Micro Focus Share Discussion Threads

[boozey] 07/2/2021 15:00

I wonder is Mr Murdoch is sleeping well this weekend.

[purchaseatthetop] 07/2/2021 14:23

Monty....I smile as I make profits. Why be serious? You are both sad and foolish thinking far above your competence, importance and station in life.

[montyhedge] 07/2/2021 13:59

Your naive like I said don’t believe all you read, only a couple of posters on this thread are serious traders, who need the Advfn Premium service, to trade shares, your not one. Serious traders don’t disclose their position.

[purchaseatthetop] 07/2/2021 13:56

Monty---either you sold or you did not. You messaged that you had sold but it seems you are claiming now that you did not, or something. Bit irrelevant.

So, either you are a foolish investor or you are an investing fool - which one is it?

[montyhedge] 07/2/2021 13:13

Don't believe all you read on bulletin boards.

[purchaseatthetop] 07/2/2021 12:51

22/1/21: Montys post:

"Sceptical
I sold out and took a profit. I want to get back in, if the figures and forward looking statement are ok. Don't mind paying more and be sure.
I'm just a little bit nervous when the CFO announced his leaving, why not wait until the Finals to announce, I know his not going for 6 months but even so."

Share price was around 385p then. I was piling in big time myself. Wonder who made the right call? Price after the finals will (IMO) be 600p+.

[scepticalinvestor] 07/2/2021 11:47

I believe Monty sold out at the 3s to await the finals...

[scepticalinvestor] 07/2/2021 11:46

Congratulations and happy birthday!Have you been self investing very long?

[purchaseatthetop] 07/2/2021 11:16

monty....that is why the message about slowing the fall in revenue is so key. Any DCF valuation where the maths forecasts a falling revenue means really low DCF valuation.

If we find out Tuesday that the fall in revenue is either slowing or stopped, and that there is any continued improvement in gross margin, then the shy is the limit and 1,000p is the next stop.

All IMO and there is no certainty!

[martinfrench] 07/2/2021 11:01

You've been very quiet of late on here month, used to be biggest cheerleader

[montyhedge] 07/2/2021 10:18

Interesting article.https://finance.yahoo.com/news/micro-focus-international-plcs-lon-035031267.html

[purchaseatthetop] 06/2/2021 18:29

That would be good news. I am a hopeful person by nature (once I am convinced there is an upside) so maybe this will happen.

We only have to wait to find out Tuesday.

This week was spectacular for my portfolio gains. Maybe next week as well. I have not told the lady wife about the gains of the last year as of yet. Next year it is my 60th birthday and our 30th wedding anniversary. I think I will give her a portfolio valuation at our celebration and surprise her! Call me old fashioned if you like....

[rochdae] 06/2/2021 18:01

The average margins for software co's are 45%. That's the standard and mcro has always set this as a reasonable target. Then the HP issues came and added significantly to costs due to integration factors. So I'm optimistic we'll see positive margin increases from here.

[purchaseatthetop] 06/2/2021 17:06

rochdae...agree except that the first 3% of gross margin increases are a lot easier than the next 3%....as the easy wins go. However, predicted revenue decline of 5% and gross margin up by 3% would almost stop the contribution fall. That would be amazing. Then the market would start planning for the upside and a price over 1,000p.

A long way to go and many potential problems but I am most excited by MCRO. Limited downside as we know so much about their progress over the last 6 months.

I would not be surprised to have a price of 625p by end of next week. When you think we were sub 400p a week or two ago that would be stellar but with more to come.

All IMO only and I am often wrong.

[rochdae] 06/2/2021 16:56

That's what the chart is saying, too. Not that I pay that much attention to it, but looks like a fling to around 800...

[rochdae] 06/2/2021 16:53

If we get 2021 predicted revenue decline to under 5% and 2021 ebitda margins of 42% that will set the share price on fire. All perfectly doable on the trajectory of the last trading statement. ..

fcf of around $630 million means debt isn't that much of an issue..

What spooked the market is that they saw the metric decline as indicative of a failing company. But far from it imo. So a rerate back to 800-1000 I think..

[watfordhornet] 06/2/2021 16:14

That would be nice

[purchaseatthetop] 06/2/2021 15:17

Watfordhornet....good call to average down. Increases your overall risk (money at risk) but in this case you will IMO come out of it smelling like roses. Must have been mighty stressful. Nobody likes being 75% underwater!

Agree with the dividend part but really I am not sure what we will find out on Tuesday. Depends on the strategy of the leadership. They may want to describe recent progress and turbo boost share price if the results are outstanding.

I suspect that we are in for a pleasant surprise as all the indications are that MCRO has really benefited from Covid19. However, the price has also risen fast recently so I do not know how much is priced in.

However, my target share value is as follows. Remember this is IMO only and not reliable;

EBITDA $1b - assume that the revenue fall slows and is matched by increased gross margin
Value is 12 times EBITDA $12b
Less: net debt -$3.3b ($4b debt $0.7b cash)
Net value $8.7b
Exchange at $1,37=£1 £6.35

Present market cap at 487p = £1.64b
Therefore adjusted share price target = 487*6.35/1.64 = 1,885p

Multiple of 12 could be a lot higher if revenue is growing, not steady and margin rising.
Anyway...that is where I think we should get.

[watfordhornet] 06/2/2021 15:03

I don't want dividends until paid down more debt and are better financially.I cannot get excited about dividends when the share price drops from 2000p to 200p. I started buying at 900p. Have with bit of luck down ok now as was buying heavily at low 200's.

[purchaseatthetop] 06/2/2021 14:55

jw330....there was the bad old world and the bright new world. The bad old world has a share price of 2,200p and then they destroyed it. Share drops to 215p and a real threat of bankruptcy.

New leadership come in with new vision. Dividends cancelled. IT systems for integrated and seamless support of customers and cross selling brought on stream. Lucky break with covid19 in that MCRO skills and software becomes critical for the accelerated digital age. Last update had repayment of $400m of debt (down to $4b) and also repayment of $175m of covid19 loan. That repayment enables a dividend to be paid.

So...you need to understand that this is WHY and ONLY WHY I bought in. I love fallen angels that can recover as I can multiply my money by ten. I bought in at 218p.

What the old leaders did to nearly destroy the company is where the opportunity lies. The new leadership are inspirational and visionary.

[jw330] 06/2/2021 14:46

I'm looking to make money but also was not aware management was paying out dividends above EPS. That's my bad. Do like the free cash flow yield here however if they do insane things then price rise not guaranteed.

[hsdeo] 06/2/2021 14:40

So you have bought in knowing you could easily lose money. Not sure about your motives

[jw330] 06/2/2021 14:37

Lol insanity...If they are not making money and paying out a dividend the next step will be diluting shareholders to pay down debt....The only thing going for this company is the strong free cash flow generation. I hope I don't get stun by this next week

[purchaseatthetop] 06/2/2021 14:24

jw330 - interesting one that about dividends. MCRO were paying out more in dividends in 2016-18 than their EPS! Talk about certain value destruction.

Reason to pay a dividend: 2 major ones IMO:
1) Brings large II's onboard who will not buy unless there is a dividend (including all income pension schemes)
2) Message that normal service is returning.

[jw330] 06/2/2021 14:11

Why would they payout a dividend? The company is heavily in debt surely it makes sense to pay that down first?