Keywords Studios Share Discussion Threads

[steeplejack] 18/9/2019 09:55

Thanks that's useful.

[1670127] 18/9/2019 09:49

@steeplejack. I look at Nasdaq ratios as they have a mix or companies at various growth rates. They are currently at 12 times earnings as a whole, that is assuming you look at KWS as a technology company. I agree on looking at PEG as well. As companies grow it is often challenging to maintain the same growth rates, we are seeing that slow down over the past few earning reports. It's still healthy but the question is can they maintain that level. Margins will be better next half, it is the norm in games services as this is peak season and facilities and equipment gets used across multiple shifts, so the loaded rate per hour is reduced. Need to compare with previous year same period to understand the real situation.

[steeplejack] 18/9/2019 09:42

Interesting.So what's a more "normal" PE ratio.Is that a market PE ratio or an industry PE ratio.Growth companies like this normally require keeping a sharp eye on cash generation.Its also worth observing the PEG ratio.

[rivaldo] 18/9/2019 09:37

Liberum retain their 1700p target.

The results were solid, and the outlook for H2 is decent, with revenues at the top end of expectations and profitability essentially unchanged.

Another small-ish acquisition today too.

KWS have the capacity to make much larger acquisitions. If I'm not mistaken VMC was the last large acquisition? It's about time for another one, which would make all the difference to expectations.

All the investment and new facilities being put in place this year will lead to greater expansion and bigger margins from next year. I'm happy to continue to hold and play the long game in a market leader in a sector which will only grow and grow.

[1670127] 18/9/2019 09:32

Results generally in line with expectations. Not as upbeat an annual report as previous ones highlighting reduced growth rates and lower peak season demand for some services. It is interesting that the seeds of the next console release are being mentioned. Everyone involved in the industry knows that there is a big dip in games services for 12-18 months before the new console is released (this is the time to develop new games for the platform, they typically stop developing for the old one). There is also the need to purchase test boxes which is a significant investment. This could put short term pressures on revenues and margins. It almost took one company I worked for under. Conversely 12-18 months post launch there is a big pick up. The question is whether most investors recognize this so are happy to buy at high growth ratios. My gut is this will continue to trend downwards toward more normal PE ratios.

[steeplejack] 18/9/2019 09:17

Very true.The dilemma is whether to play it long or be tempted to trade the oscillations.Most ultimately decide to ignore the machinations of prop book traders etc and adopt a Warren Buffet approach.The concern,however,is that the level of knowledge,exposure,pedigree of AIM stocks falls short of what you get from fully listed companies.I'm more than happy to play it long and only keep a casual eye on the likes of an Astra Zeneca.I'm not so cavalier with AIM stocks and with good cause.

[scooper72] 18/9/2019 09:07

I'm not much of an expert on these things, but in a funny way if one regards the results as generally positive in terms of future outlook and the markets or the share price don't respond accordingly then as a holder who is investing over a 3-5 year term I have more time to either build a larger holding or just consider I am holding stock in a company that people haven't yet come to fully appreciate.

[steeplejack] 18/9/2019 08:56

Or alternatively,we could highlight this comment.The figures are pretty much as expected and there are no great surprises.The real mystery,as generally with lightly traded AIM stocks,is where the share price will head on the day. "Stronger margins in the second half as we incrementally benefit from first half investments in capacity expansion partially offset by an underperforming contract and continued commissioning of new facilities."

[phowdo] 18/9/2019 08:45

Margins under pressure.
Work for Googles Stadia helping to keep rates up but console transition starting to drag as expected.

[bulltradept] 18/9/2019 08:34

Revenue growth slowing, this is what happened.

"Trading in the second half has started well. The Board expects:

o Strong organic revenue growth, at slightly slower growth rates than the first half, with particularly strong growth in Functional Testing, Game Development and Art Creation whilst Audio and Localisation Testing are not expected to see their typical seasonal peak in activity in the second half due to certain clients' shift to focus on new consoles expected in 2020."

[ted1066] 18/9/2019 08:25

What happened there??
Hope you all piled in and bought more.

[steeplejack] 18/9/2019 08:04

"Trading in the second half has started well, with continued strong performances from our Game Development, Functional Testing and Art Creation service lines in particular. Overall, this leaves us well placed to deliver revenues for the full year at the upper end of current market expectatons with our profit expectations broadly unchanged."

[steeplejack] 16/9/2019 10:06

https://shorttracker.co.uk/company/GB00BBQ38507/Small close in short position.

[eentweedrie] 12/9/2019 12:03

if we close above 1300p then reverse is on the way imo

[lopans] 12/9/2019 09:20

Or they could have increased Monday and closed at yesterdays low. Will find out tomorrow

[steeplejack] 12/9/2019 08:04

https://shorttracker.co.uk/company/GB00BBQ38507/

[lopans] 12/9/2019 07:11

Oops! 3 out of 4 funds increased shorts on the 9 September. They haven't reduced. So maybe more pain to come. Definitely entered too early on this one. Can only hope it's still at this level Monday as I have more funds been released and can buy more. ATB

[eentweedrie] 11/9/2019 17:49

can't have made very mich of a profit, even on leverage - did you lose much?

[saucepan] 11/9/2019 15:43

Out as soon as the candle flipped. Keen to get back in when support is found.

[steeplejack] 11/9/2019 15:30

KWS builds the business, in a fragmented industry
,through acquisition funded by equity.A tried and tested methodology employed by many companies past and present.Necessarily therefore,there will be a pretty steady stream of equity being sold as acquirees realise cash after lock up periods.Thats probably the primary reason why Peel Hunt has concerns.If the company moves too fast on its acquisition trail,it can possibly outrun itself and issue too much equity which floods back into the market and acts as a handbrake on the share price.There can be indigestion.

[1670127] 11/9/2019 15:11

The results have already been pre announced so there shouldn't be any surprises there I would have thought.

[amencorner] 11/9/2019 15:07

KWS is back to being heavily shorted. At similar short levels a few months back, it dropped way below £10. However, H1 results out on 18/9 so maybe it will bounce around then. No position at the moment.

[1670127] 11/9/2019 15:05

Is it possible that some if the lock in periods for companies that accepted shares as part payment for the aquistion have expired and they are offloading? Would this have to be reported by RNS