Discoverie Share Discussion Threads

[eggbaconandbubble] 03/11/2019 19:13

I'm not taking their advice to 'buy' because..........I have quite a few already! ;-))

[rivaldo] 03/11/2019 07:38

More new highs, and a superb finish on Friday night.

Eggs, suffice to say they conclude - Buy :o))

I'll just note that conclusion at this stage:

"IC View

discoverIE shares have achieved good momentum this year, but the forecast PE sits just below the peer group average. We feel the group's prospects are considerably better than average, based on the acquisition strategy, margin improvements and presence in several exciting growth markets. Buy."

[eggbaconandbubble] 01/11/2019 16:41

Pray, What is the crux of the IC article, Rivaldo?

i don't have subscription!

[rivaldo] 01/11/2019 14:16

New highs now, with buying at 476.5p.

[rivaldo] 01/11/2019 06:54

DSCV are a Main Tip in today's IC.....

[rivaldo] 30/10/2019 09:43

More here about Jefferies' recent upgrade:



"discoverIE to see “positive numbers impact” from Sens-Tech acquisition, says Jefferies

The US broker said the £58mln acquisition would provide “further growth opportunities in structurally attractive target markets”

discoverIE Group PLC (LON:DSCV) has made a “high-margin, strategically relevant acquisition” with its purchase of sensing and data module maker Sens-Tech, according to analysts at Jefferies as they upgraded their target price on the firm to 540p from 500p.

In a note on Thursday, the US broker, which rates the custom electronics maker at ‘buy’, said the £58mln acquisition would provide “further growth opportunities in structurally attractive target markets” as well as increasing the diversity of its business model.

Analysts also upgraded its earnings per share (EPS) estimates for the company for 2020, 2021 and 2022 by 3%, 5% and 5% respectively, to reflect both the Sens-Tech acquisition and a £33mln placing which was intended to reduce gearing following the purchase.

As a result of the new funds, Jefferies sees scope for over £40mln on the company’s balance sheet that could be used for more deals in the future.

The broker is now forecasting that discoverIE will deliver a pre-tax profit for its 2020 financial year of £33mln, up from previous estimates of £31mln, with revenues predicted to be £478.1mln compared to prior expectations of £471.2mln."

[eggbaconandbubble] 29/10/2019 18:44

Well done, keep up the good work rivaldo!

[rivaldo] 29/10/2019 11:00

New Edison note - they note DSCV is trading at a 13% discount to its peers:



Extracts:

"discoverIE has announced the acquisition of Sens-Tech for an initial cash consideration of £58m, partially funded by a £33m placing at 415p per share. Sens-Tech designs and manufactures specialist sensing technology and fits with discoverIE’s strategy to buy businesses supplying niche, highly customised products for critical applications. The business increases the group’s international revenues and boosts its presence in target markets such as transportation and healthcare. This is discoverIE’s largest acquisition since Noratel in FY15; we estimate the deal is immediately earnings enhancing (FY20e EPS +2%, FY21e +5%)."

"Valuation: D&M focus supports upside

discoverIE continues to trade at a discount to peers (13% discount based on FY20e P/E, 8% FY21e). Further progress in increasing the weighting of business towards the higher growth and margin D&M business (64% of H120 revenues vs 61% in FY19), combined with maintaining the profitability of the Custom Supply business, should help to reduce the discount. The stock is supported by a dividend yield above 2%."

[rivaldo] 29/10/2019 07:27

Cheers - appreciated!

DSCV have been tipped again by Mark Watson-Mitchell with a 550p target:



"discoverIE Group (LON:DSCV)

I see that Jefferies International have placed a ‘buy’ rating on this group’s shares, at the same time as raising their target price from their previous 500p to 540p.

That brings the brokers closer to my own early August valuation when I profiled the shares at 448p; they are now 458p. That is quite an impressive performance after the group last week announced its £33m placing of 8,034,840, new shares at 415p per share for its £58m SansTech acquisition."

[eggbaconandbubble] 21/10/2019 08:10

Rivaldo, Good post and just to let you know that I for one read all your messages with great interest. So you are not totally alone here!!!

[rivaldo] 20/10/2019 21:15

The latest from Mark Watson-Mitchell in his market round-up:



"discoverIE (LON:DSCV)

Much as predicted, this innovative electronic components group is on the acquisition trail again.

On Thursday morning it announced the £70m acquisition of Sens-Tech together with a £33m Placing of 8,034,840 new shares at 415p each. That was a 3.9% discount to the closing price on Wednesday night.

The high margin Sens-Tech is a UK-based designer, manufacturer and supplier of specialist sensing and data acquisitions modules for x-ray and optical detection applications. It supplies customers in the transport security, medical, food processing and industrial markets.

This is possibly one of the group’s largest acquisitions to date. The £58m cash down and £12m on profit achievement deal looks to fit in perfectly with the group’s expansion plans. It will create further opportunities for organic growth. The Placing funds will be boosted by existing debt facilities to complete the purchase.

This deal gives investors a useful opportunity to get in some cheaper stock. Even six of the company’s directors bought more shares in the Placing.

I profiled the company in early August at 438p, with a target price of 550p by the end of next year. I remain fixed with that target.

On Friday morning I noted that brokers Peel Hunt have just increased their target from 500p to 530p.

[rivaldo] 18/10/2019 12:17

New highs now - buying at 464p.

[rivaldo] 18/10/2019 08:37

Peel Hunt have increased their target price to 530p (from 500p) and say Buy:

[rivaldo] 17/10/2019 13:51

RNS just out confirms the placing monies raised without a problem.

Good to see the directors subscribing another £130,000 between them for new shares:

[rivaldo] 17/10/2019 09:09

No doubt the new analyst notes post-acquisition will give further info on the extent of the earnings enhancement.

Sens-Tach is a private company so these are obviously the most recent figures since March'19 figures presumably haven't been filed yet - which they don't have to be anyway until Dec'19. DSCV will of course have had access to the most recent management accounts during due diligence.

[this_is_me] 17/10/2019 08:19

The lack of up to date figures is strange is it not? Those who bought a slice of CAKE will certainly want properly audited up to date figures.

[rivaldo] 17/10/2019 08:00

That £15m revenue figure is to 31st March 2018 - effectively almost two years ago! That figure could now be say £25m.

For which the actual consideration is only £58m - the next £12m is dependent on achieving profit targets.

The relevant figures are the £4,4m PBT and the £5.3m EBIT - which again could be much higher by now. With synergies and cost savings the earnings enhancement could be significant.

[this_is_me] 17/10/2019 07:46

Buying £15 of revenue for a total of £70 million looks very expensive. A forensic due diligence would have been needed to have been done to check the claimed profit margin.

[rivaldo] 17/10/2019 07:15

A great looking acquisition today, funded from DSCV's own resources and a placing:

- immediately earnings-enhancing
- lots of recurring/repeating revenues
- increases the amount of high margin D&M work still further
- also increases exposure to high growth and non-cyclical areas like medical and transport

This acquisition looks really good and is pretty sizeable at £58m:

[rivaldo] 16/10/2019 14:29

Mark Watson-Mitchell tips DSCV in his latest small cap round-up and has a 550p target in a year's time:

"discoverIE (LON:DSCV)

This international group that designs, manufactures and supplies innovative components for electronic applications, announced a Trading Update on Thursday morning.

It showed that the period to the end of September saw continued progress, with the group on track to deliver positively against earnings expectations.

Its order books were up 4% in the first half at £153m, with sales some 9% better in the period, trading on consistent margins.

The interims are due to be announced on 28 November.

The shares are around 408p, which compares to my early August profile price of 430p. Peel Hunt rate the shares as a Buy, looking for 500p. I adhere to my Target Price of 550p by the end of 2020."

[rivaldo] 14/10/2019 09:11

Here's some extracts from Finncap's new note FYI - note the focus on growing sectors like renewables, medical, transport etc rather than cyclical sectors like semiconductors. Finncap also note there's plenty of headroom for further acquisitions:

"Q2 stronger than Q1

In a positive H1 update, discoverIE has confirmed it is on track to meet its full
year expectations following +9% sales growth in H1 (+5% organic) and gross
margin consistent with the prior year. Organic growth was +4% in Q1 and +6% in
Q2. The order book has increased by +15% (+11% organically) to �153m, of which
80% is for delivery over the next 12 months. Despite the wider economic caution,
discoverIE continues to make strong progress, providing further evidence of the
success of its strategy of focusing on structurally growing markets. We reiterate
our 535p target price.

Improving rate of progress. Group sales increased by +11% in Q2 up from +8% in
Q1 generating +9% for H1 (on a reported and CER basis). Organically sales grew by
+6% in Q2 up from +4% in Q1, generating +5% for H1.

Driven by Design & Manufacturing. Q2 organic sales growth in Design & Manufacturing (D&M) was +12% up from +4% in Q1, leading to +7% in H1. The strongest parts were renewables (wind and solar) and Asia. D&M accounted for 64% of H1 group sales up from 61% at the year end and we forecast this division to account for 80% of FY 2020E group profits.

Strong orders. Group orders for Q2 grew by 7% organically, up from 3% in Q1.
Orders were similarly driven by strong growth in the D&M division, with Custom
Supply division orders being down slightly. The Group order book at 30 September
2019, of which over 80% is for delivery over the next twelve months, was �153m, an
increase of 15% at CER and 11% organically over last year.

Supported by acquisitions. The two most recent acquisitions (acquired in April) are
settling in well, with integration progressing as expected. Both businesses are high quality, high margin custom design businesses, selling into international markets.

Firepower for further 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."

[rivaldo] 10/10/2019 08:37

Finncap retain their 535p price target, and current year forecasts of 29.2p EPS with a 10.1p dividend.

[rivaldo] 10/10/2019 07:14

Excellent trading statement today.

H1 trading is "good against strong comparators", and DSCV are already saying the year is on track to meet expectations.

Organic sales rates are actually increasing, having risen in Q2 over Q1.

Above all, the higher margin D&M division (now up to 64% of sales) is growing ahead of the market as a whole at 12% over last year.

Plus there's an "active pipeline of acquisition opportunities"....

[rivaldo] 11/9/2019 13:25

New highs now, with buying at 470p.