Inspired Share Discussion Threads

[wanttowin] 30/1/2017 07:39

Did they not state in Sept that the order book was 28,8 mill, now 28 mill?
Does that mean no extra orders since Sept?

[rivaldo] 30/1/2017 07:12

Excellent trading update:



- nicely in line with consensus 1.15p EPS expectations
- order books up healthily
- strong start to this year, with 1.38p consensus EPS forecast (plus 0.5p dividend)
- more acquisitions likely

On a single-figure P/E for this year INSE are just much too cheap imho.

[rivaldo] 26/1/2017 16:21

Nice close...come on INSE :o))

[martinthebrave] 26/1/2017 11:00

Joined you guys here today. Like the sector at the moment and INSE does seem decent value. GLA.

[yump] 26/1/2017 07:57

Hopefully profits will continue to rise while divestment of various earlier investors continues. What we don't want is any sort of drop just after they all finish, otherwise the share price won't jump up to a more reasonable level.

[funkmasterp12] 26/1/2017 00:13

Interesting that they're touting for business on Twitter. Not seen them do this before.hTTps://twitter.com/inspiredenergy/status/822090725076697088One could read that in a couple of ways..

[diesel] 25/1/2017 21:15

I've been in these for about 6 months, based on a sustained growth in all key measures, while share price performance has been lacklustre over the last year, if they maintain the divvy growth then that's enough for me...

[pj 1] 25/1/2017 18:43

Even if you add the debt back in then against normalised eps I calculate a p/e/ 2016 x13.7 and 2017 x10.8

P/E Ratio at year end, 2012 x17, 2013 x21, 2014 x14.5, 2015 x19, 2016(e)x12.

So a p/e of say 14? giving circa 50% uplift to 19p is at least on paper extremely likely.

I suspect the Director sales have taken more of a toll than we perhaps realise, so lets trust they are behind us

[glasshalfull] 25/1/2017 18:07

Interesting debate. I'm with spooky...Adjusted Earnings have been growing at a lick.
Hopefully they will release a t/s in the coming days similar to previous years.

Worth reiterating their earnings record that I posted in November 2016.

---

They are on a PER of 10.6 for 2016 & PER of 8.8 for 2017, despite delivering double digit earnings growth in 2015 & strong set of numbers for H1 2016. The shareprice is 1p below the 13.75p it sat at this time last year.

Worth pointing out to that Inspired Energy have delivered consistent earnings growth over the last 5 years, notwithstanding positive noises over future growth. I think it worth reiterating their earnings history dating back to 2011, demonstrating strong profitable growth & a progressive dividend policy which have gone somewhat under the radar:-

Adjusted diluted EPS

2011
Turnover £1.5m
PBT £0.9m
EPS 0.19p
Div Nil

2012
Turnover £5.26m
PBT £2.3m (+155%)
EPS 0.46p (+142%)
Div 0.11p (maiden dividend)

2013
Turnover £7.6m
PBT £3.3m (+43%)
EPS 0.64p (+39%)
Div 0.17p (+54%)

2014
Turnover £10.8m
PBT £4.3m (+30%)
EPS 0.85p (+33%)
Div 0.25p (+47%)

2015
Turnover £15.2m
PBT £5.1m (+19%)
EPS 0.95p (+12%)
Div 0.35p (+40%)

---

The interims confirmed strong growth in cash & profitability, with Adjusted EPS (+38%) in H1 & indications that H2 started strongly with this bullish statement,

"The Group's acquisition strategy has delivered great results as demonstrated by the success achieved by the acquisition and integration of WPUK and STC, while organic growth momentum has continued. Since 30 June 2016, and through the enlarged teams working together, we have signed our largest ever account within the Corporate Division and are confident we will deliver another set of record results for the year ended 31 December 2016 enabling us to looking ahead into FY 2017 with even greater confidence."

In H1 they delivered a 34% increase in operating cash with corresponding 9% fall in net debt to £8.1m, despite current receivables rising. Their order book also appears to be growing strongly providing further visibility.

On the back of these results & recent acquisition of IBS Panmure upgraded turnover by (+8%) and EPS (+7%) in 2017 to £25.9m and 1.45p EPS. So on a prospective PER of 10.6 for the year just ending & PER of only 8.8 for 2017.

2016 est
Turnover £21.0m
PBT £7.6m (+19%)
EPS 1.2p (+26%)
Div 0.45p (+29%)
PER 10.6 (@12.75p)

2017 est
Turnover £25.9m
PBT £9.3m (+22%)
EPS 1.45p (+21%)
Div 0.5p
PER 8.8 (@12.75p)

Panmure indicate:-

"At our 19p target price, the shares would trade on 13.1x, a material discount to the market for a company that is growing organically at 10%+ CAGR, has c.40% EBITDA, modest gearing (0.5x net debt / EBITDA) and a significant opportunity in a large and underpenetrated market , in which we expect further consolidation.

Last month, we noted that INSE’s interims showed a 30% dividend increase and 34% growth in its operating cash. The shares trade on a 2017 FCF yield of >12%."

I recognise that energy purchasing & consultancy services won't be everyone's cup of tea, but in a current market where it becoming difficult to find value, INSE's track record and future projections mark them at least worthy of research.

Kind regards,
GHF

[1gw] 25/1/2017 15:55

I think the adjustments are mainly related to amortisation of the businesses acquired in 2015. As such, they are the other side of the big increase in [edit] adjusted earnings aren't they? i.e. they bought some stuff in 2015, this gave them an instant increase in revenues and "adjusted" earnings, but they are going to be paying for that stuff through the amortisation charge for a number of years to come. They also have a pretty hefty chunk of goodwill sitting on the balance sheet.

So if all comes good, the amortisation charge will eventually disappear and they will be left with the bigger business and bigger earnings, both adjusted and unadjusted. But in the meantime they carry the risk of something going wrong with the acquired businesses (economic, fiscal, industry changes) and having to write some of it off at some point.

If they carry on with a significant component of "buy to build" of course then there will be further growth in adjusted earnings, higher amortisation charges and presumably also more goodwill.

They appear to be managing to integrate acquired businesses very well, so I don't think write-offs are particularly likely in the near-term, but the risk is sitting there somewhere as a consequence of the acquisitions and the increased scale.

I can't help thinking that at some point the "best" answer for shareholders might be for INSE to be bought out by a bigger competitor themselves (UTW?). But while they are making a success of picking off less well-placed but complementary businesses, it seems sensible to carry on for a while in the hope of increasing the ultimate take-out price.

[spooky] 25/1/2017 15:22

Adjusted PBT was up 44% in the first half but i suppose it depends if you believe in the adjustments.

[itr7] 25/1/2017 15:19

Spooky. "projected to be up more than 100% this year" - but that's a projection so unconfirmed. last 3 years full year PBT figures taken from annual reports are:

2015 2014 2013
3.49 2.98 1.75

So 14 to 15 was a 17% rise off a low base.

So I wouldn't say that it is misleading to say that PBT has moved up consistently but slowly. You can play with percentages but given the market cap of the firm vs the small absolute numbers of PBT I would say this is not an aggressive growth stock - which was my original point.

If the trading update shows a big jump in PBT this year, then I'd change my view.

[spooky] 25/1/2017 12:33

itr7 - 'PBT has moved up consistently but slowly over the last few years'. Don't know what numbers you have been looking at but PBT has been compounding at quite a rate, it's projected to be up more than 100% this year. I don't really have a strong view on the company but your statement is misleading.

[itr7] 25/1/2017 12:29

The more I look at this firm the more I suspect it is a well run but potentially limited company in terms of near term growth. Energy consultancy is a clear niche, they are apparently very good at it, but there are some very big players in this market attached to the large energy companies. To what extent are they able to take on those firms? PBT has moved up consistently but slowly over the last few years. As a business owner myself I know that sometimes a company reaches an optimal size beyond which the quality of the product comes into question - this is particularly so with consulting services where the level of experience and knowledge of the founders is hard to replicate. I am looking forward to the update as I think this will give me a good indication regarding INSE's ability to break out and therefore whether to stick with them over the longer term.

[rivaldo] 25/1/2017 09:27

Nice 70k buy at 13.4p has caused an uptick - trading update soon as per the above?

[wanttowin] 23/1/2017 12:17

Seems we still have someone offloading, another 1.5 mill dumped.

[wanttowin] 20/1/2017 14:57

Been waiting for a little dip, managed to get my small top up done, 20000 @ 12.95

[the big fella] 12/1/2017 15:21

1gw - I tend to agree. If the business continues to perform well over the coming years, at some point this has to be reflected in the share price.

[1gw] 12/1/2017 15:09

If they are going to leave the tap on perhaps they could at least increase the selling price to reflect scarcity value!

They have more than halved their personal shareholdings from 32.8% (Janet + Matthew) at the end of 2014 to 15.9% after the October placing. So at that rate they'll be out in another couple of years anyway...

But assuming they want to retain a meaningful stake in the business I would have thought their scope for further sales is now fairly limited - perhaps one more of 5% or 6% to leave them with about 10%.

And perhaps if instead they see themselves exiting in due course, they might want to leave their current stake in tact and use it to negotiate a sale of the whole business to someone who they felt would treat it and its employees right once they have gone.

[the big fella] 11/1/2017 12:04

It is a frustrating hold. About time the Thorntons turned the tap off. Trading statement at the end of this month should read well.

[rivaldo] 11/1/2017 11:42

Good to see INSE promoting their services for the forthcoming deregulation of water in England, noting that Veolia are applying for an OFWAT water retail licence:

[wanttowin] 10/1/2017 12:35

Frustrating hold for sure itr7, but not a worrying one for me, the decent divvy helps. I very much like the business model and feel sure the share price will/must follow the success eventually.
Did a couple of dummy buy/sells, and it seems all the trades today have been sells, yet the mm's aint giving much away. I'm hoping for a dip, been trying to get a little top up done here in the 12's, but so far no luck

[itr7] 10/1/2017 12:14

I like this business - have held it for nearly 2 years so far - but it isn't moving forward from a share price perspective - 5% above my purchase price in 2 years. So whilst I can see what they are doing and like what they are doing, is there a near term catalyst that is going to make this share worth significantly more than it is today?