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[eezymunny] 07/12/2015 17:34

Yep. So it's down 5-24% since my brilliant deramp. Down with DX!

Dear oh dear oh dear oh dear....

[freddie ferret] 07/12/2015 17:32

Nope it was the trading update that moved the price down to the 20-25p area.

[eezymunny] 07/12/2015 17:23

Well if it was a concerted deramp it's been effing succesful freddie!

Dear oh dear...

[freddie ferret] 07/12/2015 17:18

Nevertheless it does seem like you boys are trying to run a deramp here, not very successfully I might add.

[effortless cool] 07/12/2015 17:04

Well said, EM.

[albanyvillas] 07/12/2015 16:56

Has two said this is a pig and pork scam

[freddie ferret] 07/12/2015 16:54

Given the uncertainties I think that the fall from circa 85p to 20p covers the immediate risk.
There are upside possibilities and downside possibilities there is also uncertainty which should reduce over time as more information becomes available.

I do wonder at the motives of EezyMunny, short position or hoping to buy in?
If he has no current or intended interest, seems he is doing quite a bit of thinking about this one, why?

[eezymunny] 07/12/2015 16:44

Come on Aleman, you say "Losing members beats losing money". Err losing members means losing revenue. End of. And if costs are fixed, profits collapse. That's what the trading statement was all about, no?

Then you say "I don't see why you can't have fewer larger cheaper cost locations" but let's say you are a solicitor in Southampton and DX close the local drop-off point and the next nearest is in Portsmouth, are you a) going to drive to Portsmouth every night or b) take stuff to your local Post Office (for example). Err the answer is quite easy, no?

I totally accept that things MIGHT not be that bad but the "In particular, the DX Exchange operation is experiencing a higher than expected level of volume erosion and there have been increased cost base pressures" comment is enough to put me off. That's all. Maybe indeed the 2.5p divi is an indication that things will be fine. We'll have to wait and see.

[aleman] 07/12/2015 16:31

Losing members beats losing money. I don't see why you can't have fewer larger cheaper cost locations. It never did grocery shopping any harm. Still I cancede it's an industry in revolution with all sorts of changes in delivery patterns and half-empty used vehicles all over the place. There are all sorts of new entrants into markets with lots of opportunities as well as competition. I suspect the directors will have had an idea how things were going when the set the 2.5p dividend. There are a lot of posters that seem to think they know better than them. Maybe they are right. Maybe not. Do you think they'd have set a 2.5p dividend if they had not generated any cash in the first 4+ months of H1?

[eezymunny] 07/12/2015 14:35

Have a look at the DX Exchange business, Aleman.



4200 locations.

Members (customers) take their important docs to these drop off points and DX deliver them overnight to other members.

If you start shutting down locations, you presumably lose members, and the service becomes less useful to all the remaining members. And so it goes on. Potentially a quick spiral down, especially if some of the big members (eg Land Registry) cease to be members.

Maybe all the locations have 10 staff and you can cut that down to 1 - but doesn't seem very likely does it? The parcels have to be sorted and delivered regardless of volume. That's the problem.

I make no predictions at all about all this, just point out that the current trends for DX Exchange are grim. Enough to put me right off, maybe not for others.

[aleman] 07/12/2015 14:13

Generating no cash in the last 5 months seems pretty unlikely. What makes you think they cannot reduce the cost base?

[eezymunny] 07/12/2015 13:41

No idea Aleman. The last trading update doesn't give any numbers. All they said on Nov 13 was "The balance sheet remains robust, with low levels of net debt". So I guess we can assume that there was SOME net debt at that time? Since then they have paid a c. £8m divi IIRC, so who knows, maybe there is c. £10m debt today? We can only guess as the company haven't given much detail.

Not the big picture in my eyes anyway. What matters IMO is rate of decline of the DX Exchange biz. As I spelled out b4 (post 553) if that falls 20% this year and 20% next year the whole group could become quite heavily loss-making, in which case that modest level of debt becomes much more of an issue. I'm not forecasting that, but see it as a possibility given the nature of the business and it's (in my eyes) difficult to reduce cost base. As I've said, that's the bear case. It's up to you to decide if you find the bull case more compelling.

[aleman] 07/12/2015 11:17

EezyMunny - so how much cash generation in the last 5+ months are you allowing for? Last year's net cash profit for H1 was £13.3m and £9.1m after working capital changes. Forecasts suggest you could lop 1/3rd or a half off that. That might still leave debt not far off that in June - unless you know different? Of course, the £35m OneDX investment will hit this figure back up at some point but it should still be manageable if the starting point is near zero net debt and margins don't deteriorate further from management expectations. (Obviously not that bad if they are pencilling a 2.5p dividend but who really knows where margins will go?)

[az4hr] 07/12/2015 10:37

Brutal 😩

[eezymunny] 06/12/2015 17:23

They've paid out an £8m dividend since the trading statement freddie. For some reason ;) So debt higher now.

[freddie ferret] 04/12/2015 17:10

Bol.
All the mgmt have done is give an honest comment on how current trading is going and that profits are likely to be lower than anticipated. Gross gearing of 27% seems well managable to me, net debt of 1.8m and a divi of 2.5p.

[albanyvillas] 04/12/2015 11:27

This one looks finished

[staverly] 04/12/2015 11:26

Following my earlier post: 582, have since had a more detailed read in and FWIW decided to close my position as there is zero information in respect of their linchpin, the DX business. For the time being I think it best to sit on the sidelines and see whether the accelerating operational decline can be arrested. If not, then even at around £40m market cap, this could be a value trap. The BOD doesn't fill me with confidence either. DYOR

[freddie ferret] 03/12/2015 18:59

Er...... my nuclear war comment was just a leg pull, honest! :-8)

[aleman] 03/12/2015 18:09

All sorts could happen. There is talk that the pro-EU government in the Ukraine will fall next year due to growing unrest about the unaddressed corruption and bankrupt finances. There are already US and Russian military in Eastern Ukraine providing "technical support" for the weapons they are providing and it looks set to spread to Western Ukraine soon. The US and Russia are just about fighting each other in Syria as well. Tension is rising in the South China Sea as well, which could bring China in on the Russian side. WWIII anyone? What would Saudi do now that they sell no oil to the US any more and their biggest customer is China? Maybe all that rush to fracking and wind turbines and solar on fiddled global warming temperature data is actually preparing for global war and disruption to fuel supplies. I don't know what is going to happen but we are not being told a lot of what is going on. Things just seem to keep getting worse and worse and those urging caution are getting shouted down.

[eezymunny] 03/12/2015 17:55

Well the f/c profit a few weeks ago was c. £25m and now it's £12m. If you're not thinking about why that has happened then you deserve what I think might be coming ;) As I say, I think you need to think hard about DX Exchange. My view is a bearish one given the collapsing revenues (feels to me like it could become a very expensive spiralling landslide) but of course I may be overly bearish. That's for you to decide.

[freddie ferret] 03/12/2015 17:36

Yup and we could be looking at nuclear war tomorrow! :-8)

[eezymunny] 03/12/2015 17:16

Looking at PE ratio and divi yield for THIS year MIGHT be very dangerous Freddie. You need to think, IMO, about what will happen to DX Exchange next year and onwards. If it completely collapses then it could become seriously loss-making and drag the whole of DX. down to a point where it finds itself with some real headaches. I see that as a real possibility, though far from certain. You need to DYOR about that business and draw your own conclusions IMO.

[freddie ferret] 03/12/2015 17:02

I think one needs to read all of the Trading Update and to digest same. Seems to me the PE ratio and the divi yield are excellent, so how much will they worsen by?

Buy more and chill, this is well underpinned IMHO.