Gresham Technologies Share Discussion Threads

[jadeticl3] 01/8/2017 19:31

Sorry, the repeat was in error.

[jadeticl3] 01/8/2017 19:17

At what price, miti? I could not buy at anything under 185 with Selftrade.

[miti 1000] 01/8/2017 17:26

Shouldn't have been a problem, I bought at Selftrade at 183.7. There's a seller of 25k at least at that price prior to the close.

[jadeticl3] 01/8/2017 17:20

At what price, miti? I could not buy at anything under 185 with Selftrade.

[miti 1000] 01/8/2017 13:11

Added another 12k earlier...trade not showing as yet.

[gottafly] 01/8/2017 11:29

dd, one other thought.

Could it be that GHT are looking to off-load some of their legacy business streams. So are these up for sale perhaps, I am sure they would not simply be closed because they are profitable.

A legacy sale would generate some cash - not that cash seems to be needed - and I doubt they would sell for much of price, certainly not at a premium. An upside would be that it shows further confidence and concentration on CTC and the new market opportunities - the Champion (2017?) in Data Integrity & Control as Ian Manocha puts it.

This might explain the apparent drop off in turnover growth but I doubt that any disposal would have a significant effect on the share price, it would be neutral in my view.

AS always DYOR - especially Quantas.

[gottafly] 01/8/2017 10:36

Quantas, Forgot to say DYOR as I am sure you do but if you look at my posts, again as I presume you do, you will note that I have stated that the GHT share price is pretty much fully valued without any further concrete news. Perhaps you would like to add your 'two penneth' as to why given the very strong showing in the last six months there was been no revision in any forecasts. It is the lack of revised forecasts that is potentially creating a false market.

dd, agree that there is (and has been) concern on here that perhaps the share price is being held back for the advantage of a privileged few.

[double double] 01/8/2017 10:21

We can accept the low forecasts IF it really is about legacy business. Although I thought I read previously the company said they will hold onto the legacy businesses for now as they generated good profits.

I hope the brokers are not keeping the share price low and "promote" the company to their friends for possible placing or similar ahead of any acquistion. That is my fear. Last time there was such I did complain about the low share price and what happend, we had fund raising at 110p and within 3 months or so we were 150p-160p.

[gottafly] 01/8/2017 08:55

dd, I am sure that Cantor signed up for a very good reason, presumably so they could promote the share to their clients with some authority. I also find it hard to believe that a house broker does not have some extra/special knowledge, they certainly have much better access to the management.

I was speaking to an ex GHT chap and he reckons the major break through is happening at GHT and he hinted that the forecasts have been deliberately pitched low with legacy revenues as the excuse because of their 'sudden' uncertainty. He expects GHT to be exiting all legacy revenues other than those based on true long-term recurring revenues, making the company 'clean' he called it ready for the next big push. He went on to say that the legacy revenues were no longer needed since CTC is generating significant cash. Sadly he would not say any more other than 'watch this space'.

[double double] 31/7/2017 15:56

Its almost like Cantor have grudgingly upped their share price target to 200p withought raising any numbers since the share price is above their previous target of 180p. The fizz seems to have gone out of Cantor since they have been brought "in house".

[gottafly] 28/7/2017 10:02

Ok thanks dd, didn't see that.

The Kestrel disposal is very small and I know that although all labelled as Kestrel there are a number of different 'funds' in their holding. I think this is just a bit of tidying up. Having said that I am not sure that Kestrel's view (and potentially stranglehold on the share) that Gresham is a 'nice earner' on a long-term basis meets with the current Monacha driven strategy of Champion in 2017. I think Manocha sees GHT as a major player and not a nice dividend/recurring revenue earning stream.

In his note richjp stated this - I thought there was only going to be one presentation for institutional investors, however they are in effect in the middle of a four day roadshow and meeting a number of institutions on a one to one basis. I reckon GHT as are positioning themselves to new investors - quite possibly US focused as per Cantor - as a breakthrough Technology outfit - very interesting times ahead and hints at a very different business going forwards.

[double double] 28/7/2017 09:41

No mystery check the holdings rns news

[gottafly] 28/7/2017 09:36

dd, always a mine of information can you explain how you know?

[double double] 28/7/2017 07:28

Looks like Kestrel have sold approx. 80k shares.

[gottafly] 27/7/2017 16:54

Thanks richjp very helpful and informative.

The fact that we have not seen any revised forecasts from N1 or Cantor I think shows there is indeed a potential issue with the legacy revenue which seems to have been in the offing for some time - these revenues are split between recurring software revenues and services (to I think a CTC client). Also, if I recall correctly, one or two of the initial CTC sales were project based and potentially had a finite life.

So it seems the most likely reason for the modest 2018 growth in turnover of just 7.5% (but a much healthy EBITDA of plus 13.5%) is an allowance (perhaps expectation) of a loss of a considerable amount of legacy revenue. As long as CTC growth continues strongly then it will, in the big scheme of things, matter very little since GHT is not valued on legacy revenue, however, I reckon the revenue 'loss' could be as chunky as £1.5 million! Legacy revenues have provided the cash/fuel for the CTC expansion but with CTC cash flow now so strong this is no longer required - net cash in 2018 is forecast to be some £2.5 million/32% higher.

The recognition that GHT will now be seeking to pitch CTC head on with existing legacy suppliers is good news and essential if the Challenger to Champion tag is to be achieved. The existing suppliers will be very motivated to keep GHT from their accounts, so the sales process just got a lot harder and therefore I guess less predictable & more risky. Having said that I would not want to be a Smartstream shareholder.

Given what we know now, the current price of circa 180p is about right in my view. With a good second half, which I very much expect to happen, then I think we could see 200p or thereabouts come the year end. So the forecasts and pricing do not meet support Champion 2017 tag but a 10% share price rise is not too shabby.

Of course there is still the chance that GHT will make some big wins and achieve a real break out as Ian Monacha has said he wants to do. I get the feeling that management are pretty sure that they can meet the current forecasts, despite their careful 'much work to do' words, the question is how much can they beat them by.

As always DYOR but I reckon an share price of 200p plus is a given and it could be a lot lot more!

[4-10] 27/7/2017 15:29

Great job Rich thanks

[jadeticl3] 27/7/2017 14:55

Thanks rip. Very good coverage.

[richjp] 27/7/2017 14:23

I thought I would address the following issue separately.

I asked specifically why they had appointed another broker.

IM said that Cantor have a stronger presence in North America and because of Gresham’s US focus, they hope to have US investors at some point. Some of the presentations this week were due to Cantor.

He went on to say without any prompting, that they were perfectly happy with N+1 Singer who they have worked with for a long time and were very supportive again with this week’s roadshow.

I mentioned that some PIs thought that the N+1 Singer forecasts were a bit conservative. IM said he thought the figures were fair “from where they stand today”. He pointed out that although things were going well there was still a lot of work to be done in the second half of the year. He also said that there was also the matter of the decline in revenue from legacy systems which they had always been up front about. He said that they had a reasonable view looking forward of what the recurring legacy revenue would be in the short term, it was not as predictable as the CTC recurring revenue. He also mentioned that even if you start a new year with 60% of recurring revenue, you still have to sign a lot of new business to make your target.

I asked what if any information house brokers receive compared to PIs. IM and RG said it was exactly the same and there were strict rules about that. The presentation and hand out material was the same and they had to be just as cautious about what they could say to institutional investors as they do to PIs.
I thanked them for releasing the half year results so much earlier this year which raised a few smiles as it was something I specifically suggested at the AGM meeting.

I asked if we would get an autumn TU. IM did not seem too keen on that although he did not rule it out. I suggested that the absence of an autumn update could cause concern that something was amiss, however he said that according to the rules they would be obliged to make a statement if something materially had changed, so on thinking about I can accept that this time.

Well I am sticking with my forecast of 200P for the year end. I do not think it will be lower but also not much higher. Having said that I will go for 220P when the January TU comes out.

[richjp] 27/7/2017 14:20

So here some thoughts from the investor presentation yesterday. There were five of us PIs there. I have seen none of the others before and I think only one of the others was an existing shareholder.

The whole tone was very positive. Ian M said that they could not have had a better start to the year and they were “chuffed”; with how things had gone.

There is a big emphasis on North America and IM said their future success will depend on how well they do there. Two and half years ago they had no North American clients whereas now 29% or recurring CTC revenue comes from there. They were particularly pleased with the Global Asset Manager they have signed up and the Canadian bank as well. Although they would love to give the names they are not permitted to do so. Statistics were given showing the scale of the USA opportunity.

The Asset Manager deal was won against an incumbent supplier and replaces a legacy system. They now intend to go after legacy system users more aggressively. It seems that none of the known three most established legacy system suppliers have made any attempt to produce more up to date systems although their existing technology is twenty years old.

The C24 integration was very successful meaning that the final instalment cost of the acquisition will be paid. The focus is on organic growth. They remain on the lookout for another acquisition however IM said that there may not be many appropriate opportunities. Because of the success of C24 they think they could manage a slightly bigger acquisition next time. I got the impression that nothing was imminent.

Rob Grubb talked about the improved cash position, gross and nett margins. Nett profit has improved from 20 to 22% and they have a long term goal to achieve 30%.

I thought there was only going to be one presentation for institutional investors, however they are in effect in the middle of a four day roadshow and meeting a number of institutions on a one to one basis.

The N+1 Singer report is actually very positive in its wording although they have not changed their forecasts. It does not state a price target. It stresses the strong performance of the share price against its sector. It mentions that 2017 PE is 28.5 falling to 27.0. They believe the premium rating reflects the recognition of Claretti’s potential.

[amt] 27/7/2017 10:25

Ok hope you are back soon.

[philoosh] 26/7/2017 08:30

Cheers GottaFly..

[gottafly] 26/7/2017 07:10

Have a look at the Financial Times -

As of 25th July the analyst covering GHT forecasts that the company will outperform the market.

The one analyst offering a 12 month price target expects the share price to rise to 200p.

[philoosh] 25/7/2017 16:57

What is the estimate on how far this share price can go? With the good news on show surely this would take off like a rocket ?