Dx (group) Share Discussion Threads

[kmann] 08/2/2017 11:27

Theres a big differnce between a loss and reduced profit with increase pipeline. Gatemore read it the latter way. Expect more buys from them imo ... posibbly another player too.

[kmann] 08/2/2017 10:54

Told you yester day RE Gatemore. They probablby held the price back to buy in on the cheap.

Management about to be culled with a blunt mattet.

Value/Recovery play. 12p realistic

[spob] 08/2/2017 10:52

Paul Scott

"Insolvency is a very real risk here, in my view"

[kmann] 08/2/2017 10:50

"They are all stressed out loading up their vans with hundreds of parcels"

sounds like there doing ok then!

[hutch_pod] 08/2/2017 10:48

Well, Gatemore declared - 11.7 to 22.7m.

[spob] 08/2/2017 10:48

Paul Scott yesterday ...


DX (Group) (LON:DX.)

Share price: 6.95p (down 61.4% today)
No. shares: 200.5m
Market cap: £13.9m

Trading update (profit warning) - this is the latest in a series of dire updates from this mail & parcels business. Key points today;

Challenging conditions continuing
Pressure on pricing
Higher margin business failed to materialise
Fixed cost nature of courier business is hurting profitability
Problems integrating 5 sites into 1


On a more positive note,

the lower margin logistics business has been winning new work, and
"material new contracts are now being implemented and the Company's pipeline of new business opportunities is robust"


Put this all together then, and it's a nasty profits warning:

it now anticipates that profits for the year will be significantly below current market forecasts, with net debt consequently higher than expected.


Forget dividends too, probably forever;

...It has also taken the decision not to pay any dividends for the foreseeable future


A full review of the business is underway:

...and has commenced a wide-ranging review of the Company's operations with a view to driving revenues and improving its financial performance.


What's taken management so long? It's been obvious for some time that the business model here was completely broken. The reason is simple - a high fixed cost base, and declining customer revenues.

The core DX Exchange business used to be a massive cash cow, moving valuable parcels & letters around for solicitors, and similar. These days, they're using email instead, in many cases. So the reason for DX Exchange to exist has essentially gone away.


My opinion - I hope none of my readers go caught on this one. I foolishly caught the falling knife on the first big drop in Nov 2015, but it didn't take me long to realise that the problems at DX were structural, not temporary.

My report here on 21 Sep 2016 couldn't have been more stark, in warning that there probably wouldn't be any more divis, and that the company looked to be heading inevitably towards eventual insolvency.

This share is really now just a chip in a casino, for gamblers only. I think its business model is permanently broken. So the equity is probably worth nothing. Optimistic gamblers might hope that management can strip out enough cost to keep it afloat, but that's not a game I want to play. Why take the risk? Insolvency is a very real risk here, in my view.

It's also a reminder that whenever you see a PER this low, and a divi yield this high (see below), then it's a massive red flag - it means the broker forecasts are badly wrong, and the market is anticipating serious problems ahead. The market is usually right, too.

I'm increasingly of the view that searching for the lowest PER, highest yielding companies, is a dangerous strategy which, more often that not, will land you in a mess. Fairpoint (LON:FRP) was a good recent example, and DX is another.

[marmar80] 08/2/2017 10:04

Dilema for the one who bought over 400k at 7.77 today..

[reallyrich] 08/2/2017 09:14

They do have a few days to update the market on holdings

[mrbridgeruk] 08/2/2017 09:06

I'm surprised at the lack of rns major interest in shares given volume traded yesterday.

[kmann] 08/2/2017 08:00

Same broker as boohoo, same chart pattern ... look what happened next!

[larva] 08/2/2017 06:37

What interest cover is there on the £20m bank debt?

Did the bank ask dividend to be cancelled (for forseeable future, ever>?!)?

[loverat] 08/2/2017 06:35

Indeed criticism of Russia, China and elsewhere is what Western Society does to deflect attention away from its own corruption and ills in many forms of life. The classic example is calling Putin a 'killer' for allegedly knocking off a few opposition. But I don't recall him invading Iraq, Afganistan, Libya and Syria and destroying those places

[anthonyspencer1] 07/2/2017 22:01

Whats all the panic about? Still making money just paying their debts instead of dividends. Maybe should have done it 6 -12 months back but at least that got it now.

[topvest] 07/2/2017 20:56

Well private equity was right to list this and sell out. They probably knew that technological obsolescence was going to kill their core business. Fighting such forces is like running up Mount Everest!

[tattooed93] 07/2/2017 20:11

NEXT LEVEL 2P

[nick rubens] 07/2/2017 19:30

"Nightfreight is now DXfreight."

cheers tuftymat

I just can't remember what happened for me it was so long ago. Maybe I owned Nightfreight and they went down and I took a loss?

The parcels business looks very competitive ( what isn't) but it makes you wonder when a company like DX. floats on the market and then slowly sinks away. Was the money made by those who exited on flotation?

I'm always skeptical of flotations like this. However the damage is done and one needs to wonder if it can be saved or will it end up in someone else's hands after receivership?

I wonder if todays warning here might make RMG shareholders nervous?

[freddie ferret] 07/2/2017 17:10

You are wrong I first noticed this because of the fall on the % fallers list about two months later I made my first purchase at 23.5p it had bottomed at 16 or 17.

My guess is it will stay at around 7p tomorrow.

[skinny] 07/2/2017 17:06

The previous fall.

[loverat] 07/2/2017 16:59

I recall it fell very big and then more the next day. There was very little dead cat bounce here.

Not like other stocks which fall heavy and bounce.

I actually remember someone posting comparing this to another stock which had fallen and not bounced for months and making a similar prediction. I remember thinking it has to bounce but it didn't - not very much anyway. He/she was right - this one might have gone up to 27p at some point in the last 16 months but not in the league of some great recovery trading stocks.

A total waste of time for traders - and in terms of investment, the management look very poor. Very poor all around.

[fenners66] 07/2/2017 16:55

You cannot invest in Directors that do this:

"Citywire AAA-rated value veterans Alex Wright and Jonathan Winton have ramped up their stake in troubled delivery service DX Group (DXDX), following a year in which a profit warning has hammered the shares,The managers increased their holding to nearly 8% of the group worth £3.5 million at a price of 22p, down from a year high of 92p"

That was then £0.75m ..........

[freddie ferret] 07/2/2017 16:30

From memory it fell in one day, 80% down. It did do a dead cat though. Since then it has paid good divis.

[loverat] 07/2/2017 16:20

Any traders from today should have looked at the last fall. It fell, it fell more and then it flatlined for 16 months.

Likely to do the same again. Most stocks have a dead cat bounce in them. This one seems to be close to death in all investor/trader criteria. There could possibly be a bounce at some stage - but better opportunities elsewhere imo.

[freddie ferret] 07/2/2017 16:20

There seems to be no mess, just an unquantified underperformance.

I am wonder if the current board is lining this up for a takeover bid (favourable to the people on the current board of course).

Maybe things are serious, maybe they are not?????