K3 Business Technology Share Discussion Threads

[stegrego] 08/3/2010 17:52

Good outlook in results.

Looks like the market was happy to go with the adjusted numbers....




p/e of 5

[foxnil] 08/3/2010 15:47

If you are interested in quizzing management, the company is exhibiting at this show in April: www.masterinvestor.co.uk. They have a few free tickets available for shareholders and other interested parties if you email the organisers at [e-mail] quoting 'K3 Business Technology shareholder'.

[glasshalfull] 25/1/2010 23:06

Thanks for updates steg.

I usually have a skim of the Hoodless small cap flashes and agree with much of what they say, but on this occasion I think they are rather harsh to recommend a sell.
KBT have knocked net debt down from £13m to £7.4m per Edison (must also factor in £1.5m placing). Even so, £4m positive contribution to cash balance is testament to cash generative qualities here and I see that Edison also forecast that it could be repaid by 2011.

NAV is made up of intagibles and goodwill. No investment case to be made on valuation ground.

It appears that negligable growth is behind their recommendation. Perhaps they are right.

I think KBT will improve on forecasts given the impressive way in which they negotiated the credit crunch and think PER 5 rather miserly. With decent contract pipeline, reducing debt and strong cashflow I see more upside than downside in KBT.

Regards,
GHF

[stegrego] 25/1/2010 20:26

Is it usual for this sector to trade on 5x or is it the factor that almost zero growth is predicted?

New Edison note out



Also

Hoodless B

K3 Business Technology (KBT, 91p, £23.22m) Trading update covering the 12 months ending December is in-line with market expectations. The group has been supported by high levels of licence renewals and maintenance income boosted further by new business wins in both the Retail Software and Manufacturing Software divisions. The group expects to show a significant improvement on the pervious year's £13m level of net debt. Our concern is that the group will struggle to show EPS progress over the next year – so with EPS forecasts around 17.2p for both years we see the shares as up with events and maintain a SELL recommendation

[glasshalfull] 25/1/2010 07:52

Steg - Nice to see that you're sniffing about and that the shoe's on the other foot for once.
Remember the same feeling looking at ETO and noticing you just in pre-spike.

TS "in line"
Strong cash generation
Net debt lower than market expectations (circa. £8.7-£8.9m)

Soiunds okay to me :-)

Regards,
GHF

[stegrego] 21/1/2010 19:07

Grrr GHF - can you please shush about these!

Been stalking em for a little while, but was not around today and missed getting in before the jump...

Talk em down a bit for me pls.

[eagle eye] 21/1/2010 17:41

Glasshalfull,
Thank you for posting the link, much appreciated.
I spoke with Andy Makeham at the Master Investor Show last year and was impressed by how he has planned and built this business. Despite the debt, the business generates good cashflow so a few good years could see the debt paid down rapidly.
However, K3 is likely to add critical mass via acquisition,so debt is always going to be a feature. I'm sure any addition will be of of strategic value though, as K3 won't just buy turnover.
Best Wishes to all KBT shareholders.
Eagle Eye

[40plus] 21/1/2010 14:50

Hi GHF - They'll be at Master Investor April 24th 2010 - at the Business Design Centre In Islington. Talk to them directly as well. I did last year and invested afterwards based on what I felt about the management and the lowly valuation. I don't trade just aim to hold what I think are quality stocks for as long as I see them undervalued.

[glasshalfull] 21/1/2010 14:20

Summary: -

Current price 92p (91-93p)
Market Cap £23.48m

Consensus forecast 2009 (year end has subsequently changed but forecasts appear to be to 31-12-09) - 3 Brokers - D Stewart Buy with other 2 commissioned research

EPS 18.1p
PTP £6.01m

PER would be 5.08

Net debt forecast to have reduced from £13.5m (30-06-09) to £8.7m (31-12-09)

Regards,
GHF

[glasshalfull] 21/1/2010 13:16

What a quiet board.
Looks like news on trading has leaked.

Trading update will be announced towards end of January and the December update together with massive Director purchases through the year (predominantly through the placing) augurs well.

Must be sitting on A PER between 5-6 with decent cash generation.
Plenty of upside IMO.

Regards
GHF

[glasshalfull] 19/1/2010 16:57

Snippet :-



Strategic positioning

"In our view, K3 has the strongest overall strategic positioning of the three companies. Whilst it is still supporting its own products, new product development is being directed at applications build around partner ISVs. Whilst, in its manufacturing business, K3 has a strong relationship with Syspro, Microsoft is the group's key strategic ISV partner. K3 was one of the first UK partners to put serious development effort in Microsoft CRM and its proposition in the retail sector is based around the Microsoft Dynamics platform.
From a vertical market perspective, K3 has a strong focus on retail and manufacturing. Our only criticism of K3's product strategy is that its infrastructure and managed services offering is not as developed as it might be. However, we understand from conversations with management that this is a weakness which management is seeking to address both organically and, possibly, by acquisition.

Financial performance

K3 has delivered better organic growth levels than both Maxima and Sanderson despite the fact that is generates less of its revenue from existing customers. We attribute this success to superior product positioning and sales execution. Particularly in its Manufacturing business, K3 has a high developed sales methodology for upselling existing users onto newer versions of its technology. K3 also leads the pack on its margins and we attribute this to a greater level of new licence sales in its business mix. K3's cash conversion has been adequate and it has invested in growth.

Valuation

Despite being the best positioned for the changes ahead, K3 has the lowest valuation of our three stocks. For the year to December, the shares trade on an EV/NOPAT of just 6x which is a 50% discount Maxima and Sanderson. Putting K3 on a par with the other two would imply a fair value for the shares of 150p."

Regards,
GHF

[glasshalfull] 19/1/2010 16:55

Well, I've availed myself of a few today.

Been a holder before and remember comparing KBT with MXM, TSE and SND several years ago.

TSE has subsequently delisted in a management coup (family management with majority holding)
MXM suffered with QAD ending their distribution agreement.
SND have fallen on the back of debt concerns and were loss making per recent results.

KBT on the other hand appear to have weathered the credit crisis extremely well, maintained profitability and excellent cashflow will reduce debt levels significantly (this was my main caveat).

I was interested to read the following note which gives detailed comparisons with KBT, MXM and SND....intimating that KBT are substantially undervalued in comparison to peers with 150p price mooted.



Well worth a read.

Interested to hear if anyone else is following these.


Regards,
GHF

[investinggarden] 04/9/2009 09:28

Buy/Hold recommendation from Growth Company Investor

[spaceparallax] 02/7/2009 12:37

sp responding to the solid TS.

[spaceparallax] 07/5/2009 13:25

lively these last two days.

[spaceparallax] 15/4/2009 10:10

Sp recovering nicely.

[spaceparallax] 17/3/2009 09:33

Impressive results during difficult times. Outlook acknowledged to be difficult, significant liabilities - a tough year ahead no doubt.

[orange1] 09/1/2009 10:03

Anyone got a spare million? K3 will pay you 2% a week (that's more than 100% p.a)to borrow it and the board will confirm that that is fair and reasonable:

From today's RNS:

""On 29 December 2008, K3 entered into a short term loan arrangement with CA Fastigheter AB,a company connected with Mr PJ Claesson, a director of the Company so as to ensure prudent liquidity over the year end period. On 7
January 2009, the loan, amounting to GBP 1,000,000, was repaid in full in accordance with its terms.

The transaction was a Related Party transaction in accordance with the AIM rules. A fee and costs of approximately GBP 20,000 in aggregate was paid to CA Fastigheter AB in respect of the loan.

Excluding Mr. Claesson, the directors and the Nominated Adviser consider that the terms of the transaction were fair and reasonable insofar as shareholders were concerned."

[spaceparallax] 05/1/2009 12:05

Nice little bounce over recent days.

[spaceparallax] 19/12/2008 16:05

Big Sells showing today C1M shares!

[denc] 17/12/2008 15:24

praipus - they certainly do know how to charge for after sales service thats true

[spaceparallax] 16/12/2008 11:01

Why should the warrants be extended?

[spaceparallax] 02/12/2008 13:04

Today's dip is presumably in response to the broker target downgrade.

[spaceparallax] 27/11/2008 15:01

A strong Director buy.