Brady Share Discussion Threads

[slapdash] 25/7/2005 22:24

Could do well just that I think on the basis of probabilities it needs to do well just to justify the current stock price...

Could it double from here.... that would mean a P/E of say 22..... for a business that is highly cyclical (commodities afterall - may all be lovely now but wait until the commodities boom dies down)...

All I'm sayin is that there is a chance of a further profits warning..... it may not happen.... but I'm happy to see if it does then be opportunistic if I like the situation to buy after that....

Companies are always hyped for IPO.... what other factors could go wrong???

If there is no further profits warning you may get a 50-100% max upside but is that enough to justify the risk??? In my view no...

Slap

[cyberian] 25/7/2005 17:54

Not sure one can place this one in an appropriate sector unfortunately, but having been placed last April at 73p I believe the value looks good (to me at least). My medium term view is that the company will be bought out by someone like SAP...in the meantime Fidelity having requested and bought stock at circa 83p appear happy to hold.

[luchan] 25/7/2005 17:24

What's the sector PE as surely even with a non increase in profits the current share price looks worth a punt.(profits of £2m with cash reserves of just over £4m)

luchan.

[slapdash] 25/7/2005 16:07

Valued at 3* Sales which themeselves increased by 100% just before IPO (how convenient)....

Valuation depends on massive operating margin on their products.... i.e. they have to charge customers far more than it cost to make the software... so dominant position is necessary to continue their present success...

For some reason customers have looked at product and delayed purchase....

Draw your own conclusions

Slap

[cyberian] 25/7/2005 11:43

Slap may be proved right....but suggest that one looks at the 7.30 am acquisition announcement on 21st June...disappointment over not executing a large Trinity sale in 1H, but the 600 with its user partner now complete and ready for launch to wider market in 3Q. Also best pipeline of regular business as the statement shows covering 3 component areas. I have looked at competitor mentioned earlier (Microgen) and understand that they are not even remotely close to Brady's product offerings in the field. Anyway, little buying interest at present, but hopefully things will change in event of some 600 sales etc. Good luck..

[slapdash] 25/7/2005 09:23

because its overvalued...

[yam114] 24/7/2005 19:29

New to this stock, why the big fall?

[cyberian] 18/7/2005 09:58

puku.....agree that with such a recent comment from the Chairman that there is every expectation of further excellent trading to come which will reflect in the next set of results. Believe that the client base of Brady is such that they are often restricted in making some announcemnts for competitive reasons, also the terms of the recent acquisition may also have some restriction placed on the company. However, it appears that the latter is of material benefit for the company going forward. So, we are stuck without news at present and/or an up-date...personally not too worried as I expect the next set of figures to attract potential buyers. Seems some patience is required...

[puku] 17/7/2005 12:37

The announcement also said that "sales pipeline remains strong with revenue up 37% on maintenance, 80% on professional services, and 33% on development contracts". It also has cash balances of 4 million. If we are to believe all this then it is Cheap at 66p.

[slapdash] 24/6/2005 00:16

cyberian you could be right...

But sales are often delayed or cancelled...

The cold facts are that either customers delayed or decided not to purchase Brady's products in the first half when the company was expecting them to. Why not? Doesn't reflect very well on the company.

This business is on the model that it can charge a lot of money for its products which explains why market cap is many times sales. Other software businesses - i.e. flomerica - have sales equivilant to market cap.

IPO would of promised lots of things to get a high price.... when or if these don't come through the stock will fall masively as so often happens...

I'm not convinced this is such a large market (Microgen a competitor has commodity products as a small division with tiny sales)...

And I believe management failure is often correlated.... but we will have to see...

Lastly I'm not sure I can buy into any company that buys another for an undisclosed sum (shareholders don't have to know they only own the company)..

Slap

[cyberian] 21/6/2005 23:11

Looks OK to me...the real positive is that the 600 Trinity product will be a must have software package once the ball gets running with one or two large takers. It has only recently been through the Beta testing stage, and was not scheduled for proper release until 3Q. The volume of commodity trading is rampant and is unlikely to fall. Dealers work on relatively low margins despite great volatility...they will need the best software to compete. Personally feel that the contracts will come as one or two major names/customers of Brady will have been seeing and looking at this substantial up-grade...indeed almost certainly the company would have some confidence that the 2H will be as forecast...strong! Time will tell...but feel pretty safe at this level and expect to see the share price well above £1 later this year on contract news. Shares are still quite tightly controlled and as long as Fidelity and other serious Institutions retain their confidence in management the current share price drain will shortly be over, hopefully....may add soon!

[slapdash] 21/6/2005 09:39

yeah it is nice to know as potential or current shareholders how much tehy are actually going to pay!!!!!!!!!!!!!!!!!!!!! It would be nice......

Slap

[simon gordon] 21/6/2005 08:13

A negative sign when they proffer such scanty info. on the financials of the deal - typical!

[slapdash] 21/6/2005 07:36

interesting acquisition.... can't see how they can of bought this business for apparently so little money... (i.e. their cash balances are virtually unchanged...

Secondly, statement says whoops for not making any sales so far.... hmmm

Any thoughts anyone...

[slapdash] 16/6/2005 22:39

KERPEN01 - Pasted your comments on post 36 below:

Cast iron short this. A one trick pony with no assets. Highly vunerable to a me too product launch from a major player. All indications... DOWN. No wonder the Directors are bailing out just as fast as they can.

My comments - does seem like a high market cap and this is a company that will have lumpy revenues for which it only gets money if it manages to sell very high cost, high-margin products. If it can't do that now in the middle of a raging commodities bull market then when will it be able to? Also when the commodities bull market turns down in let us say 5 or 10 years no one will buy any more software and existing subscribers will cut back or be closed.

In my view this will continue going down and may be worth a look at a more realistic rating. The bulls will probably respond by saying that this has a low forward p/e.... but remember that is dependent on signing lots of big clients... otherwise you are just left with a lot of expensive overheads.... let us remember that this is 3.5 times sales in market cap and secondly that the competitor company Microgen with its Cortex system and other products is capitalised at only twice sales..... one of the stocks has recently been pumped up for an IPO... hmmm.....

DYOR

Slap

[kerpen01] 16/6/2005 21:55

Read my post 36 on this thread. And sell now if you were naive enough to buy yet another assetless "Dot Com" company. But always DYOR.

[slapdash] 16/6/2005 10:47

The fall begins... not surprising... no contracts..

Bottom line is that for whatever reason customers haven't bought its product yet..... could be innocent reasons such as delays in purchasing but even here why would customers delay if it is such a good product??????

We could easily have a full year profits warning if targets don't get met...

DYOR...... we shall see how this all pans out but market cap relative to sales does look high and all is dependent on new sales..

Slap

[slapdash] 16/6/2005 10:47

double post.

[slapdash] 15/6/2005 20:53

Interesting article on Trinity if very out of date Feb 1998...

anyone seen anything more recent??

Slap

[slapdash] 15/6/2005 13:21

cyberian - they have to announce contracts that are substantial... they don't necessarily have to give names...

The bottom line here is that they haven't won the deals or they have been delayed... that doesn't bode well.... I may have a look if this goes below 60p...

brokers often come out with lovely forecasts to get the IPO away and often profits warnings follow shortly when it is realised that the forecasts were fantasy... that could happen here and it could still go much much lower...

have a look at the chart of Microgen..

SP isn't really down that much it is only about 11% down on IPO price... so not sure vulnerable to a bid.... anyway I think management have big stakes so that isn't really an issue...

At the end of the day this is an £18m market cap company that keeps on needing to sell high-end software solutions at high margins to justify its market cap.

Slap

[cyberian] 15/6/2005 11:50

From recollection is was CEO and another key executive providing some more liquidity to meet some Institutional demand...infact Fidelity wanted a holding and bought a large number of shares at circa 83p. So the sale was purely an accommodation for them in essence....approval had to be obtained as they were in a lock-in period. Fidelity are still holders apparently.
On the option matter...there are just 250,150 issued and outstanding options and a total of 2,126,000 not issued. Agree it would be nice to see a few more contracts but sense there are problems over "confidentiality" ie. some parties do not wish their name to be disclosed in using Brady's latest software. Guess it is a bit of a problem for the company when their share price is flagging badly but little they can do until they can report/disclose their latest results. My view is that revenues and margins remain favourable, but like others would love to have some confirmation. Finally, if all is going well there must be some concern over the present share price as they may be vulnerable to an approach by some party with higher valued paper. Guess one has to ride-out the general lack of interest at present.

[slapdash] 15/6/2005 11:14

Sky racer - thanks for that.... possible dilution from share options is currently about 10% then.... not excessive by any means........... but execise price was quite low if I remember correctly... which isn't much of an incentive....

one question I was hoping to ask:

Why did the CEO and someone else in the management each sell circa 600,000 shares not so long ago...... not an insubstantial sale.....

and so shortly after floating...

Don't like that one bit!!!!!

Slap

[skyracer] 14/6/2005 15:58

Here it is;

[slapdash] 14/6/2005 13:03

skyracer - you could be right it could be overvalued.... certainly it is quite a cyclical area with banks and traders upgrading software only when boom times are upon us.....

have a look at Microgen... I believe they make a similar system to Brady... as well as the other stuff they do...

Slap