K3 Business Technology Share Discussion Threads

[foxman14] 22/11/2016 13:06

AGM on Thursday 24/11. Hopefully back up to 350p post the RNS statement.

[dpmcq] 14/9/2016 21:54

Thanks noble
A good write up from IC.

[noble3r] 14/9/2016 13:45

Latest IC comment:

It was difficult not to be impressed by the full-year results performance from retail software company K3 Business Technology

(KBT:350p), the Salford-based supplier of software to the retail, manufacturing and logistics sectors and provider of managed IT and web-hosting services. The fact that its share price is making headway back towards last autumn's 19-year high of 377p tells a story in itself. It's a company I know well, having advised buying at 220p a couple of years ago ('Tapping into retail growth', 16 Sep 2014), and last reiterated that advice at 337p ('On the acquisition trail', 5 Jul 2016).

The key takes for me were growth in sales of K3's higher margin own intellectual property software which now accounts for 25 per cent of the mix and generates a gross margin of 66 per cent; a channel partner network that is clearly gaining traction; and a pipeline of new business which is up 23 per cent to £76m year-on-year. New orders hit a record of £35.3m and helped drive revenues ahead by 7 per cent to £89m in the 12 months to end June 2016. But it's the nature of the new business being won which resulted in both adjusted pre-tax profit and EPS shooting up by more than a fifth to £8.8m and 23.5p, respectively. The fact that K3 hit forecasts even though it was hit by an £830,000 write-down after a client went into administration says much about the resilience of the business too.

In the 12-month period, K3's software license sales increased by 17 per cent to £16.2m, helped by a contribution from the retail segment and its "ax I is fashion" offering. Leading European mail order fashion retailer, TriStyle Mode GmbH was a notable client win as were Lacoste and KLiNGEL, just two of 27 customers signed up through K3's channel partner network.

Acquisitions will contribute to another year of growth too. For instance, K3 recently acquired Merac, the author of an electronic point-of-sale and management system for the visitor attractions and leisure sector. It was an earnings accretive deal as K3 has acquired a business that makes annual pre-tax profits of £330,000 on revenue of £1.27m for a cash consideration of £1.4m. It also adds substance to analyst forecasts that K3 can lift EPS by 11 per cent to 26p in the 12 months to end June 2017, a performance that would easily justify another hike in the payout per share to 2p. The payout was lifted by 16 per cent to 1.75p in the year just ended, a reflection of the cash generative nature of the business.

Analysts believe K3 should be able to report free cash flow of £6m in the current financial year after factoring in capital expenditure north of £5m. This means that even after raising the dividend again the company should be able to cut net debt in half to £4.6m by June 2017. Gearing is only 12 per cent of shareholders funds, so there is scope for more acquisitions too.

So, with the outlook positive, and K3 well funded, I have no hesitation reiterating my buy advice. On 13.5 times forward earnings, and offering decent upside to my 425p target price, K3's shares are a decent buy at 350p.

[noble3r] 19/8/2016 10:26

indeed - finally some volume

[sspurt] 19/8/2016 10:21

Interest building ahead of next months figs after a few months of snoozing...

[tromso1] 20/6/2016 12:08

Strong looking chart.

Just been tipped by Simon Thompson in the IC -

[markie7] 08/6/2016 13:46

on the move

[davebowler] 25/4/2016 10:22

Finncap;
K3 has agreed to acquire DdD, a Danish retail software business specialising in cloud-based, software vendor-independent, convenient out-of-the-box solutions. The £8.1m acquisition is funded by a £13.5m placing at 330p, allowing headroom for working capital demands and further acquisition opportunities. The acquisition represented an alternative to K3's own development of an equivalent vendor-agnostic, cloud-based solution with an estimated development cost of €2.5m, while also bringing current EBITDA performance of €1.1m from revenue of €6.2m in the year to December 2015. Target price lifted to 465p.

[dpmcq] 20/1/2016 07:51

Positive trading statement out this morning.

[tromso1] 24/11/2015 15:54

400p soon at this rate.

[gargleblaster] 10/11/2015 00:41

Not sure whether to take some money off the table here - chart starting to look a bit parabolic now!

[fillipe] 09/11/2015 10:48

KBT - continuing to move higher....now 370p at the ask, as I type, with a one month RSI of 93.4

f

[simon gordon] 03/11/2015 11:54

Tech Market View - 3/11/15:

K3 wins again in SAP's home market

K3 Business Technology Group has topped up on fuel for its journey towards greater IP on Microsoft Dynamics ERP solutions (see Journey continues at K3) through a big customer win for its ax|is fashion solution with German online fashion retailer K-Mail Order (KLiNGEL).

The size of the deal was not disclosed but K3 describes this as a major contract win and one that “will help to underpin the results for the current financial year” and deliver ongoing licence and support revenue. It is also notable because it is K3’s second significant ax|is fashion solution retail contract in Germany (where home-grown SAP also has a fashion offering), and was won through the channel which K3 is assiduously tending.

As CEO David Bolton and Group Operations Director Andrew Hodges highlighted during a recent meeting with us, the channel is important because partners can provide the resources mid market K3 would struggle to provide in a growth market. The channel represented 5% of K3’s business at the end of the most recent financial year so there is certainly a lot of headroom for growth – and something of an appetite for the retail solution that K3 has invested heavily in.

[simon gordon] 23/10/2015 20:20

Tech Market View - 23/10/15:

Journey continues at K3

We caught up again with David Bolton and Andrew Hodges, respectively CEO and Group Operations Director at AIM-listed, mid-market value-added reseller, K3 Business Technology Group. Since Bolton took over as CEO early last year, he’s set out on a journey to sharpen K3’s focus on the proprietary IP they add to Microsoft’s ERP platforms, especially Dynamics AX (see Recognising the value in K3).

The journey is more a marathon than a sprint – and rightly so. While, broadly speaking, half of K3’s revenues derive from its IP-enhanced solutions for the Retail industry, the rest of K3's business is firmly underpinned by its reseller/distribution activities in Manufacturing & Distribution, and its hosting services. Babies, bathwater etc, etc.

K3 is fast approaching triple-digit revenues. This is typically the point not far beyond which multiple-line-of-business mid-market ‘buy-and-build’ players have to decide where to place their longer-term bets. Bolton knows the answer is in their own IP. Getting there is his challenge.

[dpmcq] 20/10/2015 14:13

Not many shares in free float so as there has been a bit of buying as of late it does tend to jump on low volume.

[markie7] 20/10/2015 10:18

On move. Wonder why?

[caradog] 23/9/2015 19:48

Part of this IC article is devoted to K3 (subscription required):


It concludes "the shares could run up to analysts' upgraded target prices. Edison Investment Research has fair value of 355p (up from 289p previously), and FinnCap raised its target price from 330p to 380p."

[caradog] 17/9/2015 19:01

Nope, not a mention in IC. Maybe next week.

[caradog] 16/9/2015 17:26

According to this, Finncap have raised target to 380:


and Edison have increased their target to 355:

[caradog] 15/9/2015 14:17

I see these as a good set of results from a solid company. Oddly enough, although K3 have been recommended as a buy by Simon Thompson of the IC a year ago with a recommendation in July to run profits up to a possible 330, there is no mention of the results in today's daily market overview article. Last year we had an article specifically on K3 within a couple of days and I think we shall see a repeat this year with every prospect of a repeated buy rec and possibly raised target in time for the paper edition on Friday. We shall see.

[simon gordon] 15/9/2015 09:38

Tech Market View - 15/9/15:

K3 value showing through

Earlier this year I posed the question whether management at AIM-listed, mid-market value-added reseller K3 Business Technology Group could rise to the challenge to make the business more than the sum of its very many parts (see Recognising the value in K3). Today’s FY results affirm they are up for the challenge!

As previewed last month (see K3 - Full year “in line”), K3 did the necessaries, turning in revenues of £83.4m for the year to 30th June, 16% higher yoy. The acquisitions of Willow Starcom and RTL contributed around £1m so organic growth was a very sparkling 15%. Gross margins eased back from 54.1% to 51.5% but a tighter rein on opex saw operating profit jump 86% to £4.8m lifting margins from 3.6% to 5.8%. Pre-tax profit more than doubled to £3.88m. Super result.

And good news on the channel front (currently 5% of revenues) with a major retail win on SAP’s home turf via a global SI. Channel revenues are set to grow very much faster. And there was also good news from IKEA, K3’s largest client (but under 10% of total revenues) which has extended its contract to 2020.

K3 is not yet at the ‘mission accomplished’ stage – there’s still much work to do. But CEO David Bolton understands the tasks ahead and takes a realistic view on how these should be accomplished.

I will be meeting the top team again next month and will explain more then.