tax: £ 900,357 (excluding accruals adjustment)
Cash: £ 4,063,484
Diluted EPS: 7.18p
Final dividend per share: 2.00p

Final results 2024 (first ones indicating a rosier outlook since Covid downturn):

Financial Highlights:
 
Revenue: £ 2,910,232
Profit before tax: £ 1,098,959 (no accruals adjustment in year)
Cash: £ 7,160,177
Diluted EPS: 7.98p
Final dividend per share: 3.75p

Similar revenues and EPS numbers (shares in issue static at around 13.3M). Core profit slightly higher in 2024 (excluding adjustment for accruals in 2019) but also includes higher interest receipts.

Cash balance is 76% higher than 2019 and the final dividend is 87% higher than 2019.

Overall then, the broad picture looks better now than in 2019 with much stronger cash and a far higher dividend yield. In addition, the directors’ trading outlook is now more positive than it was in 2019.

Yet, at that time, the share price reached the 230p area some four months after the 2019 results came out having continued to rise after the results. Then came Covid.

It’s taken four years for ARC to resume a growth pattern in its numbers.

Based on the above comparisons, the current share price would seem to have a long way to go.

ARC’s enterprise value is around £10M now (market cap £17M less cash £7M held).
In early 2020 when the share price hit 230p EV was around £26M (market cap £30M less cash £4M held).

Share price now is 128p compared to 230p in early 2020.

With sales and earnings in 2019 and 2024 both very similar and the business model virtually unchanged, it is clear that EV in 2024 is only around 40% of what it was 5 years ago.

Yet, the business prospects are now higher and the dividend yield is also much higher than then. That alone should justify a higher share price than 2019. In fact it is nearly half of it.

So, was it overvalued in 2019? Or have we got a long way to go for the share price to catch up?

Two questions to ponder but it suggests the share price may have a way to go to meet the business prospects recently laid out by the directors. I’m hoping so.

[spwh100] 03/9/2024 13:54

And here's me thinking it's down to my post and stage 2 breakout analysis on stocko. Nothing to do with Paul or ST obviously!

[petewy] 03/9/2024 13:47

Moving up WITH A VENGEANCE...-

[gleach23] 02/9/2024 11:53

Great to see you back bones - agree with your summary

Simon Thompson on the case again today as he seems to be after every update. It's behind a paywall but the headline points out the changing narrative. That can often herald a healthy rerate which I think has been coming.

[bones] 02/9/2024 11:26

I’ve bought back in today, mostly around 106, a few at 109.

Seems a no brainer with upbeat commentary, £7M cash being half its market cap, bottom line profits £1M and rising, plus a handy dividend yield.

[petewy] 02/9/2024 09:04

Yes Gleach very positive.
Recurring revenues represented 99% of total revenues for the period (2023: 100%)

[gleach23] 02/9/2024 07:56

Final results today make for a pleasing read - very much a theme of having ridden out the storm and stars now beginning to align for a good recovery imo.

[gleach23] 23/7/2024 09:07

Very decent buying today. Given where the share price was in March and April I don't see why we shouldn't be back above 110p in the near future after yesterday's update.

Perhaps it will depend on whether the seller who created the apparent overhang is cleared. This buying should assist with that.

[nocton] 22/7/2024 15:49

May I ask how you came to those prices, boadicea? At the current price, ARC is on a p/e of 10.1 according to 'This is Money'. With a 20% forecast uplift in profit that would fall to 8.4. For this sort of share with reasonable growth prospects I should have thought a re-rating to at least a p/e of 12-14 was justified at the very least. So a price range of 114 to 133p would be more appropriate?

[boadicea] 22/7/2024 09:51

Did a quick price calc check on this and came to 84p (pessimistic) to 112p (optimistic) range, so 98p mid range. So I don't see much more to go for currently as the price has headed towards my mid-range this morning. I'll contunue to hold what I have and await developments.

[petewy] 22/7/2024 08:47

Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading announces that for the year ended 30 June 2024 (FY24) turnover is expected to be ahead of market expectations by approximately 4% as result of increased use of product by certain customers, whilst adjusted profit before tax is expected to be ahead by approximately 20%, as a result of the aforementioned increased product usage and certain planned staff costs only being incurred at the end of the financial year (FY24).

Expectations for the current financial year (FY25) remain unchanged.

[gleach23] 25/6/2024 09:09

Nice to see another modest buy of 7,796 shares this morning but the buy/sell limits are unchanged. Can still buy 15,000 shares but not sell 1,500 so it would appear the overhang is still in place.

It would be great to learn of any further progress with the Tier 1 client win last October. They said this at the time -

"A multi-year agreement, with the initial deployment in New York, marks the start of an important relationship with a Tier 1 global institution that should see expansion to Europe and Asia."