Eurodis Elect. Share Discussion Threads

[mike012321] 05/7/2005 22:07

Yep,eg they quote WSTS,DMASS and EECA in their results presentation dated 26/07/04 for year ended may 31 2004

[mike012321] 05/7/2005 21:56

Ed
Yes,quite true. In the past, they have quoted figs from various sources (eg WSTS,DMASS, SIA and EECA-the last gives European semiconductor revenues in €.Haven't looked, but I think in the last presentation but one EECA and DMASS were quoted.

Ed, just looked,sorry got that last bit wrong, but they have quoted them in the past

[ed winchester] 05/7/2005 21:35

mike, dont eurodis quote WSTS ?

[ed winchester] 05/7/2005 21:28

thanks for that mike. what is odd about eurodis is that its UK side of the business has done pretty well with stable sales.

[mike012321] 05/7/2005 21:14

News from the distribution sector...

Is the UK distribution industry in flatline?
It's clear from AFDEC's recently published quarterly industry commentary that the UK market has flattened substantially over the last few months. Adam Fletcher pores over these statistics.

Although billings have continued to grow quarter on quarter they have not matched the exceptional growth seen in Q1 of last year. The book-to-bill ratio (the value of sales orders received compared to the value of sales orders shipped) across the electronic component industry was negative in Q1 '05 (see graph below). Further, as the book to bill ratio remained below unity for the complete quarter, an upturn in the second quarter seems unlikely.

Unless there's a rapid change occurring in the UK electronics market within the next quarter then AFDEC's forecast of market growth of 4.3% in 2005 may prove to have been optimistic.

Whilst many organisations are forecasting a fall in the UK market for 2005, there are still reasons to believe that the industry may see some recovery in the last half of the year and that overall 2005 will remain flat compared to 2004. However, the next quarter will be crucial and market conditions will continue to be extremely tough across all sectors of the UK electronics market.

Driving concerns

Overall manufacturing output in the UK slumped by 1.6% in March and now only accounts for 17% of the overall economy. This can hardly be a big surprise given the attitude of consecutive governments to the plight of the UK manufacturing sector.

The failure of Marconi to secure any of BT's £10bn investment in new infrastructure is a further blow to the manufacturing sector of the UK.

The demise of MG Rover is a textbook case, typical of decades of under-investment and missed opportunities.

However, research indicates that both local and multi-national companies still view the UK as an attractive economy in which to invest.

The productivity and quality gains that resulted from Honda, Nissan and Toyota's investment in the UK's domestic automotive sector have more than proved this point. The rapidly increasing usage of electronics components in cars represents a great opportunity:

The next generation BMW 7 series is reputed to have more than 70 microprocessors controlling its operation. Equally well placed are the niche players in the automotive sector, such as the multitude of Formula 1 and world rally teams that develop and enhance their vehicles in the UK.

Asian slowdown

The European electronics industry can take heart from a hinted slowdown in the momentum of technology investment in Asia. Many organisations are discovering that there are lots of additional costs and risks associated with generating a sensible return on their investment in APAC (Asia/Pacific region).

Companies are increasingly expressing concerns about 'technology leakage' (industrial espionage?) of intellectual property, the availability of skilled labour, currency devaluation and political uncertainty.

Closer to home the domestic electronic component distribution industry is rightly concerned by its collective inability to raise the 'inventory turn' - a crude measure of how effectively inventory is being utilised over a 12 month period - much beyond 2.5 times a year. Many manufacturing organisations are achieving a significantly better result, as are distribution organisations outside the UK. Perhaps this is a cultural issue, a lack of accurate customer forecasting, high minimum order quantities from manufacturers or just inadequate inventory management?

The advent of the impending RoHS legislation will require greater levels of forecasting and co-operation between all organisations involved in the supply network. It will be a wholly unexpected benefit of this legislation if the 'inventory turn' figures improve!

The good news for UK plc is that we are well placed to respond to the global changes in demand. And, as multi-national companies refocus their investment strategies, we may be a net beneficiary. Whilst the downsides can be debilitating, history has shown us that the pain is normally offset by improved performance on the recovery. It's a shame that we cannot flatten the cycles out!



European semi distribution market flattens out
The European semiconductor distribution market 1st quarter 2005 did not start as promising as Q1 last year – it has declined by 2.58 %, says (Distributors' and Manufacturers' Association of Semiconductor Specialists DMASS. Sequentially (over Q4/2004), however, the industrial channel grew by over 10%. The outlook for 2005 is only cautiously optimistic.

2005 appears to have started very slowly for industrial semiconductor distribution. Against a bullish Q1/2004, it was almost impossible to grow. According to DMASS, semiconductor distribution sales from January to March 2005 declined by 2.58% to €1.185bn, versus Q1/2004. However, sequentially the market grew by 10.8% versus the prior quarter.

DMASS Chairman Gary Nevison said: "With the first quarter done and the second one half way through, it appears that 2005 could be relatively flat for industrial semiconductor distribution. The first half of 2004 has not be representative for the industry cycle but seems to have been driven much more by inventory correction than we all expected. In a realistic comparison then, 2005 does not look too bad. Now we have to wait and see how much the RoHS directive and its implications on the supply chain will influence order behaviour of customers and the supply situation at our suppliers."

Regionally, the only positive surprises were Israel, Poland, Italy and France, with growth rates between 28.3% (Israel) and 1.6% (France). Eastern Europe as a whole for the first time in years did not show a double-digit growth. Other big markets declined between 4.9% (Germany) and 13.9% (Nordic). With €175m, Italy managed to establish its number two position as a market behind Germany (€357m). The UK and France followed with €137m and €124m respectively.



Eurodis is a member of DMASS . I think Eurodis,Avnet and Arrow etc use DMASS figs when calculating European market share (although DMASS figs are a subset of overall European distribution revenue-proportion varies from country to country).

[dyfiman] 05/7/2005 21:04

Mr Ed W. .......

many thanks for the advice. You have confirmed my ultimate gut feeling.
May I say, I was not reckoning on a trocketing share price after the new entity is announced - if we get there.
But I do feel the market will recognise the new entity and I'm quite happy for a slow and steady rise.
Cannot, perhaps naively, think the market will turn it's collective nose up
at what seems a sensible outcome. The caveat again is, if it all pans out as seems at the moment.
Thanks and best regards again.

[ed winchester] 05/7/2005 19:40

dyfi

My honest view would be that you should wait and let them announce the deal and its details. I'm pretty sure the share isnt going to rocket when the deal is announced. It might rise but it wont fly. I think you will have enough time to buy at a decent price when the deal is actually announced. Once the merger is confirmed AND if they remain listed then I am sure the market will warm to the new entity and gradually rerate the share, but it will be a gradual process rather than an overnight thing.

[dyfiman] 05/7/2005 19:27

I'd just like to say that a merger announcement in 15 days
will suit me fine.
A new force, uniting two companies. The new entity will be stronger
than each on its own and could/should get the nod from the "market"
as a good thing.
Logic suggests, therefore, the share price of the new entity
has an excellent chance of rising. Someone mentions a dilution,
so for me,
it's a question of what do do now. Buy more ELH now, or wait till
the new entity is announced and buy then when we know the
nuts and bolts exactly.
I'm not clever enough to work this out so would appreciate
any guidance from the "old heads".
Apart from that, with no real evidence, I feel, gut-wise and nothing, there will be a good outcome for current shareholders that stick in for the
next 16 "working days".
FWIW, despite rightly-placed cynicism, I think Pete 3102 is genuine
despite the wise words of Mr Momentos.
All you regulars deserve a big result on this and I hope your brass
balls of late turn into golden windfalls.
It may not be instant, but I feel the market will take kindly to
this merger - pray it goes through - and reward accordingly. Of
course, I could be way off beam!!
Best regards all.

[mike012321] 05/7/2005 18:27

Thanks Ed. Some good points.

[ed winchester] 05/7/2005 18:13

Mike, so long as the shares will be issued to buy an asset i think dilution wont be a overly major problem as the shares issued (or funds raised) will be in order to buy a business/asset. If eurodis can show that as a merged entity it will become a profitable outfit with positive cash flow then dilution will be the least of our problems. This is where the concept of the company being highly operationaly geared would come into play. So increasing their revenue by a 50% (eg the opposite company having £100m of sales) then one can see how quickly that will translate to profitability and cash flow. And that doesnt include other facts like cost cutting and synergy benefits.

[mike012321] 05/7/2005 17:53

Ed
Yes,think Eurodis will be mindful of shareholders' interests. But do you think there might be further dilution for existing holders (via new fund raising)?

[ed winchester] 05/7/2005 17:48

If Eurodis remains a quoted plc then most likely scenario would be to issue shares to the owners of the other company. OR a fund raising to pay off the major shareholders.

I am pretty sure that institutions will back a merger as they know eurodis is at a point where increase in sales will tip them over to profitability and cash flow.

I wouldnt be surprised if Eurodis are doing the rounds regarding a fund raising to carrying out the merger.

[ed winchester] 05/7/2005 17:42

Yes Mike, I hope it is the case. I am sure the management realise that they owe it to shareholders (including the institutions that bailed them out, and many small shareholders that backed the fund raising), and that they wont be too pleased if its 'sold' on the cheap especially as the company has spent millions of shareholders restructuring the company to make it more leaner and viable.... so the best outcome going forward is to do a genuine merger with existing shareholders being part of the future.

[mike012321] 05/7/2005 17:38

Thanks for that Pete. It will be great if Eurodis retains its listing.

Mike

[Abuse team] 05/7/2005 17:30

Post removed by ADVFN

[mike012321] 05/7/2005 17:23

Pete
Whilst appreciative of Momentos' comments re sources, could you please clarify something. Is it your understanding that Eurodis will retain its listing as Eurodis - i.e there won't just be a listing for the newly merged company? Thanks.

[ed winchester] 05/7/2005 17:16

ian

pretty sure it was klwt that took the 2.8m on. Monica will confirm this tomorrow, a 'cigar' for her is she confirms what i'm saying :-)

[ianturner] 05/7/2005 17:10

WAIT FOR MONICA ed

[greenwellsglory] 05/7/2005 17:08

i am facinated by the web site british bulls.com i havent a clue what their 89 different candelstick formations mean todays for elh is a four price doji with the statement "wait" .it probably gives as much info on elh as anybody else.but at least a 4 price doji or is it 4 piece suite sounds good

[ed winchester] 05/7/2005 17:02

you were spot on momentos. looks like KLWT took them on rather than placing them hence lowering their bid.

[momentos] 05/7/2005 16:39

Would have thought the 1m is already booked if they are selling the odds.

No requirement to declare as they aer already sub 1%.

[sdtoot] 05/7/2005 16:37

Does that leave Aviva with 1m or are they now out completely?

[momentos] 05/7/2005 16:35

lol, I told them not to let Monica do it....

[muxdapanza] 05/7/2005 16:30

haha they have adjusted the 600 you mentioned on the 2.8mill trade