Journeo Share Discussion Threads

[oliver_m_j] 19/7/2024 16:23

Strong finish - not much stock available! Weak holders probably shaken out by now

[nchanning] 19/7/2024 09:45

Train operators systems going down for a day because of a Microsoft cloud outage makes sod all difference to Journeo

[dodger777] 19/7/2024 08:10

Could be an excellent short term buying opportunity

[oliver_m_j] 19/7/2024 08:05

Early sell-off: maybe on IT news?Train companies affected in UKpublished at 08:0208:02BREAKINGA major train company has warned passengers to expect disruption as it is suffering "widespread IT issues".All four of Govia Thameslink Railway's brands - Southern, Thameslink, Gatwick Express and Great Northern - posted on social media: "We are currently experiencing widespread IT issues across our entire network.

[mgsmith] 17/7/2024 11:22

there are 2 sorts of forecasts in my opinion. Educated guesses and uneducated guesses. Neither of which are of much value. Does anybody actually know the situation regarding the New York subway contract or they just guessing?

[adamb1978] 17/7/2024 10:44

The 'already included in management forecasts' wording is, I imagine, just their way of telling the market that the years figures are being de-risked, rather than the market increasing their expectations. With any business which doesnt have a full recurring revenue model, they'll start the year with <100% of the year forecasts covered and each contract signed takes that % closer to 100%. To me its just good management by the company.

I've emailed the company on this US subway contract question to see whether there were any extensions in the initial agreement or extensions signed

[apad] 17/7/2024 10:25

Given the low cash flows and small Mkt Cap, that's a sensible position, melody.
Depends on one's personal risk approach.
JNEO is my 12th largest holding, so I am not that gung-ho and I am also looking for new news on orders.
apad

[melody9999] 17/7/2024 10:06

APAD - the bit for me - and why I am no longer a holder having exited at 255p - is uncertainty over continuing growth. NY Subway ending is obviously a drag. But recent contract win RNS all say 'already included in management forecasts' or similar.

The real question is what contracts do not come off (or are delayed) that were also included in management forecasts and would lead to a revenue miss.

Mitigating that is margin improvement....and any new contracts that are additional to expected revenue.

I think the management team is excellent and longer term prospects good so will keep watching with interest.

[rmillaree] 17/7/2024 09:47

APAD
"I must be missing something in this debate."

You are missing then fact is very normal to have forecasts for current year and next year.Ok not all companies do next year forecasts - Journeo is sub £40 mill market capo so is on the smaller end of things so your argument that many small companies dont do "next year" is valid. Not having next year stuff though can leave a big void ref us knowing what to expect so i would much prefer every company top have next year out in the open and adjusted accordingly when they adjust ref this year

"2025 forecast would be for 31 Dec 2025. I.e a year and a half ahead."

not from my point of view - to me ye 31/12/2025 starts in less than six months (01/01/2025) - so i am as interested in next years expectations as this years (probably more so) - in 6 months time now(2024) will be the past and 2025 will be the now ! - i would expect shareprice will be much more judged on 2025 expectations than 2024 if they are both in the public domain and there is no specific lumpiness. Clearly uncertaintyu ref tehn future is not going to help sharprice stability if they have internal expectations that would provide stability.


I have know idea whether Dan_the_Epic has raised most excellent points ref lack of 2025 forecasts and the new york subway situation or whether they are talking out of their posterior? - i do sit up and take notice though if someone is posting stuff that could perhaps be very useful info.

Dan_the_Epic
are you able to provide any more detail to back up your assertions here ? i do undersand if you cant provide any further info - if you can confirm one way or the other though anything that might help clarify cheers.

Does anyone know when "next years forecasts" have turned up in then past for Journeo? - seems like somewhat fanciful speculation that forecasts would be witheld due to one known contract ending - life goes on so company should really not be delaying anything due to that fact - ie if it leaves potential void in profits that should be disclosed and out in the open i similar manner to previous years.A middle ground here might be slight delay where the extra small period of time would ensure they arent issuing stuff that would likely be wrong very soon - that to me would be more to do with signing new contracts though than stuff coming to natural end that should be standard to plan for.

Hey ho its never plain sailing with small caps - as someone fairly new to this company to me then 2025 void kinda explains the share price volatilty. With large volatility and lack of next years numbers though i kinda preume that pi's are the least well informed people with regard to teh true picture of how the business is doing - that aint great.

Comments from the company seem pretty "confident" so it would be poor to me if they are in any manner sotring up posible bad news ref next year for later release - or even this year if they have work to to deliver contracts by 31/12 so sales and profiuts can be booked for audit purposes - to me the hard work starts when you have signed the contract ! - the expected new sales still need to be delivered to the extent they get past the year end audit.

[apad] 17/7/2024 09:38

I judge the share price to steadily increase towards 250p in the short term. Unfortunately I have no cash left as I put it all in at 225p 😊
GLA
apad

[apad] 17/7/2024 09:30

Now I understand your point, Dan.
My view is that the acquisitions and the Infotec order have introduced too much uncertainty into predictions so far in the future.
They might very well get the second part of the Subway contract or some other.
It's so far away.
0.8 years revenue (today and at the estimate in 6months time) buys the whole company. In my book this makes it ridiculously cheap, so presumably the market shares your negative view, Dan. 😊
apad

[cockerhoop] 17/7/2024 09:25

A couple of points

Cavendish didn't provide FY24 forecasts until their 1st August 2023 note so this year is currently consistent with last year.

Whilst it is true that the signed US Subway contract expires this year it does only cover around a third of the applicable rolling stock. I spoke to Tim Court at a site visit and he was hopeful of picking up more orders but was cautious as the OutFront model (advertising based) had changed with lower subway footfall since covid. So there appears to be a wide range of outcomes for the US subway business.

[dan_the_epic] 17/7/2024 08:58

Infotec before NY subway

Revenue (£m) / Profit before tax (£m)

2018
7.26 / 0.94

2019
7.12 / 1.03

2020
5.65 / 0.85

2021
5.53 / 0.54

Infotec last year with subway.

2023
19.7 / 3.7

What do you think happens when this contract ends which it is doing this year ?


9/10 last Cavendish reports had at least 2025 forecasts and many had 2026. The fact there is no 2025 from Cavendish I think is a conscious choice to hide the NY subway issue until they can mask over it with an acquisition. It does not hide that when NY subway falls out there is a profit hole that really needs to be filled pronto IMO

[apad] 17/7/2024 07:49

Journeo Yr end 31 December 2023.

Here are the results and the Cavendish forecast for 31 Dec 2024

Rev. Pre-tax profit £m EPS (p) DPS (p) P/E
2021A 15.6 0.5 5.0 0 51.0
2022A 21.1 1.0 10.3 0 24.8
2023A 46.1 4.0 19.8 0 12.9
2024E 48.0 4.4 22.1 0 11.5

2025 forecast would be for 31 Dec 2025. I.e a year and a half ahead.

I must be missing something in this debate.

apad

[hydrus] 17/7/2024 07:47

From CavendishInfotec generated revenues of £19.7m and at a gross margin of 30%. As with other parts of the business, we expect these margins to increase going forward as the lower margin New York train contract will represent a small proportion of the revenue mix.So the subway contract is not generating all the profit clearly. How much tbc

[adamb1978] 17/7/2024 07:17

Dan

You're obviously welcome to your own theories however 2025 forecasts aren't available for many small caps (and for those for which they are available, they're generally utter garbage). Far better reading figures and results carefully. If, as you suggest, there is a big black hole in 2025 then you'll start to be able to see it by reading between the lines well before any 2025 figures are available.

Adam

[dan_the_epic] 17/7/2024 06:57

adam the central costs are small anyway, your point doesnt move the needle. the lack of 25 forecasts belies the business visibility and imo is because they know they have a potentially serious 2025 issue and imo they will scramble to do m&a to fill it before releasing forecasts

[adamb1978] 16/7/2024 23:24

"Look at the fine print of the 2023 accounts. infotec underlying profit £3.7m. Everything else minus central costs, only a few hundred thousand"

Well, if you take out one division/business unit of lot of small companies then they won't be making much profit simply because the central costs of a company support the entire business.

So if you remove Infotec as an example here, then you also need to strip back the central costs to mimic what central functions they'd run with if they were without Infotec. That would probably result in lower EPS as, for example, you need a CEO regardless of size. That however is just just economies of scale and amortising the central costs over a different sized business, rather than anything magic about JNEO.

[apad] 16/7/2024 20:21

Not wrong. It's just that the company doesn't give the figures.

Also
"although the company doesn’t give specific figures, the strength of the order book is reflected in broker Cavendish’s forecast for underlying EPS to climb 11.6% to 22.1p in FY 2024."

"Cavendish suggests a forecast PE of 17.4x would be a fairer, suggesting a target price of 385p – 50% higher than the current share price."

apad

[rmillaree] 16/7/2024 20:19

per stockopedia i have £48 mill expected 2024 revenue - 2023 was 46 - not sure if you have lost a year soemwhere ?

[apad] 16/7/2024 20:01

My notes say the Cavendish forecast is £48m revenue against the current £46m.
Am I wrong?

apad

[rmillaree] 16/7/2024 19:50

The problem with Journeo that many investors will walk into is that the business barely makes any money without the New York subway contract, which is not getting renewed

Interesting comments Dan - i wqs wandering why there were no 2025 numbers available on stokopedia despite the company being beyond half way into 2024.

I cant really get much detail from quick skim of the annual report any additional useful info in that regard would be appreciated. Infotec seem to have abnormally high % of uk market for their segment so is the loss of New York not manageable perhaps? does that unit have scope to get other similar large decent conbtracts elsewhere - would seem that there would be plenty of potential markets for that type of kit?

[dan_the_epic] 16/7/2024 19:33

The problem with Journeo that many investors will walk into is that the business barely makes any money without the New York subway contract, which is not getting renewed

Look at the fine print of the 2023 accounts. infotec underlying profit £3.7m. Everything else minus central costs, only a few hundred thousand

No wonder Cavendish refuse to give out forecasts for 2025 when there is no Subway contract left

Oops

2025 is not going to be a good year at all IMO, DYOR.

Giant value trap

Underlying profit


2023 £'000

Fleet System 583
Infotec 3,697
MultiQ 153
Passenger Systems115
Central (264)

[stkildaroad] 16/7/2024 18:05

Selling on account of the Williams pronouncement is a possibility. We will never know for sure. I'm a long term holder of these shares and seen many false dawns before. But Ive been to recent AGM's and had a chance to meet the current management team and ask questions. This team know what they're doing and all recent news points to the fact that they are on target. It's a very small cap company and obviously share price is influenced quite easily. Both Exec and Non- exec Directors have significant holdings, some of which bought recently with their own money at more than the current share price.
It's a no brainer for me and I have topped up today at a price I don't expect to see again. Williams may actually have done me a favour.