Simigon Share Discussion Threads

[dgwinterbottom] 11/4/2016 08:23

Rivaldo - Yes agreed, but I prefer to get a hard copy which I do every year!

[rivaldo] 08/4/2016 12:42

Nice to see a 15k buy cause a tick up.

DGW, the Annual Reports are all on the SIM web site from memory.

[dgwinterbottom] 07/4/2016 07:54

Just when I thought it was safe.......the share price retrenches!!!

Incidentally, has anyone like me obtained a full copy of the annual report n previous years?

[dgwinterbottom] 02/4/2016 11:07

Many thanks both like you Mach100 I bought around 30p and bought some more later then watched it all collapse to 13p. The problem with companies such as these can be their lumpy order intake but to be fair there has never been any mention of order book gaps. That said there is a forecast 15% drop in t/o for y/e Dec 2015 on prior year. When I first bought there was expectation of a sizeable contract from US Defence for simulators for earth moving equipment training,, however this was withdrawn and has not emerged since.

[mach100] 01/4/2016 12:55

Hi Rivaldo and DGW. I quite like TPs but mostly ignore broker forecasts. In my experience in my won shares and others I have researched I can hardly think of any that has actually come true. At any rate they can adjust them as move along. A bit like firing and arrow at a target but clinging onto the arrow and moving it as you go along. I did have a TP on this one of 30p but didn't sell when it hit that and have watched it wither all the way down to about 13p. It's hard to value as it has a lot of cash and pays a divi but has the uncertainty of extra milestone delivery requirements in order to achieve revenues. I would put a TP of 26p on Sim with a down side of 14 to 16p in the event of further delays in fulfilling contracts

[rivaldo] 01/4/2016 12:14

Hi DGW. I don't generally go in for share price forecasts - they generally go wrong!

The best reference point is Finncap's 45p target. That would represent a £23m m/cap, or £18m EV knocking off the £5m cash. £18m EV against a £1.05m PBT forecast for this year is toppy for an overseas company blah blah.

But it's pretty easy to justify at least a 30p share price, i.e a £15m m/cap against £5m cash and a £10m EV.

And with another large contract win or two then that 45p would certainly come into play.

[dgwinterbottom] 01/4/2016 10:27

Rivalso: Care to hazard a guess? I have topped up recently as well!!

[rivaldo] 01/4/2016 09:32

:o)) A long way to go yet hopefully bb2.

With nice visibility from the $6.7m and $4m contract wins, and the potential for more to come, it'll be interesting to see how far SIM can go over the next year or two.

[battlebus2] 01/4/2016 08:44

Thanks Rivaldo, thought it was April fools when I saw we were over the 20p mid :))

[multibagger] 01/4/2016 08:16

Added another 16k :)

[multibagger] 30/3/2016 18:56

Cheers battlebus2 :)

[rivaldo] 30/3/2016 12:03

Looks good online - I can only buy 10k maximum at 19p, but can sell 40k at a premium at 17.57p.

[battlebus2] 29/3/2016 13:09

That's why your a multi bagger :))

[multibagger] 29/3/2016 12:32

I had to paid 19p when the offer was 17p...that too for a tiny 43k approx. Got another 8k at 17p earlier.

[battlebus2] 29/3/2016 10:53

Bought a few myself after reviewing.

[multibagger] 29/3/2016 08:51

Agree that there is significant upside on this with about 72% equity tightly held. Unable to buy in any decent quantity.

[multibagger] 29/3/2016 08:33

I have put in a tiny order as well...fundamentals very attractive.

[rivaldo] 29/3/2016 08:32

Welcome Steg. 30p would be very nice upside from here.

Looking good online, as I can only buy a maximum 4k at 17p, but I can sell at least 40k at 14.13p, so hopefully the momentum from Thursday's trading update will continue.

[stegrego] 24/3/2016 17:36

I don't particularly like this business but did buy a few at 15p today, as it's surely worth closer to 30.

[rivaldo] 24/3/2016 16:11

As GHF said, SIM has an EV for its core business of just £2.5m, given that it has a £7.5m market cap which has $7m cash (£5m) on the balance sheet.

This for a business making $1.5m PBT and paying a decent dividend.

Crazy.

And that's without the carrot of even larger phased contracts to come.

Revenues have been pushed back until this year - so this year's numbers will benefit, even though SIM achieved last year's forecasts without the benefit of those revenues!

I suspect cash flows have been utilised in 2015 to support the fulfilment of those contracts, which means that on completion this year the cash pile could rebound heavily upwards.

[cockerhoop] 24/3/2016 15:41

On a cashflow basis it has been a loss making company in 2015. Cash is down from $9m to $7m.

With Rev down 22% and cashflow $2m negative I'll be interested in looking at the PBT and adjustments when they appear in the finals.

[rivaldo] 24/3/2016 14:56

Looking very good online - I can sell 30,000 shares at a premium, whereas I can only buy 100 shares maximum at 16p!

Many thx GHF for the Finncap extract (I'd appreciate a copy if poss if there's a full note (as well as on CHT)?

SIM will be in prime position for the larger second phase assuming all goes smoothly.

[glasshalfull] 24/3/2016 13:51

Well the market aren't subscribing much value on the business which is on an Enterprise Value of c. £2.2m, given that it has £7.2m market cap with $7m cash (£5m) on the balance sheet.

Yes, earnings growth has slowed but we are looking at a company that will have delivered 3-years growth, albeit it's only a marginal 2% rise forecast in earnings for the year just gone. Still credible, with the mitigating factor for last years negligible growth explained through slowdown in delivery of the "Major Contract" contract that has moved into the current year

I could understand if this was a loss making company, but from the undernoted commentary it would appear that they've delivered $1.5m PBT (the prior EBITDA and PBT forecasts from the broker were indicative of this). Therefore on a PER of 6.7 & 3 cents earnings in 2015.

finnCap have indicated a further 2% EPS growth in 2016 & the undernoted update indicates that the $6.7m "Major Contract" is expected to be tendered for a larger 2nd phase, & SIM would appear to be in pole position.

The broker has this to say,

"Earnings will be in line with expectations expectations (finnCap FY 2016 forecast: $1.5m EBITDA); however, this will be on much reduced revenue of $6.8m compared with the $8.3m sales last year and our $8.7m forecast. This is due to a slowdown in the delivery of the very large $6.7m contract won in 2013 as a prime contractor in the defence industry. The customer is requesting SimiGon provide additional deliverables, outside the scope of the original contract. Given this is the first in a series of major contracts available in a phased rollout, SimiGon has agreed these extras and expects to meet the delivery milestones during the course of the current year, albeit to a slower timetable. This is of course one of the risks associated with becoming a prime contractor; it has the benefits of larger contract values and higher margins but delays and disputes fall directly on the prime. Otherwise, SimiGon continued to trade well during 2015, clearly focusing on profits to deliver much higher than anticipated operating margins.

The company has continued to deliver on its other long-term contracts as a prime contractor as well as securing further contracts with new and existing clients. The balance sheet remains strong with more than $7.0m of cash at December.

The major contract is due to close this year; thereafter a second phase, much larger than the first, is expected to be tendered. This would be training for the rest of the forces of the country involved. As supplier of the first phase, SimiGon is in a strong position to win this second order; however, it is therefore required to give complete satisfaction on the original contract, with delays inevitable."

All things considered, this looks decent risk/reward to me on such a low EV while providing a 3% dividend yield.

Regards,
GHF

[rivaldo] 24/3/2016 12:11

It's perfectly normal to have year end debates with auditors to confirm revenue recognition, believe me! If the timing of a major $6.7m contract is changed, then that will take some time to confirm and agree with the auditors. And that will include the cost allocations, some of which will no doubt be held over to match with increased revenues this year.

With a little buying interest and a tip or two perhaps SIM will now quickly rise back into the 20p's.