ILX Share Discussion Threads

[spaceparallax] 17/4/2009 09:31

Reasonable trading in recent days, with Buys probably in the majority - once again the sp's crept above the SMA135. Will we manage to stay above for a little longer this time?

[spaceparallax] 09/4/2009 11:51

What a surprise, NOT!

[spaceparallax] 09/4/2009 08:29

Looks like we closed up another half pence. Can we maintain the momentum this time, or will we once again be frustrated by the persistent mystery seller.

[spaceparallax] 08/4/2009 15:10

The recent trade prices have rather disturbed the predictanility of ILX dealing, which traditionally wide spread of + or - 2p from mid. If we've returned to those criteria, then smallish buys this pm have been hitting 25p. This might suggest another step up before close, providing that no one spoils the party.

[spaceparallax] 08/4/2009 10:50

That would be nice. Decent buying these last few days - perhaps we're tipped somewhere?

[mudbath] 08/4/2009 10:09

spaceparallax,

That's three of your moving averages crossed in one day.!
Can we breach the 200 day m.a.this time ??

[spaceparallax] 07/4/2009 10:07

JM,

In most shares, odd decimal buys/sells are pretty usual; however, ILX has traditionally operated on a broad spread i.e. it's been difficult to Buy or sell for say 2p above or below the midprice.

[jmeek] 06/4/2009 17:04

From my account I can buy multiple of ticks only (ie 20-21-22 and not 20.50 -20.30). Is it the same for the other private investors? Does it means that the dealings at 20.30 and similars are done by somehow professionals? Could someone explain to me?

[spaceparallax] 06/4/2009 16:02

Presumably the 10K mystery trade was a BUY.

[donaceaceace] 03/4/2009 09:59

wait for the grand finale and watch the herds of shorters run to the bridge :-

[spaceparallax] 03/4/2009 09:58

A spark of life this morning.

[djonson] 01/4/2009 13:23

Hi M,

1) I first "meet" ILX as, following another company (Vectrix), I saw some funds buying these shares. So I took a look. Finally I also experienced their training classes in banks while in London and I decided to concentrate more on its business understanding.
2) I'm in since last summer and I hold shares at about 30% above current prices. I'm fine with it and not at all afraid. My time horizon in >2 years.
3) End of earn our payments are a big relief, sure. Remaining question marks in my view are:
a) the cash flow generation. ILX is cash positive business (meaning that working capital is ususally positive). This is good but the huge cash flow creation of last year (3m) was due to working capital (1m). This requires high attention in forecasts
b) I do not exactly know the flexibility of the costs. How much of the costs are fixed and how much variable? I know that courses are paid by lesson and not by number of "students" (this is very positive for us), but I have no real figures to quantify or drive other conclusions.
c) CTG (40% sales in 2008A) is the most profitable (highest margin) part of the business. I can't accurately quantify it anyway. So the very likely slowdown in it would have significant negative impacts.
4) The biggest catalyst will surely be the de-leverage. ILX is not highly leveraged but due to share price decline it seems so. In fact 2008A: Debt/equity: 0.47x and Debt/Market Cap: 2x. It's here that lies some fear that keeps small inexperienced investors fair away.


Thanks for Stilo tip! At a first look it seems interesting!
I'll take a deep understanding when possible. First take away:
1) Attention to positive Taxes (due to the previous year losses). The enlarge income as of now but will soon depress it.
2) Interesting EV of 2m with Market Cap (2.5m) + Net Debt (-0.5) showing strong balance sheet. Book/ Market Cap in anyway at around 1 showing no huge undervaluation. Capex = Depredation is a good signals meaning no huge cash out. Working capital evolution is also low: negative of 0.1m
3) A big problem is that 2008 is the first profitable year. This creates a problem for me. It requires forecasts which will have an enormous impact. Basically I can't take an average. But of course a deep analysis could solve somehow this problem.
The business seems very interesting to me! Thanks again mudbath!

[mudbath] 01/4/2009 09:47

djonson,
What originally brought ILX to your attention and how long have you been an investor?
I too am bullish over this company's prospects,although I see increased Public Sector demand and Mlearning as the main drivers for growth.
The cash position holds great importance in my view.Completion of the onerous terms of the earnout are therefore a relief.
By the way ,I feel that STL should meet ALL of your criteria for a compelling investment.
Cheers Mud.

[djonson] 31/3/2009 21:20

S, I agree with all your points about ILX a macro prospective.

Anyway:
1) I do not forecast revenues growth (graduate intakes decreased 28% in '09). But I'm not worried about it.
2) Margin pressures will probably come from high level of capex (that is positive in my view) and a shift of revenues from CTG towards Best Practices (historically less profitable)
3) Furthermore do not worry. The last earn out payments to CTG was given in cash in January. Only possible dilution problem could arise from the management incentive scheme.

[spaceparallax] 31/3/2009 20:42

D,

ILX certainly appears to be weathering the recent economic pressures and the E-learning does indeed seem to be courting popularity. In tight times, one would expect turnover to diminish, but ironically Banking/Financials has demonstrated itself to be The sector in need of retraining.

One word of caution on earnings with ILX specifically - as you're no doubt aware, some elements of the business are relatively new additions to the Group and as such may be due to incur phased earn-out payments. I don't have the figures to hand, but they can be gleaned from searching previous RNSs. These may impact our bottom-line EPS, although they will not detract from performance.

[djonson] 31/3/2009 16:23

Yes, jonson is a nickname, I'm Diego.
1) I agree in your distinction income/growth. I'm also for the growth., but I'm not smart/informed enough to bet on not yet profitable companies. I think that as no one obliges me to invest I must feel comfortable with my investment even if it would lose at the beginning. I couldn't be comfortable with a business not making money yet. But I know it's a personal choice

2) I don't think that this period needs different evaluation rules but rather a more conservative forecast (very hard to do actually, due to some human/annalists characteristic)

Back to our company:
- ILX with its £1m 2008A earnings has a 9x EV/E. Really amazing and difficult to find in other companies. The business is much or less recurring (being must have training) even if I expect, with no worry, performance declines for the next 1.5 years. Then even if I'm not as much optimistic in Nov 08 Ken Scott expected ILX to be debt free in 1.5years. This would mean an EV/E of 4x or below by 2010. Anyway, again I'm not hoping for that.
- Future catalysts (as from the report) would be: E-learning increase with boost of profitability // M-learning launch // Buy back that should revitalize share price or earnings per share, from July 09 // Positive currency effect (11% of sales are outside UK)

Then the macro idea for me is that Learning and Skill development is a key competitive advantage in which everyone will have to invest.

[spaceparallax] 31/3/2009 15:23

Sadly Orvil, I doubt that they are. They must be pretty desperate to ditch such a chunk so cheaply, when the charts so such potential.

[spaceparallax] 31/3/2009 15:21

Italian,

I should have realised with a name like Jonson!

I can understand many of your prerequisites, although would caution that many 'standard' rules could have become less valid in recent times as quite a few companies that might have historically been regarded as rock solid have foundered.

On the matter of GTL. Your point 1 I would consider met. Point 2 and 3 are currently not possible, but the reason for investing in a business like GTL is the potential for tremendous future growth in a rapidly expanding niche.

One age old adage that does hold strong is the recommendation to diversify, which can apply to sector and risk. Also, it very much depends upon whether you're seeking growth or income - my pursuit is low income, significant growth.

Good luck whatever you choose.

[orvil] 31/3/2009 15:17

75k sold at 16p is that the seller finally out of the way

[djonson] 31/3/2009 13:26

Spaceparallax, thanks for the tips. I'll take a look to the more interesting of them!
No I'm Italian but studied/worked in UK as well as France.

For the companies I invest in I look for:
1) Outstanding and reliable management.
As I invest in Micro cap this is absolutely key (even if very hard to understand/evaluate).

2) (Market cap+ Net debt)/Average 4 Year Earnings < 13.
This shows me how many years (assuming a 0% growth and conservative earning results) does it take for the company to pay back itself. Anyway for companies with high Capex or Working Capital volatility this ratio does not make sense. Furthermore I only want already profitable companies. For instance GTL does not sound interesting to me: it has EV of>100m on earnings of let's say 3.

3) I look for business with recurring results.
For instance I don't bet on mining as their results are too much related to commodity prices.

[spaceparallax] 31/3/2009 12:53

We appear to be witnessing a remarkable confluence of many lines on the chart.

[spaceparallax] 31/3/2009 09:44

DJ,

Greetings. I will generally stick with the existing thread because of the useful graphics etc...

Am I correct in assuming that you're Scandinavian?

Companies that you might like to look at:-

RCG - biometrics and security
AFE - minerals exploration, with a breakthrough project beginning to come to life.
CRA - specialist designer/manufacturer of a downhole compressor system to enable the extraction of the significant chunk of gas previously left behind. verging on successful outcome.
ENK - Nickel producer who have just been granted a tree-felling permit that's held up their major project development for 3 years. share price set to thrive.
FDI - diamond explorer retruning promising sample results that produce 2010...
GTL - super-efficient bio-ethanol producer. share price rock-bottom, but huge potential.
RGD - sugar refiner and baking ingredients. share price rockbottom, but good turnover.
SQS - software quality tester, growing business very solid.
VML - silver, gold and uranium miner. share price very low, huge nuclear supply potential.

Good luck!

[djonson] 31/3/2009 09:01

Hi everyone.
It's quite a while we do not have any update from the management, but in mid April they will produce a newsletter or rather a trading statement (Source: inquiry to investor relations).

In the meantime, having some free time as I am a student and I'm waiting replies from job applications, I produced a quite comprehensive study on this company.
Please fell free to take a look if interested:

To be 100% clear:
1) I'm a shareholder of ILX and I already experienced its training-led courses
2) This is not at all a suggestion of purchase but rather a study on such an interesting business/company. My investing idea is that it's safer to invest in 2-3 companies you know perfectly than in 20 you just know the name of.
3) Due to the illiquidity of the shares and the potential short term downside I would suggest this investment only for medium term investment horizon (2 years)

Anyway please fell free to suggest other very interesting companies (the less the best) and if I can/I understand the sector I'll take a look also to them.

[spaceparallax] 20/3/2009 14:27

No problem AA29.

Sp beginning to look up again - whilst mixed trading continues, we do appear to have had a few decent Buys of late. Having crossed the SMA135 again so soon, it would be great if we could stay above, which would obviously be helped by a dose of good news.

[aa29] 19/3/2009 17:00

Apologies if my question came over as more pointed than it was meant to be.

I would agree that this share should have a good future (from the current depressed level) and the trading fundamentals appear solid. However I'd have too many concerns about the management (Ken, in particular) who've presided over the decline in shareholder value (incl a couple of poor acquisitions) to make me want to reinvest. The share option for apparently simply being around next year reinforces those concerns.