Telecity Share Discussion Threads

[itchycrack] 27/12/2013 23:29

Looks like a break above 700p is firmly on the cards.
Plenty of 'buying on the dips' here.

[ukinvestor220] 19/12/2013 10:32

Telecity – does weakness give an opportunity?

By Chris Bailey - Tuesday 10 December 2013
Share this article with your comrades in revolutionary capitalism

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Most investors can see that data and the internet are still strong investment themes. Despite phenomenal growth over the last decade, consumer and business on-line activity is still growing fast. We can all see this in our day-to-day lives, as we interact with a growing range of devices.

So if I then said that the leading UK-listed company in the backbone of ensuring these consumer and corporate data and related requirements were met was trading near a two year share price low, then I think you would agree it was worth a look, at least.

Telecity (TCY) is Europe's leading provider of 'premium carrier-neutral data centres' with data centres in prime city centre positions from London to Helsinki to Istanbul plus many others in-between. As the company proudly notes on its website:

'our data centres are enabling environments in which the separate networks that make up the internet meet and where bandwidth intensive applications, content and information are hosted'

Bandwidth intensive is absolutely key. Businesses and customers/consumers want to access their services and related information immediately. Managing this data flow and data transfer is becoming increasingly difficult...but that is where a company like Telecity can help. Their client list includes many well-known businesses.

Back in July at their half-year results point, Telecity talked about 16-17% revenue and ebitda year year-on-year, plus they were generating cash after making expansionary capex to help them capture the current business opportunities. Back then, the shares took a tumble on fears that their new data centres would not be able to generate the returns historically seen by the group. This slide has continued and for the past few weeks the share has been trading below 700p. That's quite a fall from the psychologically important round number of a 1000p share price achieved in early July.

In a timely fashion, an article appeared in the Sunday Times a couple of days ago which captured nicely some of the current fears around Telecity shares. One of the key concern points was that:

'the chief executive Michael Tobin stuck with commitments to increase capacity at some of the dozen data centres it operates around Europe, despite fears of a glut that could push rates down'

The most recent corporate presentation from Telecity highlights new capacity growth across many of its existing sites...but to jump to 'fears of a glut' seems too pessimistic.

Data centres are not easy to build. The location has to be right in order to offer speed to potential customers (which is why most of Telecity's locations are in city centres), additionally the significant power requirements require significant planning and interaction with planning authorities, even before you start to factor in all the operational requirements.

Reflecting this – and unlike so much in internet-related matters – capacity additions in the market are almost exclusively coming from Telecity and its two big global peers, the US-listed Equinix and Interxion.

My personal view are that given the continued growth in internet traffic and data centre requirements, these fears are overstated. Telecity themselves in their November interim management statement said that they were continuing 'to focus on creating shareholder value, through delivering controlled and profitable growth'. Additionally, Equinix were talking at a London conference last week and continued to talk positively about the sector, especially concerning opportunities in Europe.

The other critique in the Sunday Times article concerned the company's communication with the market. Additional to this, the reasonably long-standing CFO is leaving at the end of January 2014, with the company yet to announce a successor. Undoubtedly these issues are overhanging the market too.

Equinix announced a share buyback earlier this month and, in my view, Telecity need to similarly respond to the implied criticisms in the press at or before the next update in early February. The new CFO announcement would also be helpful for full clarity purposes – as mentioned above, the company is cash generative and does not have worrying net debt levels.

At around a x19 P/E rating on this year's earnings, Telecity is not the cheapest share in the market but few companies with a near £1.4bn market cap have its continued growth opportunities and can generate cash for investors even whilst investing in improving their internal infrastructure to fully capture this opportunity.

Taking everything into account, with the share trading at around two year lows, I think it is time to look closely at the company due to the combination of a falling share price, a strong theme, a valuation that has compressed, few natural competitors and low sentiment in the press.

Chris Bailey is a City Veteran (aged 40) who now writes for his own eclectic website www.financialorbit.com
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[dr_smith] 10/12/2013 10:17

Thank-you Phoenix, I'd be interested to read, but needs subscribing (free) and says:
"We will not bombard you with spam. We will send out a twice daily alert with links to all new articles."
Well, twice a day unwanted emails is something I can do without.

[phoenix1234] 10/12/2013 09:47

excellent & v detailed analysis here

www.shareprophets.advfn.com/views/3041/telecity-does-weakness-give-an-opportunity

[fraser038] 05/12/2013 18:46

going back to retest to lows IMO

[skinny] 29/11/2013 08:58

Toying with 7 quid again.

[dr_smith] 27/11/2013 17:47

Hi Silver.
I too heave much invested and here for long term, it is just sometimes hard to fathom why 'market' thinking differs to ours.

[silverfern] 27/11/2013 16:23

Thanks Doc. He isn't leaving til 31 January. Subsequent releases made that clear. I think given his profile if there was anything we'd have it out by now., TCY are too big and the risks too high, esp in current climate, for any substantive issue to be hidden. ON that basis I have reinvested (a lot, as ever )!

[dr_smith] 27/11/2013 09:56

When FD left, (or possibly still around for handover) he was given a pay off.
That implies to me his leaving was at co's request, not idividual (e.g. health grounds). No reason has been given, where there must be a reason, so that is unsettling and we just keep out fingers crossed that no skeletons come out of closet - say at next annual report.

It could just as easy be something against co policy/protocol and not directly anything to do with way business is run e.g. swinging from chandaliers in drunken state across the board room.
I made that up obviously, but the missing 'reason' for departure could be unacceptable activity unrelated to accounts/prospects of co, but something where the co says please leave, rather than FD saying I resign, whereupon I wouldn't expect a package to be given, although I suppose it could be a payment under a health plan.
Likely we'll never know, but concerns will be 99% reduced after next full accounts.

All IMO.
I don't know the chap, but hope he is OK healthwise.

[silverfern] 27/11/2013 08:54

Given TObin's comments about the departing FD being a friend and trusted colleague I did wonder whether his departure might be health-related or just career closure, rather than anything more concerning (to the market). I also found this:


Mind you he was director of Futuremedia a company with a track record of milking the market for PI suckers and ripping off clients: amazing you could go from working for that little nasty to TCY.

[freddie ferret] 22/11/2013 17:06

In order to get back to the long term trend we need 1200-1300p smartish.
I think it all depends on the income stream.

[itchycrack] 22/11/2013 08:55

If we can get and stay over 700p to become support then I think we'll have put in base for a more sustained rise to the 800p level, which we also need to break and make a floor before a return to previous levels.

[mechanical trader] 22/11/2013 08:51

22 Nov 2013 Telecity Group PLC TCY Barclays Capital Overweight 701.25 689.50 1,140.00 1,140.00 Reiterates

SP TARGET 1140p

[mechanical trader] 22/11/2013 08:44

Missed this broker note from last week
apologies........

Telecity Group Upgraded by Numis Securities Ltd to Buy (TCY)
Posted by Scott Davis on Nov 15th, 2013

Telecity Group (LON:TCY) was upgraded by research analysts at Numis Securities Ltd to a "buy" rating in a report released on Friday, Stock Ratings News reports. The firm currently has a GBX 900 ($14.40) price target on the stock, down from their previous price target of GBX 920 ($14.72). Numis Securities Ltd's price target indicates a potential upside of 40.19% from the stock's previous close.

Telecity Group (LON:TCY) opened at 650.00 on Friday. Telecity Group has a 1-year low of GBX 633.00 and a 1-year high of GBX 1026.00. The stock's 50-day moving average is GBX 771.2 and its 200-day moving average is GBX 884.5. The company's market cap is £1.313 billion.

TCY has been the subject of a number of other recent research reports. Analysts at Jefferies Group reiterated a "buy" rating on shares of Telecity Group in a research note to investors on Monday, November 4th. They now have a GBX 1,020 ($16.33) price target on the stock. Separately, analysts at Investec reiterated a "buy" rating on shares of Telecity Group in a research note to investors on Monday, November 4th. They now have a GBX 1,000 ($16.01) price target on the stock. Finally, analysts at Arden Partners Ltd reiterated a "buy" rating on shares of Telecity Group in a research note to investors on Monday, November 4th. They now have a GBX 1,230 ($19.69) price target on the stock. One investment analyst has rated the stock with a sell rating, two have given a hold rating and twelve have assigned a buy rating to the company. The stock has a consensus rating of "Buy" and a consensus price target of GBX 1,028.57 ($16.46).

TeleCity Group plc (LON:TCY) is a provider of network-independent data centers providing colocation and related data centre services

[spacecake] 20/11/2013 12:54

Should the company announce a new FD and a decent set of full year results and no "other" calamities, I can see the dive down of the share price from 800p to under 650p being reversed. Rewarding holding investors through the dividend always brings a smile to my face.

[dr_smith] 20/11/2013 10:50

I am a long term holder of TCY which I see a nice plodder.
Given that the business changes little on a daily basis its surprising how volatile the share price has become.
Today FTSE is .25% down but TCY is 2.68% up.
Could this be the market moving towards longer term shares when FTSE lacks sparkle, I ask myself.
Comparison of TCY versus FTSE show this isn't true, so struggle to explain to myself why TCY should be more volatile than other big co's.
I suppose it could be self prophesizing markets, one investor gets spooked, so spooks others, other folks aren't spooked re business but expect share price will go down in short term due to those already spooked, so sell to avoid short term dip.. and so cycle goes on, until 'value' is reflected upon as a winner and the upward cycle begins.
Hope that made sense.
In short, I see it as a very good steady business, but market makes it appear shakey when it isn't... unless of course you know different why daily price should be more variable than most.

[mechanical trader] 20/11/2013 10:33

TCY TELECITY GROUP Looks cheap on its present share price plus RECENT DIRECTOR BUYS, check RNS.

Telecity Group Broker Views

Date Broker Recommendation Price Old target price New target price Notes

07 Nov Investec Buy 690.25 1,000.00 1,000.00 Reiterates
04 Nov Investec Buy 690.25 1,000.00 1,000.00 Reiterates
04 Nov Arden Partners Buy 690.25 1,230.00 1,230.00 Reiterates
23 Oct JP Morgan Cazenove Overweight 690.25 1,200.00 1,100.00 Reiterates
21 Oct HSBC Overweight 690.25 1,240.00 1,240.00 Reiterates

Telecity Group PLC

FORECASTS 2013 2014
Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)
Arden Partners
19-11-13 BUY 97.22 37.06 10.00 115.44 43.69 12.00
Numis Securities Ltd
15-11-13 BUY 97.10 36.00 10.50 102.80 38.40 11.20
Westhouse Securities
24-10-13 BUY
Investec Securities
23-10-13 BUY 96.50 37.02 9.00 114.50 43.84 10.80
Canaccord Genuity Ltd
30-07-13 HOLD 98.30 36.60 9.30 118.60 44.20 11.30
Milkstone Ltd
13-06-13 HOLD 98.00 37.00 9.00 115.00 43.70 10.70
Cenkos Securities
04-02-13 BUY 97.09 36.40 7.30 118.30 43.90 8.80

2013 2014
Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

Consensus 97.16 36.70 10.25 115.22 43.72 11.23
1 Month Change -0.61 -0.14 0.57 -1.55 -0.43 -0.12
3 Month Change -0.61 -0.13 0.59 -1.62 -0.43 -0.12


GROWTH
2012 (A) 2013 (E) 2014 (E)

Norm. EPS 27.59% 20.16% 19.11%
DPS % 309.96% 9.56%

INVESTMENT RATIOS
2012 (A) 2013 (E) 2014 (E)

EBITDA £87.30m £155.09m £177.03m
EBIT £87.30m £99.60m £119.70m
Dividend Yield 0.37% 1.52% 1.67%
Dividend Cover 12.22x 3.58x 3.89x
PER 22.00x 18.31x 15.37x
PEG 0.80f 0.91f 0.80f
Net Asset Value PS 100.14p p p

[silverfern] 20/11/2013 10:12

I bought in yesterday and today

[itchycrack] 20/11/2013 08:37

Nice bounce today (thus far) :-)

[spacecake] 19/11/2013 10:59

Dare I say... we have hit bottom ?

[freddie ferret] 15/11/2013 17:28

PE ratio isn't so bad now.

[spacecake] 13/11/2013 18:55

Trouble In The Datacenters?

The bottom line
Essentially, the evidence is that the datacenter market is maturing and pricing power appears to be moving away from the datacenter providers and toward the buyers. Meanwhile, its incumbents are still investing in new capacity. Investors in datacenter providers InterXion, Telecity and DuPont Fabros should take note.

Whether the issue is going to be prove relatively short term (as is implied by Equinix's arguments over the hybrid cloud deployment issue), or if it's simply a function of oversupply, the near-term outcome is likely to be similar. The industry is facing some pressures and cautious investors should wait until there are signs of pricing power returning.

hxxp://www.dailyfinance.com/2013/11/12/trouble-in-the-datacenters/