Kbc Adv.Tech. Share Discussion Threads

[actybod] 08/4/2014 23:25

Any particular reason for drop other than wider market sentiment?

[cashstrapped] 26/3/2014 11:16

FYI

Post the full-year results, house broker Cenkos Securities is forecasting a rise in revenues from £65.1m to £67.1m in the current year to end December, to lift pre-tax profits by around £500,000 to £8.9m. The respective forecasts are for revenues of £69.1m and pre-tax profits of £9.5m in 2015. On this basis, expect the reinstated final dividend of 1p a share announced alongside these results to be lifted by 10 per cent this year and the same next. It could be more given that operating cash flow is expected to be in excess of £9m this year and £11m in 2015, making the £600,000 cost of this year's payout easily affordable.

In terms of valuation, not only are KBC's shares modestly rated on an historic cash adjusted PE ratio of 11.2, but a multiple of six times cash profits to enterprise value (market capitalisation less net cash) is hardly an exacting valuation either. So, given the positive trading update, and potential for earnings upgrades this year on the back of further contract wins, I have decided to upgrade my fair value estimate on the shares to 165p which neatly coincides with a major high in August 2001. A move through January's 131p high would be a bullish sign indeed as it would signal a break-out on the point and figure chart.

CS

[cashstrapped] 26/3/2014 11:12

Gargoyle2 - yes full write up from ST with 165P target price.

CS

[simon gordon] 26/3/2014 10:59

Bakunin,

I think KBC are totally focused on the down/mid/up stream.

Infochem's products are for flow assurance and wax deposition:

[gargoyle2] 26/3/2014 10:57

I assume the buying since 10:48 am is on the back of a tip -- Simon Thompson?

[simon gordon] 26/3/2014 06:49

I was wrong when I posted yesterday that the PBT of £7.1m was a miss on the forecast £7.8m by Cenkos. The £7.1m figure is not adjusted.

Cenkos - 25/3/14:

FY13 sales increased 3% to £65.1m aided by a rebound in consulting and despite the impact of the major contract award in Latin America in the previous year. The turnaround in the losses in consulting helped adjusted profit before tax increase 45% to £8.4m (Cenkos £8.3m on the same basis – our previous published forecast of £7.8m included SBP of £0.5m).

KBC is currently valued on respectable, albeit somewhat modest, earnings-based multiples. However, in our view, the market is missing the point as to how the Group is likely to evolve over the next three years. Through a mixture of organic and acquisitive growth, technology revenues are likely to grow from less than a third of sales currently towards 50%. In turn, this should drive multiple expansion given the value that the market places on high recurring revenues built around a strong IP proposition. The progression may not be a straight line one, but our illustrative top-down analysis below gives a flavour of the upside which could see the shares progress through 200p.

[simon gordon] 25/3/2014 20:19

IC - 25/3/14:

KBC reinstates dividend

The turnaround at KBC Advanced Technologies

(KBC) has gathered momentum over the past year, with earnings back in the black and a reinstated full-year dividend.

A supplier of consultancy services and specialist software for the oil and gas industry, KBC posted operating profits of £7.4m, against £3.9m in the previous year. The improved trading performance was largely attributable to the strength of the consulting division and ongoing cost-cutting measures, somewhat offset by higher depreciation and amortisation costs. The bottom line was also bolstered by a much lower tax charge in 2013.

The reorganisation of the consulting business resulted in a 7 per cent increase in divisional revenues to £47.2m and a return to profit at the operating level. The slight decline in revenues within the technology division is not a fair reflection of performance, as a higher proportion of existing contract revenues will crystallise this year due to changes in their accounting treatment.

The full benefits of KBC's restructuring programme will not become apparent until the end of 2014, but the company said that it had enjoyed a good start to the year, with a healthy forward order book of £78.2m.

IC VIEW:

Having nearly doubled since we returned them to our buy list a year ago, KBC's shares trade on 15 times Cenkos's adjusted 2014 EPS forecast of 8.4p. That isn't overly expensive for the sector, and we are optimistic about KBC's long-term prospects. But we don't see any near-term price catalysts. Hold.

[simon gordon] 25/3/2014 18:24

Bakunin,

KBC sell Petro Sim Refinery direct to downstream refineries.

KBC are developing a new direct sales channel so that they can sell Petro Sim Production to the mid and upstream. Previously they did not have a product for this vertical. By partnering with the likes of Flaretot the sales people will have more than one product to sell.

-----

Based on the Cenkos forecast KBC are on 14x 2014.

Share price catalysts:

~Accretive acquisition.
~Multi year Multiflash contract.
~Decent PSP order.
~+Twenty million dollar consulting contract.
~Takeover offer.

[simon gordon] 25/3/2014 14:58

City Presentation up on website:



New CEO 1H 2015, probably internally groomed.

[gargoyle2] 25/3/2014 14:22

Paul Scott's take on the results:
-----

KBC Advanced Technologies (LON:KBC)

I've followed this company for many years, it's an oil industry consultancy & software company, that makes oil refineries more efficient. The trouble is, it's been rather accident prone in the past, not in terms of blowing anything up, but in terms of profit warnings. So it's one of those companies that seems to be permanently restructuring.

Having said that, today's results for calendar 2013 look impressive. Turnover is up 3% to £65.1m, and operating profit on the face of the P&L has gone up 91% to £7.4m. Diluted EPS has moved from a loss into a 9.2p profit. Great stuff. I make that a PER of 13.2, which looks reasonable, based on a 121p share price at the moment.

Dividends are being resumed, with a 1p payout for 2013. It's a start anyway, and represents a yield of 0.8% at the current share price of 121p.

It passes my Balance Sheet testing with flying colours, so no issues there - the business looks well funded. Note that cash has reduced, but that is because it was unusually high last year after a customer made a large up-front payment.

The outlook statement sounds reasonably positive, with a little caveat on timing of orders, to give them wiggle room if something goes wrong later in the year perhaps (!);

"We enter 2014 with a healthy pipeline of contracted work of £78.2m (2012: £82.9m). Together with a number of key consulting contract wins in the first two months of 2014, this means that KBC is well positioned to meet its objectives for the coming year. The exact timing of contract awards will continue to affect results within any year. However, given the strength of the order book, an enhanced range of products and services and major internal progress in 2013, the Board looks to the future with confidence."

Overall then, KBC gets a thumbs up from me. If they can maintain this better level of performance, then the shares mgith be worth considering.

[simon gordon] 25/3/2014 13:58

Cenkos - 25/3/14:

2014
T/O - 67.1m
PBT Adj - 8.9m
EPS Adj - 8.4p
DPS - 1.1p

2015
T/O - 69.1m
PBT Adj - 9.5m
EPS Adj - 8.9p
DPS - 1.2p

[simon gordon] 25/3/2014 12:50

Tech Market View - 25/3/14:

KBC in recovery

It hasn't finished its structural changes and expects these to continue during 2014, but much of the work to bring KBC Advanced Technologies back from a torrid 2012 (see here) was completed in 2013 and it shows in the full year results (to December 31).

Although revenue was up just 3% to £65.1m the company, who provides consulting and software to the hydrocarbon processing sector, delivered improvements to the bottom line. PBT, which shrank by 7% in FY12 (to £3.7m), reversed in FY13 with taking to a more respectable level of £7.1m. KBC is still working on the turnaround of its consulting division and investing in its technology division to open up the upstream production and midstream marketplaces where it appears there are several areas of opportunity, as well as further investing in capacity in regions such as the former Soviet Union, Middle East, India and parts of Asia. These require high levels of investment however.

The problem with KBC is that performance is volatile and reliant on a small number of customers so a large contract won or lost during the year has a significant effect. For example, FY13 licence revenue was down 5% to £17.9m, because of a "particularly large" licence sale in FY12. Overall, licence revenue has increased 38% since 2011. There is still structural work within KBC it has shown it can make the necessary changes.

[simon gordon] 25/3/2014 12:42

Bakunin,

CNBC and Pearson?

Anyway, good luck to you.

=====

Hopefully, should get the Cenkos forecasts later this afternoon.

[simon gordon] 25/3/2014 12:05

Bakunin,

If you read the posts for the last few months on the TRB thread you'll find plenty to digest. America is the most exciting angle in the story.

[simon gordon] 25/3/2014 11:51

Tweet:

Tom Sieber ‏@SharesMagTom

KBC chairman Ian Godden tells me 2014 seen best start to a year since he joined business in 2008

[simon gordon] 25/3/2014 11:02

Bakunin,

Not a good idea?

Historically TRB were mainly consultancy but have now become a software leader in their sector. TRB's software is slowly conquering the world and America is a massive opportunity. Superb plain speaking CEO. They've jettisoned much of the consultancy side. Making excellent cutting-edge software bolt-ons. I was hoping that KBC could become a TRB type clone, I'm not so sure now, hence I have been scaling out until I see some hard evidence that PSP/PS5 is being adopted.

[dasv] 25/3/2014 08:55

bamboo - re: chart - I think after today the technical picture has clearly improved. KBC has lowish beta (0.57) so wider market weakness or strength will affect it only slightly. I sold last week (along with loads of other stocks, but I bought back in today higher (regrettably).

[simon gordon] 25/3/2014 08:42

Gargoyle,

Yes, the order looks constructive but 18 months from launch is snail like. I see Mr Godden has acknowledged this fact, about time.

Once again I think Mr Godden is not a straight talker, for instance:

"The business delivered better than expected results"

In March 2013 the full year forecast was cut, now PBT is a miss by £0.7m, T/O is lower by £1m than foerecast and it is the tax charge that is making him state a beat on the EPS.

The Forecast for 2014, before today, was for a £1m increase in turnover and PBT of £8.3m. They are not actually growing the top line just cost cutting to increase margins. The new software is very slow to adopt and the Esmeraldas order is gradually running down. 10x to 12x until they prove up PSP/PS5 seems reasonable, it's certainly not a growth stock right now, maybe later in the year or 2015.

I've been reducing since Caroline Brown was fired and adding to TRB which I use as a comparison to KBC.