Kinovo Share Discussion Threads

[dyor2] 30/11/2023 19:43

Hi Smithie, as far as I'm aware construction contracts are normally able to be terminated if the client becomes insolvent, because the client is no longer able to make the requisite stage payments. My understanding of what Kino said yesterday is that this is what they have agreed with their client's administrators. From memory, £260,000 of the additional £460,000 they have now provided for the DCB contracts is in relation to reaching agreement with their client's administrators on the termination of this particular contract.

[nico115] 30/11/2023 19:19

" Three year visible revenues have grown to £157m, of which they say £66m should be booked in FY 24/5 (turnover was £63m last year"I believe £66m for this year which makes sense as we are 2nd half weighted !I did check with David yesterday who confirmed this.

[smithie6] 30/11/2023 18:40

"Of the remaining two, they conformed that one has now been terminated with no further liability (due to the client going into administration),"

I'm not a legal expert but imo it is completely impossible (!!) that liabilities are deleted when a co. goes in to administration.

If for example the co. had a liability to repay a debt of say £1m, then the creditors to the company going in to administration would quite rightly expect that debt to be paid.

Or if the liability was to build a big hotel for free then again the creditors to the company in administration would expect it to be completed.

[dyor2] 30/11/2023 18:18

Some sizeable buying today. I’m not surprised, because I thought the results presentation yesterday was positive in a number of respects. Crucially, management made it clear that for all practical purposes they think the potential for any further nasty DCB related surprises is now behind us. Five of the nine DCB construction contracts will be completed in December and a further two by the March 24 financial year end. Of the remaining two, they conformed that one has now been terminated with no further liability (due to the client going into administration), and although the final remaining contract might not be completed until early 2026, Kinovo’s liability is capped at the £860,000 value of its performance bond. In terms of estimated net cash costs to complete the various contracts, there was £1.33m remaining at the end of September. Obviously there may be some adjustments up or down to contract values as the various projects reach practical completion, but probably no more than a few hundred thousand pounds either way, and in terms of cash flow they say there is c. £960,000 of customer retentions on the projects which could be coming back to Kinovo following practical completion. So, as I say, the major DCB uncertainties do now seem to be behind us, and this should become fully apparent by the time of the full year figures.

So investors can now start to look to the value of the underlying core business without the drag of DCB uncertainty, and the prospects for the core business seem stronger than ever. Three year visible revenues have grown to £157m, of which they say £66m should be booked in FY 24/5 (turnover was £63m last year). But this does not include any potential revenues from the multiple framework wins which Kinovo has announced. Management said yesterday that at present Kinovo has £72m of tenders out for direct award, and historically has won c.50% of its tenders. There is the potential for a lot more than this over the next few years as the framework clients continue to put work out to tender, and Kino seems to be in the sweet spot of having more potential work than it can handle and is bidding on service quality rather than price. Management stated during the presentation that they don’t need to bid on price (they say they were not the lowest price bidder on any of the new contracts they’ve recently won), and hence they’re confident of maintaining gross profit margins at c. 26%. going forward.

Quite apart from the growth prospects, Bullen emphasised in yesterday’s presentation that the key to valuing Kinovo is the strong underlying cash generation of its business, and this should become increasingly evident next year. They should end the current financial year with a small positive net cash balance and in a normal year expect to convert at least 90% of EBITDA into cash, so IMV they should be generating £6m+ p.a. of cash next year, and obviously this will grow as EBITDA grows. They have high visibility of forward revenue growth, and gross profit margins seem sustainable. So in terms of capital allocation, they will clearly have the potential, if they choose, to pay a significant proportion of free cash flow as dividend in 24/5. As I’ve previously posted, all this seems to make the current market cap of £30m look way too low, and if the market doesn’t recognise this then Kino will look very vulnerable to a bid from a Private Equity fund or a competitor. Personally, I’m hoping this doesn’t come too soon, because I’d really like to hold this stock longer term. I can’t find many stocks with Kinovo’s combination of seemingly assured growth potential, high cash generation and low market value. But I guess it will depend on the attitude of Tim Scott with his 30%? He could in theory bid again once six months from his last bid have passed, though I think that’s unlikely - more likely at some stage he sells to another bidder? I’m hoping he’s going to be patient!

[nico115] 30/11/2023 15:59

Bought another 15k ...Too cheap

[nickcarr1] 30/11/2023 15:10

Looks like two lots of 500k shares disclosed. Nice.

[qs99] 30/11/2023 13:17

Nice big buys ...

[basem1] 28/11/2023 19:50

We obviously have some value investors here and I joined the party yesterday. Another stock I would like peoples comments on is PGH it looks very cheap but you cannot buy when you see the chart It also has a decent yield and the last TU seemed fine A value trap or genuine investment Sorry for off topic

[qs99] 28/11/2023 15:02

Nicely put DYOR2

[dope007] 28/11/2023 08:12

Just a pity I can't see an end to the utter shambles that is the UK stock mkt

[dope007] 28/11/2023 08:10

Decent results and I can finally see an end approaching with the DCB contracts with only 2 outstanding beyond the end of this financial year.

[kinwah] 28/11/2023 07:58

Still worrying that all the cash generated by the ongoing businesses is being absorbed finishing off the old contracts. It should come to an end eventually but the management do seem cautious over the possible need for further provisions.

[qs99] 28/11/2023 07:45

Reckon we should see somewhere between c.£6-7m EBITDA for full year, market cap c.£30m, net cash now £1m and hopefully rising....so full year dividend IMO would be appropriate if the final DCB contract isn't going to need too much more....

DYOR but a long way to go, intimated in RNS IMO.

[mach100] 28/11/2023 07:40

Agreed basem. Think a divi would help but probably not prudent. The renewable side is disappointing and if there is a fall it will be attributable to that.

[basem1] 28/11/2023 07:31

Solid enough results no surprises A small rise I would think

[aldriglikvid] 23/11/2023 09:01

Insider buys after the acquisition offer:

David Bullen CEO 19,047 52p
Lee Venables COO 18,903 53p
Neil Rooney MD 48,000 52p
Sangita Shah Chair 19,048 52p
Debbie Rooney Finance Director 27,348 55p


What else do you need, fellas? This is going to 100p. Just wait.

[texaspete2] 22/11/2023 19:09

Not that I am aware of, I think we have just seen accumulation at around 48p support level (we've both added here it seems!). The fall back to here from 60p+ has been on low volume which is a good sign, so a move up is a good possibility as long as there is no unpleasant surprises in the results, gla

[nico115] 22/11/2023 13:32

Tipped somewhere ?

[nico115] 21/11/2023 05:00

Added 100k at 47.15p Scott indicatively bid 56p so rude not to !

[davidosh] 20/11/2023 10:11

Busy??...With results out two days before and hundreds of potential investors at the event where could be more importsnt to present themselves?

[nico115] 19/11/2023 17:10

I'm coming because you have some great speakers coming and it's also great to speak to some very shrewd investors .Not sure many companies there that will spark my interest though . Just think posting you have invited Kinovo means one or two here will think they are coming . Hope they do but doubt it as will be around figures so mgmnt will be busy . Look forward to seeing you at Mello.

[davidosh] 19/11/2023 13:12

We select good companies, we invite them and the rest is down to management.

Some are shy, some claim they cannot afford time at an event meeting investors, some are genuinely unavailable and some see the real value in meeting serious investors face to face as opposed to the hundreds of webinars available but where you cannot ask private questions and spend proper time with management.

I know you are coming to Chiswick Nick so do please encourage Kinovo to accept our invite. We have 27 companies coming so far and great speakers plus our legendary BASH sessions

[nico115] 19/11/2023 12:16

Invited or they're presenting ?Two v different things !!

[davidosh] 17/11/2023 22:26

Following on from the results on the 28th we have invited the management team to come and do two presentations for the hundreds of Mello investors attending the two day conference in Chiswick in London.

There are over 30 companies engaging with investors and it seems perfect timing for Kinovo



There are lots of fund managers attending and fab speakers so very worthwhile attending

[sooty snipes] 16/11/2023 19:54

Hmmm. Wonder who's selling?