Indigovision Share Discussion Threads

[jaf111] 18/3/2013 09:56

For all the positive talk the share price remains very depressed.....although perhaps things are about to change with share price showing some strength this morning!

[cestnous] 17/3/2013 10:31

Appreciated Pauly. Thanks

[stingylady] 17/3/2013 07:47

Pauly- Thanks for the input; it is always good to hear some confirmation of what is happening.

[welsheagle] 16/3/2013 20:04

Gret post, Pauly

[stingylady] 15/3/2013 15:40

Pauly-Thanks for the post

[iain123] 15/3/2013 12:52

Thanks for taking the time.

[paulypilot] 15/3/2013 12:23

Hi,

Just a quick post before I have to dash out.

Myself and a couple of other investors met IND management yesterday, and have to say I'm impressed with the turnaround strategy. There is a great deal going on behind the scenes to launch new products, and deliver a much better sales strategy. Marcus certainly seems to be leading from the front, and is working incredibly hard, flying around the world (mostly in Economy, I was delighted to hear!) to push the sales teams - which have benefitted from previous top-selling salespeople jumping ship from competitors & returning to IND, surely a very good sign?!

As indicated in the interims, the pipeline for new products & customer projects is strong, hence why they made bullish noises about H2 - which is consistent with what has previously been reported, so I think they are managing investor expectations better.

As always, results are sensitive to individual large contract wins. Nothing we can do about that, it's inherent with this type of business, doing large
projects on fairly high margins.
However, IND is operating in a huge, growing, global market, so there should be plenty of scope to grow their market share.


Talking of margins, there is no overall trend, we've been told (as previously) to expect gross margins to fluctuate between 50-60%. This is actively managed, with them taking a view on every project.

We talked about the competitive position, with IND being confident their products are right up there at the top of the industry, and getting better all the time. They were particularly disparaging about several competitors, where apparently camera latency in service has been very poor, and that one frame per second megapixel cameras are little more than toys. Interestingly, several previous IND clients have tried competitor products, then returned to IND, due to competitor systems disappointing in performance. Whereas IND product "just delivers".

The sales effort sounds much more focussed and effective. So all in all, I think risk/reward here is looking good. It's very much a turnaround situation, where the company had let the grass grow under its feet, and has needed to fix a lot of issues to get up to speed again, but that seems to be happening, with sales growth accelerating up to 15% as reported. New encoders are being launched now, and many more new cameras too for imminent launch, so there's lots going on.

Sceptics might well want to wait until the year-end figures are reported in Sept (although there should be a trading statement in July), to be convinced that the company has turned the corner. But you cannot fail to be impressed with the new energy and action taken on multiple fronts to rejuvenate the business under the new CEO.

I think in the past we were on a bit of a wing & a prayer here, but in my view they're getting the ducks lined up nicely in a row, so the chances of out-performance from now on, are much better than in the past.

Lumpy contracts mean there will always be a risk that forecasts might not be met due to timing of large contracts, but that's just something we have to live with. Or not invest if you can't live with it!

I'm not going to chase up the share price, but will certainly be buying more if it slips down to the 300p level. Plus the dividend yield is pretty good now, 3-4%. Given the special dividend paid last year, any surprise on divis from now on is more likely to be on the upside than the downside in my opinion (that's just my personal view, we were not given any steer on that).

We weren't told anything price sensitive, but at the company's request, I have deliberately avoided giving any commercially sensitive details. They don't really want the business discussed at all on bulletin boards, as it hands potential ammunition to unscrupulous competitors. But I hope the above is all the right side of the line, in being general, and with nothing commercially sensitive.

Regards, Paul.

[paulypilot] 13/3/2013 17:19

Dave,

Ah yes, good point!
Also my apols to everyone for o/t.

Cheers, Paul.

[davidosh] 13/3/2013 17:12

Paul.....just for the record but clearly off topic for here. LOQ will never be ahead of forecasts so early in the year purely because the vast majority of the business is done in the three months of June to August and then October for Frightfest weeks in the US. Only a handful of their customers have parks open and busy before Easter so never going to shift expectation before at least July and probably August IMO

[alter ego] 13/3/2013 16:42

lol. that could be a big seller and not just in Africa

[exotic] 13/3/2013 16:39

"... ZESCO's main objective was to minimise the use of armed guards and link all the sub-sites to a centralised control room ..."

I can see a day when the PTZ controls will also interface with machine gun attachments.

[paulypilot] 13/3/2013 15:35

Hi,

Dave - points on LOQ noted, thanks for the reply.
Recurring revenue is the big issue isn't it. Although I do feel if LOQ are so far ahead of forecasts, then the broker should issue upgraded forecasts, as it's not in anyone's interests for there to be unrealistic (too high or too low) forecasts out there in the market.

It's from last week, but some quite good points made in this press release from IND;


Also, some great comments in this one - signs like this (of top performing sales manager returning to IND) augur well for

the future in my view;

Regards, Paul.

[speedsgh] 13/3/2013 14:55

IndigoVision provides integrated security for Zambian utility

[davidosh] 12/3/2013 14:47

I think they are keeping the targets safe and sensible based on weather as such a big unknown but you can easily add 40% to the forecast eps and still see it well beaten this year with favourable conditions. If profits were to double you can see how the p/e comes down very quickly and with 80% repeat business and new contracts each year...

Personally I cannot see 2013 eps at less than 20p even without good weather as the dollar exchange rate looks to be improving their 90% dollar earnings even without increasing anything else.

[paulypilot] 12/3/2013 13:46

Hi David,

Fair points. What do you think are realistic EPS targets for LOQ then for 2013 & 2014? The valuation might start to stack up if the broker forecasts are way too low!

Cheers, Paul.

[davidosh] 12/3/2013 13:19

Just to be clear I am not making a case for buying LOQ but certainly defending the valuation against a company like IND.

The forecasts are just that. I know that the LOQ forecasts are based on exactly the same conditions as 2012 but with the additional known park business. They do not take into account the strong dollar since they were set or the potential uplift from new deals and most importantly better weather conditions which is always the unknown.

There is barely any risk to the downside on revenues but I can easily see upgrades through the year and revenues of £45m are easily achievable....that would be 60% growth and operational gearing will kick in at LOQ too ! The theme parks simply share the benefits.

[davidosh] 12/3/2013 12:20

darlocst.....Yikes bad enough fighting the comparison with IND but please do not introduce TAN to the mix...lol

Just for the record think of who owns the right to the queuing contract in the theme parks...LOQ on deals up to five and seven years strong. A new company cannot get near even with a smartphone app because the technology will not be introduced without LOQ or the theme park allowing it in. LOQ will introduce it when necessary and only if margins and profits suit all parties to use it.

That said many parks would still need additional infrastructure due to signal quality and many rides you would not want your smartphone on your person due to risk of damage. The Qbot beats most destruction tests but you would only want it in a theme park !

As for the huge water park market....LOQ have it in their waterproof pockets !!

With good weather, strong dollar, and lots of new parks (including Universal the world number two) this season and high recurring from the new ones in 2011 and 2012 I see revenues up big time in 2013.

[alunmorris] 12/3/2013 12:09

Paul,

>[Lo-Q] is very aggressively valued after a huge run up in price, has simple technology that's easy to copy...
>[IND] is cheap, has highly complex technology, and is beginning to execute properly after a long period of under-performance.

You're right about the rating on LOQ & IND and I have sold 2/3 of my Lo-Q shares because the weight in my portfolio had become way too high for an illiquid smallcap...but:

I was equally sceptical about Lo-Q's moat until I was told that several firms had had a crack at the same market and failed. Issuing tickets by smartphone is obviously simple. The queue optimisation behind it is not simple. There are over 9000 patents in a google search (excluding computer s/w and h/w)

Disney allegedly spent $1bn on their latest visit handling system, which seems to be mostly about queuing. I'm stunned by the figure even though it must include a lot of hardware.

IND's technology is very complex, but so is a TV. How much better is an IND system than one assembled from off-the-shelf parts and s/w?
In the long run I think their moat will be brand and service, not the tech.

[cockneyrebel] 12/3/2013 12:09

I think it's about reliability tho PP. Delcam like LOQ have years of delivering and not disappointing. They are also currently benefitting from 3D printers being the 'big thing' going fwd.

IND had their chance imo, several times. I think investors are prepared to pay up for reliability of growth and earnings - look art ASC and RMV. When IND are illiquid, lack visibility and have let investors down several times (especially with the 'as expected margins are lower' when nobody expected it) then it takes a long time to rebuild trust imo.

All imo.

CR

[darlocst] 12/3/2013 11:59

LOQ - class act as a company, share price reflects that and some already though. Last AIM company I remember on that type of valuation & similar share price trajectory was Tanfield.

IND - the jury is out but clearly new management is having a positive effect. IND currently on its lowest valuation (since it became profitable). I'm not wholly convinced they can make the broker forecast but happy to hold at this price and see if management can accelerate progress over next 18 months.

[paulypilot] 12/3/2013 11:55

Hi Chaps,

Some fair comments there, the recurring revenues one is very valid - that's a big advantage for Lo-Q, over companies like IND which have to re-invent the wheel every year effectively by winning new contracts. On the other hand they are only a small player in a huge global market, so you can get growth either way.

I'm sceptical about Lo-Q's barriers to entry at this valuation though. Could they really block all competition, if other companies decide to enter that space? I very much doubt it. In practice Patents can be got round by doing something slightly differently that achieves the same end result, and you just cannot ignore smartphones - mobile is taking over everything.
I'd be thinking very seriously about that as a competitive threat.

I don't want to get into a my company's better than yours type of slanging match, as that wasn't my point at all. What I was actually saying is that Lo-Q is a good example of the racy valuation that investors will put on growth stories once they can demonstrate out-performance.

As I've said many times before, well done to everyone who has made a lot of money on it. I'm not interested in the past, just the future. My salient point with IND is that after a 5-year sideways period in terms of sales & underlying profits, due to lousy execution, they are now starting to execute well again.

Hence the upside on the valuation from a PER of 10 could be very considerable, at this point in time. Lo-Q is a good example of the upside on valuation once a company performs well. So is Delcam, and there are plenty of other small cap examples of stretched valuations now.

Cheers, Paul.

[cockneyrebel] 12/3/2013 11:43

"It's a fair criticism that IND have failed to properly exploit their IP, but that's where the management changes a year ago are starting to make an impact - hence the very confident outlook at IND for what they are predicting will be a record H2 this year."

Have IND promised a record year? I think they've said they expect operating profit to beat last years £2.66m. Will that be a record?

CR

[davidosh] 12/3/2013 11:39

Careful Paul. I hold both but my LOQ holding absolutely dwarfs my IND holding even though at one point they both had identical values and on top of that I have sliced off some profit at LOQ as you know.

You simply cannot compare the two companies and LOQ will grow significantly this year for various reasons. If IND can grow top line at the same rate as LOQ in 2013 without dropping the margins as they now seem destined so to do then I will take any comparison more seriously but that ignores the fact that LOQ have massive barriers to entry and 80% plus recurring revenues. IND sales are lumpy as we know and very little maintenance or recurring revenue with the same customer !

LOQ are about to crack the booming far east leisure trend via a No1 partner and have already signed up six of the 10 largest parks operations in the world. They dominate their space...IND should take note and can still take notes. LOQ are a class operation and never stand still. IND went backwards !

[shanklin] 12/3/2013 11:33

Paul

Before you're accused of libel, you might like to add a few "IMHO"s to your comments re LOQ.

Good luck with IND.

Cheers, Martin