K3 Business Technology Share Discussion Threads

[glasshalfull] 23/11/2011 17:43

I'll be keeping an "eagle eye" on the shareprice. I'm certainly interested at these levels and not too concerned about short term movements.

Andy Makeham & team have done very well in executing their acquisition strategy, pretty seamless as I can determine. If invested I'd hope they'd concentrate On organic growth - with the odd SMALL bolt-on & confirmation of the strong cash generation and reduction in net debt.

Last invested in these during 2009/2010 and did well to double although sold at 150p and missed the further leg up to 200p and beyond.

Tole - I knew you'd be looking. Saves me an email...if you've any info would greatly appreciate it ;-)


Regards,
GHF

[tole] 23/11/2011 17:20

Also looking for an entry down here ;)



Noticed my above investtech chart wont show correctly...

Looking for c115p

[eagle eye] 23/11/2011 17:19

Glasshalfull,
You are quite right, but nobody is interested at the moment as market sentiment is so poor. K3 suffers from being an illiquid stock with a few straggly sellers and no buyers.
Look at the chart and it would be hard to call the bottom.
An attractive company on a compelling valuation.
Best Wishes
eagle eye

[glasshalfull] 23/11/2011 17:07

Fogot to mention that net debt is forecast to reduce further in the next financial year.

Falling from £10.2m at end of June 2012 to £3.4m at June 2013. Fantastic cashflow if they can do this....and I'd imagine the shareprice would take care of itself.

Regards,
GHF

[glasshalfull] 23/11/2011 16:57

AGM Statement out an hour ago.



"The Board would like to confirm that it remains confident of the Company meeting management's expectations for the full year."

Hmmm, with consensus forecasts indicating 27.82p EPS on the cards this equates to a PER of 4.4 on 46.7% growth y-o-y.

Net debt has always been my main concern with KBT but it now looks like July's placing at 205p raising £5.1m (after expenses) as highly opportunistic given the current market turmoil. Net debt was £15.5m at 30th June so the placing minus the small acquisition of FD Systems in July (£2.6m) indicates that net debt would have fallen to £13m before positive cashflow benefits. Edison have penciled in net debt falling to £10m at year end.

The positives I see is that their move into acquiring small bolt-ons they've built an enviable customer base that they may be able to cross-sell and also established a decent recurring revenue stream that is extremely important in this environment.

KBT have also moved strongly into Managed Services which is showing excellent growth....and lovely margins.

Has the slide from 218p to 123p (today's closing mid) since August now appearing overdone? The shares have come off 44% yet are trading in line.

An interested observer,
GHF

[philo124] 12/10/2011 21:21

Directors should buy enmasse.

[yump] 19/9/2011 10:12

Yes, it is a bit mean.
This looks like its doing an old fashioned thing.

I can remember when used to read results in Investors Chronicle and be safe to wait a few weeks before buying into companies, as they got marked up, then settled back and then began to respond after a few weeks. Unlike the pumped ones, where everyone gets very excited half an hour after some good results are posted.

[spaceparallax] 19/9/2011 09:58

Agreed, divi needs to improve though.

[yump] 19/9/2011 09:57

I bought in recently and expecting that the share price will continue on its upward overall trend and that there is plenty to go for in terms of its size, which will put it into a different stock category, where there will be more interest from funds.

Having been significantly higher, at least I'm certain I didn't buy near a top.

[dpmcq] 19/9/2011 07:30

Solid set of results . . . . again!
I agree yump, not very fashionable and who invests in well run profitable companies these days and pays a divi? ;-)

[yump] 19/9/2011 07:17

Given the growth, the resilience in tricky times, the growing recurring revenue stream etc. etc. etc. this seems to have a silly low valuation. Perhaps its not very trendy, but there don't seem to be many companies like this around.

Not sure all the chasers of loss makers and blue sky stocks will follow it - loads of pi's have become gamblers and short-termers over the last decade, but make it a bit larger and more funds will take notice - then p/e should go up and stay up.

[yump] 25/8/2011 13:34

Seems to be quite responsive to small volumes.

[philo124] 25/8/2011 13:16

Yep, sometimes falls are indiscrimate; 165p looked pretty harsh.

[yump] 25/8/2011 11:49

Looks oversold to me. 10% off for the placing + a load more because of the general market woes = too much. Its as if they've done something badly wrong, when they've actually got an excellent track record.

[yump] 22/8/2011 22:12

Quite interested. Not really looked before.

Buy and build can work if its business-driven, not ego driven, if the company is relatively small and if the market is fragmented it makes sense. Plus there will be quite a few companies around who have not weathered the recession storm very well etc. etc.

Not a bad time for acquistions imo. and at this size

Much prefer this to the large company acquistion driven businesses, who always seem to be compensating for their own businesses grinding to a halt by making 'impressive' takeovers, which often end in tears or flat profits and a pile of exceptionals.

If K3 have been acquiring companies over a long period and have still managed to deliver increasing profits with no 'hiccups' then I reckon they've got as good a chance as any to build and buy their way to something substantial.

...now where's that explanation of acquisition driven earnings growth in the Zulu book...

[philo124] 19/8/2011 15:50

Bought another 1500 @ 164p for AIM portfolio, cheap as chips on a 12 month view.

[philo124] 26/7/2011 13:16

Forward P/E 7.4.

[eagle eye] 15/7/2011 09:33

40plus,
I reiterate your comments re Andy Makeham. I've met him 3 times in just over 2 years. Don't under estimate David Bolton though, who is Andy Makeham's business partner and Chief Financial Officer. You don't see too much of him but he is a shrewd and a safe pair of hands. With him at the helm, K3 is unlikely get a rush of blood to the head and make deals that don't make commercial sense. Thats why I think it unlikely they would take over Maxima lock stock and barrel.
Eagle Eye

[cfro] 14/7/2011 18:13

Thanks very much for your comments 40plus. Please feel free to post more often. I for one, as im sure so would others here, welcome your thoughts.

I've never met Andy Makeham myself, but i do get he impression that he knows what he is doing and trys to do a good job. I would tho hope that he doesnt get too ambitious.

As to Maxima, GHF pointed this out to us months ago and is suspect he will be proven right.

But to what advantage would a TO be for shareholders?

It has a turnover of £45M currently. If a full or part TO couldnt increase PBT and EPS atleast by say 20% after dilution then what would be the point?

[40plus] 14/7/2011 16:30

cfro - I normally don't post but I'm a long term holder and not worried about today's news. I think we're in safe hands with Andy Makeham. I've met him twice and he's not about overpaying for companies. If the acquisitions fit at the right price and can be integrated as they have done in the past then I'll be keeping hold of my shares. The savage way the share price was hit during the downturn was no reflection on how the company was being run or performed as I saw through the rising EPS figures. It did however allow me to pick up stock on the cheap and I'm now looking forward to them building a great company for us shareholders.

[interceptor2] 14/7/2011 16:20

GHF - After selling my holding today I went for a bike ride, which I find great for thinking things through. And I came to the same conclusion, that they are lining up Maxima(MXM for a bid.

KBT have a long history of acquisition going back to 2007/8 when I held these once before.

As cfro says, they are a buy and build company.

ic2...

[cfro] 14/7/2011 16:02

Very disappointed with the news. :-(

These 'buy and build' companies are all very well and good but if management are too ambitious and get greedy with what they buy then things often go badly wrong. We are seeing the same signs currently with CRE imo.

A crying shame because i always liked KBT alot. On an extremely cheap valuation and growing nicely. Now tho, its a diffent kettle of fish and it really depends on what managment want to buy....

Luckily i had sold half my holding a couple of weeks or so ago @£2.21 when i went to cash initially. Never got round to buying them back but was always intending too. My remaining 1200 shares went today at lunchtime on this placing news but had to take only £2.07 unfortunately. :-(

[eagle eye] 14/7/2011 14:36

Glasshalfull,
I don't expect KBT to have Maxima in their sights, but it might cherry pick one of their divisions at the right price. One thing is for sure....it looks as if the target could be more substantial in size than we have seen in the recent past.
Eagle Eye

[philo124] 14/7/2011 14:24

Could be, just had a quick look at them.