Kinovo Share Discussion Threads

[qs99] 26/2/2024 10:33

great post DYOR2 thanks mate

As you say, with only 1 troublesome contract left by May, the risks should then be largely "known" and capable of being dealt with by existing cash flow.

Meanwhile, underlying business is in rude health IMO....DYOR

84p is low as you say, would like £1+

DYOR

[nico115] 14/2/2024 11:51

Bought 25k at 48.9pFall overdone imho .Totally agree dyor- the voice of reason

[dyor2] 13/2/2024 16:45

Am not too surprised by the pullback in Kino’s share price since the trading update. News on the core business was fine as expected, but (fairly or not) the DCB update has shaken sentiment and re awakened lingering investor doubts over management credibility on the eventual outcome of DCB completion costs. Kinovo is a thinly traded share, and that, coupled with what looks like one of the institutional holders deciding to sell out, lies behind the subsequent 30% share price pullback.

Personally, I’m not too bothered by this. The £1.4m increased DCB costs aren’t particularly horrific and can comfortably be funded over the next few months from cash generated by the core business, and as the projects complete (8 of the 9 are now scheduled to be complete by the end of May), the scope for further nasty surprises will markedly reduce.

But the big question for me is what Tim Scott plans to do with his 30% stake. It’s fairly obvious that in due course he’ll either use it to launch a renewed bid, or sell to another bidder. Maybe he hasn’t decided yet, but I’d be surprised if he doesn’t do either one or the other later this year. Under Takeover Panel rules the soonest he can come back with another bid is late March/April this year. If that’s what he decides to do, then if I were him I’d do it as soon as he’s allowed to, whilst the share price is depressed. If he’s going to sell to another bidder, I’d leave it until later in the year after the 2023/4 full year results, when the DCB picture will be pretty fully resolved and he can sell to a bidder on the prospect of say £7.5m EBITDA for 2024/5.

But the bottom line for me is that I can’t see him staying with a passive 30% stake forever, and the only way he can get full value for the stake is either to bid again himself or sell to another bidder. So one way or another I’m guessing that the fundamental value of the core business will lead to a bid later this year. I think a number of PE houses would bid at least 7X EBITDA, and on forecast 2023/4 EBITDA of £7.5m that gives an enterprise value for the Kino core business of £52.5m, which is 84p a share. IMV that sort of multiple would significantly undervalue the core business (because at £7.5m EBITDA the business will be generating circa £7m free cash flow p.a., which is a 13% p.a. free chas flow return on a £52.5m bid value - very juicy for a PE bidder). But regrettably the current share price weakness would make it likely to succeed. In fact, FWIW, if a bid were launched right now then I think it might succeed at as low as 75p.

We’ll see, and I’d love to be proven wrong and hold this share for the longer term despite the share price pullback. But I’m increasingly feeling like I won’t get the chance.

[nico115] 12/2/2024 13:21

No I'm a buyer at 45pHopefully I miss it!Aim is always v soggy in feb / March(end of tax year ) so I'm looking for extremes .

[forensic] 12/2/2024 13:01

Have you bought any nico?

[nico115] 12/2/2024 12:24

We had 11m of debt and now have net cash so I think it's 90pct done .Right time to buy is now before we get news that DCB liability is finalised . With 6.2m ebitda forecast and will probably be nearer 6.5m even if Dcb liability worsens by £500k this is still a steal here.Be good to see director buying but with so many contracts in the pipeline they are probably barred from buying . I'm still at 100p min within 18 months .

[forensic] 12/2/2024 11:54

The DCB disaster is far from over - thats what the market thinks

[kinwah] 12/2/2024 11:08

The price action is rather unusual. I was wondering if perhaps KINO had received a legal claim from the people KINO had sold DCB to for breach of contract relating to the cessation of funding. I remember they did threaten it at the time DCB collapsed. KINO is in better financial health now so it could be vulnerable to such a claim. I have a feeling it may still be too early to draw a line under the DCB disaster.

[nico115] 12/2/2024 11:01

I don't think so as so much stock is in HNW hands who won't worry about an increase in debt . No one will accept a low priced bid imho .

[tiswas] 12/2/2024 10:39

Nico

Do you see the last bidder having another opportunistic go on this news and at these levels?

[dope007] 12/2/2024 10:37

Not far off me adding as the mm's take small sellers to the cleaners.

either that or possibly a larger sell order with them and they are looking to find a demand level to clear it

[qs99] 12/2/2024 10:18

Indeed
Yes H2 cash should more than cope
With any overrun cash costs IMO so which PIs selling when underlying business is doing so well?!
DYOR

[nico115] 09/2/2024 17:54

Only one question to ask yourself :Would you buy kino at 55p if they had £2m of debt and Dcb was finalised and finished with ?Yes ...all day long !!

[forensic] 09/2/2024 15:20

If everything's now in the open, then I would expect the directors to be snapping up the shares......

[barnesian] 09/2/2024 14:53

Even as much as an extra £2m extra one-off cost, reduces the value of the company by £2m on a market cap of about £40m i.e. a 5% reduction in value.

A 10%+ reduction in the share price is not justified on rational grounds. It's panic, disappointment or a momentum judgment. In any event it is a buying opportunity if you believe in the long term prospects for the company.

[hornets89] 09/2/2024 14:52

Anyone have suggestions of Kinovo's closest peers to compare valuations?

[sooty snipes] 09/2/2024 14:49

You can buy in for the same price Tim wanted to steal the company at today. Short of cash unless I sell something Doh............

[qs99] 09/2/2024 14:39

Well all but one of contracts will
Be finished in next two months or so so how much more can one contract cost ffs?! DYOR!

[nico115] 09/2/2024 14:28

Millions ? Wow 1.4m so far ,I think 2m top whack so 600k more but hopefully im wrong !However I also think we will blow away 6.2m due to ..."Without accounting for additional works crystalising from Kinovo's pipeline as the Group enters its peak trading season" Hmmm ..what's that tell you Forensic ?

[forensic] 09/2/2024 14:09

Time will tell re costs. I wouldn't be surprised to eventually see more cost increases in the millions....we could have some more bad weather....

[nico115] 09/2/2024 10:56

Maybe costs will increase slightly but not more than 500k imho .On the positive side I think we will beat £6.2m as still 6 weeks to go until year end and the statement says it doesn't include any business which they are expecting to win in the short term .Core business is obviously winning higher margin electrical work and this bodes very well for the future . Can't wait to be rid of this DCB ! Still think we have a very bright future albeit todays news was a negative .

[dope007] 09/2/2024 09:55

I expect most of them to be completed in 6 months to a years time and the shackles of those contracts removed. Those contracts are why I bought Kinovo as the prospects for strong returns were far greater than the risks on the contracts in my view at the time.

A view I still maintain

[fozzie] 09/2/2024 09:54

Water table is so high that just one 24 hour period of rain is enough to flood all the roads around me, never known it this bad so not surprised that time has been lost due to weather. Seeing the nett costs rise 1.4M isn't great news and not surprised at all that the share price is marked down. Given share price action over the last few weeks I would hazard a guess that one or two knew this was coming.

[forensic] 09/2/2024 09:44

If the weather had been unseasonly good, the statement would have read"because of the director's proactive management, the contracts were completed ahead of expectations and at a reduced cost....."(This goes for many directors and companies out there).Don't they build in any costs for contingencies?One thing is for sure, costs will go up again....how bad that is, is anyones guess, but expect another cost increase in 6 months or a years time....

[dope007] 09/2/2024 09:12

Yes, underlying performance is superb. the mkt cap is simply crazy