Wonder in what tip sheet? |
A lot of buys beginning at 12.38. |
Looks like it's been tipped. |
Wonder what has produced the spike? |
Well we all make up our own minds based on information we glean but 'interviews' like the above do the company a dis - service. Amateur hour doesn't help them or pi's. |
In my experience analysts' analysis is often pretty good , their messages are far less reliable. So a lack of message does not bother me, I prefer to make up my own mind anyway.
Still, we all have our own methods... |
Something coherent with a clear message. Otherwise why bother? |
What the analyst statement from 6 weeks ago?
Semed OK to me... not sure what you were looking for... |
Post immediately above |
Which interview is that? |
Terrible interview. Hesitant, no flow. Gave up on it.
He forgot the 3 elements: tell them what you are going to tell them, then tell them, then tell them again in conclusion.
No idea what he was trying to communicate |
"...as it still remains difficult to predict short term market conditions, we therefore consider it prudent to withhold both formal financial guidance and the payment of a dividend. We will keep this position under constant review and intend to reinstate both guidance and dividend as soon as is practicable."
Recall last year of paid dividends was 6.17p. That in itself should support a price around 120p+ and more if some growth is added to the mix. I do not expect us to go ex-growth even if acquisitions are on pause for now.... |
 Zeus;
Today’s interim results provide detail to the comprehensive update released in late July (28th). The business traded profitably in each month of H1 apart from April, despite lockdown, reporting adj. operating profit of £0.9m (HY19: £6.1m). Importantly, cash generation remained resilient and net debt declined to £14.5m (HY19: £18.8m), a £2.1m reduction over the six-month period. The resilience of Flowtech’s model is highlighted by revenue declining to c. 60% of normalised levels during April, the month with the most stringent lockdown measures in place and when many industries were completely shut down. This is a strong performance relative to other industrial companies and distributors. As expected, formal guidance is still suspended but will be reintroduced when the operating environment stabilises.
Flowtech is coming through FY20 in better shape than most businesses and its earnings recovery will benefit from operational gearing as cost savings come through. This is not reflected in the share price, using the depressed FY19 earnings, the shares are trading on 6.7x historic earnings.
§ Resilient and profitable performance in H1: Revenue declined 21.8% to £46.6m (HY19: £59.6m). Gross margin was resilient at 35.1% (HY19: 35.6%) leading to an adj. operating profit of £0.9m (HY19: £6.1m) and adjusted PBT of £0.6m (HY19: £5.6m). Net debt of £14.5m is c. £1.0m lower than stated in March, despite lockdown. The reduction in the working capital commitment is a structural change within the business and it will not materially increase as revenue normalises. With net debt continuing to fall during H2 and new banking facilities in place, the balance sheet is in a strong position.
§ Improving revenue trends will see an improvement in profitability in H2: April bore the brunt of the lockdown impact with revenue declining 41%. Since restrictions started to ease, Flowtech has seen four months of steadily improving revenue trends with August 12% down yoy. This should continue as it annualises easier comps in Q4 and should result in H2 profitability being higher than H1, albeit down yoy. Short term visibility has improved during the summer but the medium to longer term outlook remains unclear. The economic fallout post government support schemes coming to an end during the autumn make forecasting difficult, exacerbated for businesses such as Flowtech that have short term order books (c. six weeks). However, Flowtech’s focus on MRO markets will see it weather a prolonged downturn better than most, as evidenced by its performance to date this year.
§ Valuation compelling on recovery potential: On depressed FY19 earnings the shares are trading on 6.7x and 6.1x EV/EBITDA (with the caveat net debt in FY20 will be lower than FY19A). |
Lots of progress in headcount, new e-fulfillment, debt, rationalising the business properties and locations. Underlying performance looks pretty decent, and actually still profitable for the half.
Personally I think these results are impressive, and a restored profit, margin and dividend in 2021 looks heavily odds-on (assuming no large impact from natioinal disruptions over the Winter). 125p would represent a PE of c.10 underlying before further gains from restructuring, modernisation and debt reduction.
Future looks pretty bright to me. 75p cheap. |
All about as expected IMO, and worth more like c.£77m / 125pps on steady recovery / more 'normalised' basis if we ever see that again (exactly where they were at the start of the year in fact). |
Considering the circumstances this is a good result; keeping the margins up and reducing the debt is particularly impressive. |
Accounts out - "However, as it still remains difficult to predict short term market conditions, we therefore consider it prudent to withhold both formal financial guidance and the payment of a dividend. "
Working hard but Fincapp target of profit note of 13th Feb gone to money heaven - Howeer debt down and margins only fractionally impacted but with reduced revenue bottom line severely impacted by failure to reduce overheads in line.
but (imo) looks like a survivor - $64k question - Market reaction?? |
...or that someone is getting lucky! :)) |
Up ahead of interims tomorrow. Let's hope there's been a leak! :-) |
interims next Tuesday |
Looking at recovery potential of 50%+ in the share price medium term. I'd say that was quite a bit higher than the average (non-financial) stock in the UK market, some of which have recovered quite a bit, and with debt controlled and a pretty robust business model, this is a firm hold/buy for me. |
Zeus-
Breakeven performance in Q2 and profitable in H1 indicates a resilient FY20 performance
The strength and resilience of Flowtech’s operating model is increasingly apparent. HY20 revenue is down c. 22%, at this level the business will have remained profitable, albeit modestly. Even in Q2, when revenue was down c. 33%, the business should have been broadly breakeven. This is a very strong performance relative to other industrial distributors. Net debt continues to fall and is expected to be lower this year. £14.6m was reported at the end of June, a £1.0m reduction since March, despite the impact of COVID-19. The potential for cost savings in unison with a continued focus on working capital to reduce debt make us firmly believe that Flowtech does not need to raise additional equity. As we had expected, formal guidance is still suspended but will be reintroduced when the operating environment has stabilised.
Flowtech will weather the COVID 19 impact better than most UK Industrial businesses, this is not reflected in the share price. Using the depressed FY19 earnings, the shares are trading on 6.7x historic earnings.
§ The business has remained profitable during H1: April, with revenue down 41% yoy, is the only month we believe the business will have lost money, having previously stated that it would be breakeven trading down c. 30% for an extended period of time. As a result, the business will have been modestly profitable during H1, despite revenue being down 22%.
§ Improving trends into H2; guidance will be reinstated once stability returns: May saw an improving trend as lockdown measures started to ease and the Government encouraged businesses to get back to work. This has continued into June, which was 25% down yoy, and July, that is seeing a further step up in demand with revenue improving 15% on June. End markets, and the wider economy, are in the recovery phase making it difficult to forecast underlying demand. Once stability and visibility improve formal guidance will be reintroduced.
§ Restructuring, cost saving and working capital initiatives already in place: In terms of assessing potential efficiencies, Flowtech was ahead of the curve having already implemented strategies to save costs, restructure and realign the business while remaining focused on managing working capital. However, an additional £1.0m of savings has been identified and announced today.
§ Valuation difficult to assess on current economic outlook but Flowtech has strong recovery potential: Using depressed FY19 earnings the shares are trading on 6.7x. On EV/EBITDA, again using FY19A EBITDA and net debt (bear in mind FY20 net debt will be lower than FY19A), the multiple is 6.0x. |
Encouraging, but not much more than already known.Looking at broker forecasts for FY2020, I think they might be revised down slightly, given loss making first half and guidance of just profitable second half, reading in between the lines.Good that net debt is coming down still. |
An encouraging update in present circumstances. |
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