Chelford Share Discussion Threads

[aspex] 25/1/2005 07:44

nojo2,
Chelford's the name and Chelford's the game around these parts.
Get back into your burrow!

[faz] 25/1/2005 07:43

Click on nojo's link and he earns 2p - click a 1000 times and ADVFN might remove this advert. He osounds very depressed anyway

[shirishg] 25/1/2005 05:18

Post removed by ADVFN

[johndee] 25/1/2005 01:15

Its going up by a similar amount every trading day......and early in each day too.......that has to be unique.....I have never seen this happen to any other share before..........must mean something and always on thin trading apparently too.

[silverfern] 24/1/2005 19:53

Typical - only up 10% again. I mean come on you know like well etc I reckon 280p by results would be payback for all the heartache over the last six months (I mean if it was your child would you be as patient?) and then let's see.

[andrewwan] 24/1/2005 09:42

Go past the £3 mark very soon. But I don't understand why it still in a thin trade.

[aspex] 24/1/2005 07:49

AA,
Well spotted, but when I got interested at 0.55p (55p equivalent) that was true.
The signs were there then.
That is all bye-the-bye. Onward and upward

[alexandrews] 23/1/2005 13:51

aspex,

OK well I'm afraid there's nothing in that post that has persuaded me to change my mind on the validity or usefulness of PSR.

BTW, I'm not sure why you think CHR is "a stock where there has been no profit to measure its future performance" - the interims to 30/06/2004 showed the following profits (losses) after tax (all figures in £'000):

  • 6m->30/06/2003: (497)
  • 6m->31/12/2003: 284
  • 6m->30/06/2003: 135

Alex

[aspex] 22/1/2005 09:54

AA,
I think Kenneth Fisher in his book "Super Stocks" explains the significance.
He, too accepts that it is only a trigger to examine the potential for shares that are not making a profit currently but almost certainly will do so in the future.
I note that the book has not been updated in recent times but many of the 'super' stocks he quotes are those that have risen from the ashes of a proit glitch to value up at 3 to 10 times their entry point within a year or two.
My point is that CHR is such a stock where there has been no profit to measure its future performance but that it has been growing its customer base in both numbers and value.

[aspex] 21/1/2005 19:01

It looks like AA wants a spat with anyone who will bite so I won't go there.
'nuff to say I am satisfied with my logic over Chelford in particular. and until now this thread has been clear of the investment fringe so I am sure we wish to keep it that way.
Keep smiling all!

[faz] 21/1/2005 17:09

Alex - frankly if I had £1.8m to invest I wouldn't worry about the next 50 years!
faz/silverfern

[blueblood] 21/1/2005 16:47

Looking at the brokers estimates in IC article it gives turnover in 2004 of £11M and eps of 15p. The trading update gives turnover increase foy year of 19% and the interims had £5.6m with normally a stronger 2nd half. By my calcs I imagine turnover will be nearer £12m with profit of £1.2m and eps of 17p. This must be fair value around £3 with over £2m in cash in bank.

[alexandrews] 21/1/2005 16:02

Still not interested in taking up my offer, silverfern?

8-)

[silverfern] 21/1/2005 15:56

Thanks - it does look like a cracking stock and I thought who would buy at these levels so I checked and sure enough I did last year! I've added since then of course.

[johnroger] 21/1/2005 15:46

IC in full
21 January 2005

CHELFORD (CHR)

180p - Aim - Following two profit upgrades last year, and a recent positive trading statement, software company Chelford has clearly signalled to the market that it is now in rude health. The supply-chain solutions minnow is on course for a record year and, following recent court approval, is also in a position to pay dividends.

Chelford was initially a cash shell from the stable of infamous shellmeister Michael Edelson but, in 2000, it was the subject of a reverse takeover by SSI. The SSI business is focused on ERP, and supply-chain software and services. Chelford went on to acquire its SAP reseller division for £375,000 just over two years ago and, after a period of restructuring, it is now profitable.

Based in Basingstoke, Chelford's main focus is the supply of software to the mid-market sector. SSI sells to the food and drink, mills and chemicals markets, and the SAP arm is focused on wholesale and distribution in healthcare, mail-order and consumer products.

Chelford has more than 100 customers and new contracts are typically worth £350,000. Well-established clients include Sony, Corus and Cotton Traders. Regulatory compliance is driving the SSI division, while the availability of new solutions is helping the SAP business.

In addition to its cash-generative business, Chelford is sitting on a healthy cash pile of £2.1m. Over recent months, it has explored a number of acquisition opportunities, but the prices have been too high. The market remains massively fragmented, so there are deals to be done - but Chelford will not overpay.

A recent 100:1 share consolidation has trimmed the shareholder base to 1,300 individuals. And some two-thirds of the cost base for 2005 is already covered by existing contracted work. The current pipeline of new business is also at record levels - so Chelford is well-placed on this front, too. Trading on just 9 times 2005 earnings, the shares are too low. Buy.



--------------------------------------------------------------------------------
Ord price: 180p Market value: £12m
Touch: 175-185p 12-month High: 300p Low: 126p
Dividend yield: nil PE ratio: 9
Net asset value: 114p Net cash: £2.1m




--------------------------------------------------------------------------------
Year to Turnover Pre-tax Earnings Dividend
31 Dec (£m) profit (£m) per share (p) per share (p)

--------------------------------------------------------------------------------

2001 7.81 -1.05 -0.16 nil
2002 7.30 -1.03 -0.16 nil
2003 9.88 -0.37 -0.03 nil
2004E 11.0 1.00 15.00 nil
2005E 13.4 1.50 19.00 nil
% change +36 +50 +27 -

--------------------------------------------------------------------------------

*Arbuthnot estimates
Normal market size: 2,000
Market makers: 4
Last IC view: 23 Apr 2004, page 59

BULL POINTS
Strong balance sheet

High recurring revenues

Record pipeline of new business

BEAR POINTS
Tax losses have been utilised

Competitive trading environment

[faz] 21/1/2005 14:51

Ah ha- looks like the Inv Chro. printers were buying shares earlier this week then. . It's all very nice indeed - if eps comes in at 15p remember that this is a company growing profits so anyhting under 300p would be cheap. Expect a dividend also.

As we probably ahve a few new readers here I'd like to introduce the PSR vs PE debate for this bombed out share: ) While watching the price rise I hope you enjoy the education the last two days' postings have given me.

[kkbabe] 21/1/2005 09:55

Hello everyone. I am new to this board following the Investors Chronicle "buy" recommendation this morning. Their buy price was £1.80. They quote Arbuthnot as estimating eps for 2004 at 15p and 19p for 2005. Cash pile of £2.1m so in a position to pay dividends.

You probably know this already but the bull points are,

Strong balance sheet

High recurring revenues

Record pipeline of new business

The bear points,

Tax losses have been utilised

Competitive trading environment


Looks interesting.

[alexandrews] 21/1/2005 09:43

AA
(Unless of course you want to try and specify the exact criteria under which PSR is a valid measure? But I think you'll find that in trying to do so, you actually conclude that future profit in one shape or form, possibly combined with net cash, is the only really valid basis for measurement.)
Exactly!
For a company approaching profit (Chelford, do I hear?)the reason behind pSR is very clear.

aspex, read this again. Now tell me the exact criteria which makes PSR valid, rather than some airy fairy "a company approaching profit".


A small increase in margin per sale can have an enormous effect on the final profit once that is achieved.
I will concede that where the products that the company sells are low margin (supermarkets) major effects are market determined.

So it is really dependent on a combination of volume and profit margins, ie future profit levels rather than simply the price-to-sales levels?


Going on to the pure software monopoly, the margin can really turn on the volume sold once development costs are pegged.

Again, this is all just a function of gross margin, no?


You have basically just confirmed my premise, ie PSR in isolation is a meaningless measure, and that future profits are the only really valid basis for measurement.

Alex

[aspex] 21/1/2005 09:27

AA
(Unless of course you want to try and specify the exact criteria under which PSR is a valid measure? But I think you'll find that in trying to do so, you actually conclude that future profit in one shape or form, possibly combined with net cash, is the only really valid basis for measurement.)
Exactly!
For a company approaching profit (Chelford, do I hear?)the reason behind pSR is very clear. A small increase in margin per sale can have an enormous effect on the final profit once that is achieved.
I will concede that where the products that the company sells are low margin (supermarkets) major effects are market determined.
Going on to the pure software monopoly, the margin can really turn on the volume sold once development costs are pegged.

[bernieboy] 21/1/2005 09:07

Wow - up 12% now and not looking back. About time too, come on my son. Where are all the doomsters with their doom and gloom about what would happen after consolidation! Ha!

[baughfell] 21/1/2005 08:56

Crikey, just goes to show its darkest just before dawn. Much further to go in the run up to April results IMO

[bernieboy] 21/1/2005 08:49

About time this one got back up to these levels. Always said the falls were unjustified with no reason for them whatsoever. Looking good.

[alexandrews] 21/1/2005 02:29

aspex,

PSR as a fallacy is easily demonstrable (by reductio ad absurdam): consider a company that resells £10 notes for £9. Undoubtedly this company would have enormous sales levels, yet it would never make a profit and would soon be bankrupt. A little extreme you may cry, but this demonstrates that PSR cannot be used as a general guide and so therefore, by extension, cannot be claimed to be valid in specific instances.

(Unless of course you want to try and specify the exact criteria under which PSR is a valid measure? But I think you'll find that in trying to do so, you actually conclude that future profit in one shape or form, possibly combined with net cash, is the only really valid basis for measurement.)

Alex