Mxc Capital Share Discussion Threads

[chimers] 05/9/2019 09:18

Shouldnt you be over on Burford losing your money.
This aint your kind thing ...it's RISING.

Blessings and praise etc etc etc

[williamcooper104] 05/9/2019 09:15

Can't even get £2k this morning on HL

[suneday] 05/9/2019 07:49

Unless anything happens before, and it might, just waiting on the Adept circular now. That will be interesting for shareholders.

[suneday] 03/9/2019 12:01

No. Skinflints. Anyway, I'm thinking yesterday was just a warm-up. Got to be some developments to report from the horse's mouth - possibly on Adept first, loan notes and things.

[chimers] 03/9/2019 11:49

I wont be holding my breath!!

[suneday] 03/9/2019 11:11

When they pay you, tell them to get some proper newsflow going. We're dead in the water - nobody sees the value here yet. Still waiting on a rerate. Went from creep to a little hop yesterday, but that's nothing - though it helped.

[chimers] 02/9/2019 23:13

That all depends on how much they want to hold back for reinvesting which would change from year to year dep on what presented itself to them.
But there is a strong hint that they will be completely self-financing with practically all profits going out to shareholders the way it should be.
Remember Ian Smith and Tony Weaver and then Kestrel and Nigel Wray and Martin Bolland will benefit the most being by far the largest holders here.
Which puts it in their interests to pay out as much as poss.

[merguezdamour182] 02/9/2019 22:43

How big a dividend per share do you think Chimers?

[chimers] 02/9/2019 22:34

Every year the shares in issue reduce and the profits increase.

[suneday] 02/9/2019 22:30

Thanks for that. I'm still bemused that investors don't seem to see this as a working company and forward price it - the NAV is where we are, not where we're going.

[chimers] 02/9/2019 19:32

MXC’s valuation gains worth exploiting

Simon Thompson

MXC Capital (MXCP:90p), a technology-focused merchant bank run by a management team that backs investee companies they represent, is set to report a bumper set of annual results for the 12 months to 31 August 2019.

That’s because there have been material movements in the value of its listed investments, the most dramatic being the near five-fold increase in the carrying value of MXC’s stake in IDE (IDE:7.35p), a £29m market capitalisation mid-market network, cloud and IT managed services provider. IDE has gone through a cost reduction programme to create a more appropriate and profitable cost base. It has been successful which has its customers the reassurance they needed. This also means that IDE’s management can now focus on driving the core activities of the business to rebuild value for shareholders. This is clearly happening.

In IDE’s latest annual results, chairman Andy Parker revealed that “towards the end of the 2018 financial year, several of our material customers renewed their contracts, some on a multi-year basis, and at the time of writing (28 June 2019), the pipeline of opportunities across the business both with existing and new customers and partners is the strongest it has been since my involvement.” The improvement in trading has worked its way through to a much improved financial performance, too, as “IDE has been trading profitably at an adjusted cash profit level in the year to date.”

Moreover, following a refinancing that resulted in MXC investing £8m in loan notes to enable IDE to pay off all its bank debt, the solvency risk subduing the company’s valuation has been unwinding, a factor that has accentuated the share price recovery. The point being that all of IDE’s loan notes are held by its largest shareholders, thus giving management the breathing space to focus on the ongoing turn round strategy.

By my reckoning, MXC’s holding of 172.8m shares in IDE is now worth £12.7m, a hefty £10m more than six months ago when I last advised buying MXC’s shares at 85p ('MXC returns to trading profitability', 9 May 2019). The valuation uplift adds almost 15p a share to MXC’s last reported net asset value (NAV) of 97p.

Further balance sheet gains

It’s not the only material balance sheet movement either as Aim-traded shares in Adept4 (AD4: 3.55p), a provider of 'IT as a service' to small- and medium-sized businesses in the UK, have quadrupled in value since MXC’s interim results in May, lifting the book value of MXC’s shareholding from £612,000 to £2.41m. Adept4 is a turnaround situation, too, and its directors recently reported that the business has returned to modest levels of profitability at the cash profit level.

The re-rating has also been driven by news that Adept4 has entered into a non-binding agreement to acquire Cloudcoco, a profitable company that offers cloud and related technology solutions and one with a strong and growing pipeline of business. It was established two years ago by the former directors of Redcentric (RCN), a UK IT managed services provider. If the deal goes ahead then Adept4 will issue 218m shares to the vendors to give them 49 per cent of the company’s enlarged issued share capital of 445m shares, so reducing MXC’s stake to 15.3 per cent.

Another reason for Adept4’s re-rating is because MXC has agreed to buy £5m of Adept4 unsecured loan notes for a discounted price of £3.5m from The British Growth Fund on completion of the Cloudcoco acquisition. This is the only debt Adept4 has. The fact that MXC will now own the loan notes, which are due to mature between 2021 and 2023, is a positive move as it removes the financial risk that was subduing Adept4’s share price. The £1.8m uplift in MXC’s shareholding adds a further 2.7p a share to its own NAV.

It’s also worth flagging up that the private equity funded takeover of Aim-traded Tax Systems (TAX), a leading supplier of corporation tax software to the large corporate sector and the accounting profession in the UK, completed at the end of March this year. MXC had invested £14.9m in the company and realised £24.2m of which £200,000 of the £9.3m profit will be recognised in its forthcoming annual results.

Value opportunity

I estimate that MXC will book total realisations and investment gains of £12m (17.9p) in the second half of the financial year just ended to lift its closing net asset value (NAV) to £74.3m (115p a share after adjusting for the market value of shares acquired by the company’s Employee Benefit Trust through MXC funded loans), significantly higher than its current market capitalisation of £60.5m. Moreover, MXC’s share price is now completely backed by four of its investments: £15.1m (22.5p) shareholdings in IDE and Adept 4; net cash of £19.5m (29p); a loan portfolio worth £11.5m (17p); and investments of £14.5m (21.5p) held in private companies.

Clearly, with MXC’s shares trading well below my spot estimate of NAV then no value is being placed on the two MXC partnerships that are generating over £1m of fee income. One is with a subsidiary of Liberty Global, the international TV and broadband company, to create an IT services provider focused on small- and medium-sized business customers. Both partners have invested £3.5m each.

The other partnership is with Ravenscroft, an independently owned investment services group based in the Channel Islands with £4.7bn of assets under administration. MXC acts as consultant to Ravenscroft in its role as investment manager to the GIF Technology & Innovation Fund in which the States of Guernsey has invested. MXC contributed £5m of the fund’s initial investment pool of £38m and it should be fully invested by the end of the calendar year. In addition, Ravenscroft paid £2.25m for a 25 per cent stake in MXC’s transactional businesses, highlighting the value it sees in MXC’s deal makers. MXC’s retained 75 per cent stake in that business is in the price for free, too.

The bottom line is that with MXC’s previously poorly performing listed investments turning the corner, and the directors targeting a 2.2 times return on capital over the next four to five years on its investments, then there is ample scope for the company’s share price to return to a decent premium to NAV in due course. Trading on a bid-offer spread of 89p to 90p, MXC's shares are well worth buying.

[suneday] 02/9/2019 16:11

Bummer. I got sent to Sainsbury's ( closer than Waitrose ) and when I got back mini-excitement over. Bit of profit being taken. Can't read the tip - don't subscribe. Hope to see some buyers when they think profit takers gone.

[chimers] 02/9/2019 15:48

More action now at least.

[suneday] 02/9/2019 15:46

Sorry - like what we got!

[suneday] 02/9/2019 15:33

Still very undervalued I agree - but it's a start. Would now be nice to get some newsflow from MXCP. Not all about Íde and Adept, but they will feature in the masterplan - they got their mojo back. You got to have vision, like what I got!

[jayfella72] 02/9/2019 12:57

Nice movement..... So so undervalued.

[chimers] 02/9/2019 12:32

MXC Capital (MXCP:90p), a technology-focused merchant bank run by a management team that backs investee companies they represent, is set to report a bumper set of annual results for the 12 months to 31 August 2019.

[chimers] 02/9/2019 12:31

IC TIP JUST OUT HOT OF THE PRESS LOL

STRONG BUY

[chimers] 02/9/2019 11:17

IDE was 11p a few moments ago it has settled back on profit taking but is now heading back to 11p.

Just wait for AD4 to announce the deal is done at AD4 ;)

[suneday] 02/9/2019 11:14

Slither. And add a bit to the last.

[suneday] 02/9/2019 10:44

Holdings in Íde now worth £15336987.3438!