Discoverie Share Discussion Threads

[rivaldo] 11/9/2019 11:46

Nice £30,000 buy at 455p just now.

[rivaldo] 08/8/2019 22:19

Tipped as a Buy tonight on Master Investor - hopefully new highs tomorrow? IMO his 550p target in a year may be quite light if DSCV make the acquisitions they've been promising, as the current rating in itself isn't very demanding.

Mark Watson-Mitchell seems to share my taste - he's also tipped CAPD and HMLH recently, both of which I hold:



Extract:

"discoverIE Group aims to double earnings within five years
By Mark Watson-Mitchell 08 August 2019"

"The group, which has a solid balance sheet, has some good growth company strategic aims – including providing its investors with returns of 15-20% per annum, to continue building revenues, to acquire high quality businesses, to carry on internationalising the business, together with providing a progressive dividend, and best of all is its target to double its earnings per share within the next five years.

Its shares at just 438p are trading below that of the average of its peers, which would put them out at 510p. However, I rate them higher, especially if it can achieve its aim of doubling its earnings per share within five years.

I suggest a target price of 550p taking just a one-year view.£

[rivaldo] 31/7/2019 10:34

Finncap retain their 535p target price. They summarise as follows:

"Strong sales growth. Acquisitions are contributing well with total Q1 sales up +8%
and organic growth of +4% in Design and Manufacturing (in line with our full-year
forecast) and +3% in Custom Supply (ahead of our full-year assumption of flat sales).

.New project design wins remain strong. There have been a number of successes
in key target sectors, in particular, the renewable energy, transportation and industrial markets. Project design wins are a key driver of future organic growth.

.Rising operating margins. Q1 gross margins are in line with last year. We forecast
flat gross margins for the full year and operating margins of 7.6% (2019: 7.0%). This continues a well-established trend of rising operating margins, driven by the strategy. Over the past five years, operating margins have increased in every year, in total from 3.4% to 7.0%.

.Positive outlook supported by the order book. Book to bill was 1.09 in DM and
1.07 in Custom Supply. The group order book (80% of which is for delivery over the
next 12 months), rose to £154m (+13% at CER and +8% organic) over last year.

.Firepower for acquisitions. Post the year end, a £28m fund raise was completed
and two acquisitions completed at an initial cost of £21m. We forecast net debt/EBITDA of 1.1x in FY 2020.

No change to target price of 535p. The continuing success of discoverIE’s strategy
drove a 17% CAGR in EPS over the past three years. We don’t forecast acquisitions
as their scale and timing are variable, but in essence we so no major reason for
above-average growth not to continue, given the successful focus on structurally
growing markets. In this context, the FY 2020 P/E of 14.5x is not demanding against
small/mid cap 14.6x."

[eggbaconandbubble] 25/7/2019 07:10

RNS - Nothing to complain about there!

[tomps2] 17/7/2019 15:07

DSCV mentioned in this Income and Growth presentation by Downing at Mello May 19, along with RFX and ADT.

[eggbaconandbubble] 10/7/2019 13:58

I guess that means that 'Danske' are buying in or topping up more likely.

[rivaldo] 26/6/2019 10:43

New note out from Edison today - they state DSCV is trading at a 17% discount to rivals. They see more acquisitions coming, and have increased their forecasts given the last results. They now see 29.1p EPS this year:

[rivaldo] 20/6/2019 11:36

Looks like it's just me here then, to appreciate that DSCV has "some of the “most attractive growth prospects” in the UK industrials sector according to Berenberg:

Https ://www.proactiveinvestors.co.uk/companies/news/222497/discoverie-has-some-of-the-most-attractive-growth-prospects-in-uk-industrials-sector-says-berenberg-222497.html

"discoverIE has some of the “most attractive growth prospects” in UK industrials sector, says Berenberg
10:05 20 Jun 2019

Analysts forecast that discoverIE would have around £30mln of acquisition firepower in the near term, which if deployed in similar terms to previous purchases could lift earnings by 10%

discoverIE Group PLC (LON:DSCV) has some of the “most attractive” growth prospects in the UK industrials sector according to analysts at Berenberg, who on Thursday hiked their target price for the group to 520p from 490p.

The German bank said the custom electronics maker’s last set of full-year results had shown its Design & Manufacturing (D&M) division had accounted for 61% of revenues and they expected the division to further grow to management’s target of 75% in the medium-term, which would push operating margins up toward 11% from 7%.

Analysts said given D&Ms relatively small position in a large and highly fragmented market, there was “plenty of scope” for the segment to grow both organically and through acquisitions.

The broker also said that the firm’s focus on its target markets of renewable energy, transportation, and medical and industrial connectivity was “appealingR21; given the present uncertainty in the macro industrial environment as each of the sectors had long-term structural demand for electronics.

Looking ahead, analysts forecast that discoverIE would have around £30mln of acquisition firepower in the near term, which if deployed in similar terms to previous purchases could lift earnings by 10%.

They added that the company’s smaller size relative to competitors such as FTSE 100 Halma PLC (LON:HLMA) and FTSE 250 Diploma PLC (LON:DPLM) meant it was easier to find family-run businesses whose owners would be willing to sell at a reasonable price.

Berenberg also reiterated its ‘buy’ rating on the stock, saying the opportunity presented by the company was currently “underappreciated”."

[rivaldo] 20/6/2019 08:44

Berenberg have today raised their price target to 520p (from 490p) and say Buy:

[rivaldo] 12/6/2019 11:59

Numis says Add with a 530p target:

[rivaldo] 06/6/2019 23:33

Great finish - and new highs.

[rivaldo] 06/6/2019 09:13

The IC say Buy:



"IC View

discoverIE’s story is one of consistent and disciplined working capital management. Its working capital has stood at 14 per cent of annualised final-quarter sales at constant exchange rates for the last two years. This is driven by the custom nature of its products, which are built to order and less prone to obsolescence. In a difficult market for industrial businesses, discoverIE looks a rare and reliable growth story. Buy."

And it looks like more acquisitions are on the way:

"discoverIE (DSCV) is interested in making further acquisitive forays into the sensing technology market, chief executive Nick Jefferies says, following its £4.2m April deal for Positek, a developer of customised rugged, high accuracy sensors.

The electronics group funded a £16m outlay on two businesses in April, with an equity placing that raised a net £28m. “We’re particularly keen on the sensing area,” Mr Jefferies says, adding that the company will target the US and Europe in this space. Hobart, its other April acquisition, makes custom transformers for energy infrastructure."

[rivaldo] 05/6/2019 14:13

Finncap's note is now available. They did indeed retain their 535p target price.

They summarise as follows:

"discoverIE has reported an impressive set of FY19 results driven by strong sales
growth (+13% in total and +8% organic), rising operating margins (7.0% up from 6.3%) and good cash conversion at 93% of underlying operating profit. Adj. EPS was up +22%. With a record order book and a high level of design wins the group is very well placed to further progress its growth track record despite more short term economic caution generally. We make no major changes to our P&L forecasts but improve our net debt forecast from £54m to £47m at March 2020 and reiterate our 535p target price."

"Investing for growth alongside increasing ROCE. Given the continued investment
in acquisitions and the business generally, it is very encouraging to see ROCE also
rising, and we expect this to be a key support to a higher share price. Our
calculations show ROCE of 10.9% (post tax and lease adj.) up from 9.2% last year.
.
Positive outlook. While not immune to changes in economic conditions, new year
trading has started well, supported by the order book and design wins (wins in FY19
have an estimated lifetime sales value of £266m, +40% on last year).
.
No change to target price of 535p. With these results providing further evidence
that the group’s focus on structurally growing markets and its consolidation of a
highly fragmented market continue to drive growth, cash flow and a higher ROCE,
the FY20 P/E of 14.6x is not demanding against small/mid cap. 15x."

[rivaldo] 05/6/2019 08:27

Cheers sharw.

It's strange that Finncap didn't issue any research/morning notes yesterday, or today AFAICS. Hopefully they'll catch up on DSCV later today or tomorrow.

[sharw] 04/6/2019 19:34

rivaldo - apologies, I was wrong. I searched for the latest finnCap update and didn't notice the date of the article from which I quoted was May not June. I have double checked the finnCap website and, unusually, they have not posted a "Morning Note" today.

[from8to800] 04/6/2019 18:45

Rather dim reaction by the market. Disappointing.

[mfhmfh] 04/6/2019 16:50

Buy rating reiterated in today's IC.

'In a difficult market for industrial businesses, discoverIE looks a rare and reliable growth story. Buy.'

[rivaldo] 04/6/2019 15:29

Cheers sharw - that's not what the Broker Views page says, and at present the Finncap update isn't on Research Tree so I can't check it. Good news anyway.

I did however find these further analyst notes:

"0804 GMT - discoverIE is very well placed to further progress its growth track record despite general short-term economic caution, says Guy Hewett of finnCap. The analyst notes the record-high order book and high level of design wins that will benefit the company. "discoverIE has reported an impressive set of fiscal 2019 results driven by strong sales growth--13% in total and 8% organic--rising operating margins, and good cash conversion at 93% of underlying operating profit," he says. Hewett adds that he sees net debt lowering at March 2020. The analyst has a target price of 535.0 pence."

"0907 GMT - DiscoverIE has found clear momentum behind its four target growth markets of renewable, medical, transportation and industrial and connectivity, Peel Hunt says. The broker notes that 66% of sales now come from these four segments, while the order book is at record levels. "These results, against an uncertain macro background, highlight a very robust business and we expect to see further positive performance, which will come through in the rating," says the broker. Peel Hunt has a buy rating on the stock with a target price of 500 pence."

[sharw] 04/6/2019 14:16

finnCap did not "retain" a 535p target - it was an upgrade from 488p:

"....we now believe a valuation in line with peers Diploma, Trifast and XP Power is appropriate. This equates to a calendar 2020 P/E of 17.8x and a 535p target".

[rivaldo] 04/6/2019 12:34

Good summary here, with some analyst comment as follows:

Https ://www.proactiveinvestors.co.uk/companies/news/221438/discoverie-sparks-as-it-hikes-dividend-after-strong-full-year-performance-221438.html

"In a note, analysts at discoverIE’s ‘house’ broker finnCap reiterated their 535p target price for the firm saying the “impressive221; results provided further evidence that the company’s focus on structurally growing markets and its consolidation of a highly fragmented market would continue to drive growth, cash flow and a higher return of capital employed.

Fellow broker Peel Hunt was similarly upbeat, saying the company remained on of their “top picks” in the sector and reiterated their 500p target price and ‘buy’ rating."

[rivaldo] 04/6/2019 09:18

Finncap and Peel Hunt retain their 535p and 500p targets respectively, and say Buy:

[psync] 04/6/2019 08:54

Good reading, positive outlook. Glad I've held onto these.

[rivaldo] 04/6/2019 07:14

Excellent final results today.

27.2p EPS was ahead of Edison's forecast of 26.9p, as is the 9.55p dividend. And net debt is also better than forecast.

Order books are at record levels, and the outlook is very bullish, with current year trading having "started well".

Plus there are "Further acquisition opportunities developing":



"With a record year end order book and a high level of design wins, we are well positioned for continued progress and excited by the opportunities that lie ahead as we continue to build a high-quality, global business"

[rivaldo] 03/6/2019 08:19

Cheers Skeln, nice to see some appreciation!

Peel Hunt reiterate their Buy and 500p target today: