Teliti Share Discussion Threads

[whynot3] 28/8/2006 15:29

BF - I do admire your detailed research and your eternal optimism. Tel said "TMG added that trading is broadly in line with current market expectations." Whose market expectations are these ? The directors, brokers ??

I have a feeling you will again be disappointed - With shares at rock bottom why haven't directors been buying ? What has happened to Ed Smyth and the goodies he was meant to bring to the table for the 20% of TMG he was given ?

[blank frank] 25/8/2006 20:42

Here is my current PEG (price earnings growth) analysis for TEL (all figures are adjusted as necessary for the 50 into 1 consolidation):-

TEL's future PEG (price earnings growth) ratio is as follows:
historic P/E ratio: 29.5 (59.0p mid price, 2.0p eps)
divided by forecast annual eps growth: 800(%) (18.0p eps, Rowan Dartington forecast)
= 0.036875.


According to the Motley Fool website, a PEG of 0.5 or less is undervalued!

That site also says that 0.5 to 1.0 is fairly valued; say 0.75 medium. What earnings would TEL need to forecast for 2006 to score a PEG of 0.75?
About 2.79p eps; i.e. under a sixth of the actual forecast!
Of course, in reality such a forecast downgrading of over 80% would almost certainly hit the share price through sentiment, especially in view of the company's short earnings track record; but the above does indicate that even in the event of such a relative disappointment, the pre-existing share price may still be a reasonable valuation.

And for the current year, Westcom alone should contribute c. £180K. of earnings even if it just maintains its 2005 pre-tax profit of £240.6K. And that alone should contribute c. 6.4p to reported eps (based on average no. of shares in issue for the year - c. 2.8M. on a rough estimate).

What does PEG analysis suggest is a fair price for TEL shares if the current broker forecast is expected to be met? I.e. What share price would TEL need be at to score a PEG of 0.75 using the current broker forecast for 2006 of 18p eps?

Believe it or not, the answer is £12.00 per share! I.E. over TWENTY TIMES the current share price of 59.0p!!:
illustrative historic P/E ratio: 600.0 (illustrative 1200.0p mid price, 2.0p eps)
divided by forecast annual eps growth: 800(%)
= 0.75.

Of course, in reality it's unlikely that TEL would move to such a high share price this year even if it did meet the broker's forecast, because its track record of earnings growth would still be relatively short. But even so, the above calculation does give some indication of what large medium term upside the share price may have if the company does well.

And as we're nearly a month after TEL's year end of 31/7/06, and have received a positive trading update in June, TEL should at least get near to its forecasted result for 2006.

B.F.

[blank frank] 25/8/2006 19:48

TEL's recent "TMG plc Shareholder News" contained quite a bit of encouraging material; but perhaps the most significant for me was the detail of TEL's recently announced contract extension/wins.

All these new customers, and more, are apparently embarking upon CAPEX (capital expenditure) programmes to upgrade their telephony systems:-

"Travis Perkins
www.travisperkins.co.uk
2005 turnover £2,640.8 million
TMG Telecom deliver a seamless national telecoms service for all 1000 sites, the success of this three year partnership has been rewarded with a new three year contract agreed till May 2009.
Travis Perkins is a leading company in the Builders' Merchant and Home Improvement markets. Our service to Travis Perkins includes account management and fulfilment of all Travis Perkins telephony services including maintenance, engineering support and customer service to all sites across the UK. TMG telecom manages and 100% fulfils, a CAPEX rollout programme of telephone systems which will enable Travis Perkins to benefit from the operational efficiencies of VoIP technology, as well as providing voice and data consultancy advice. ...

HMV
www.hmvgroup.com
2005 turnover £1,885.6 million
TMG Telecom has secured a new maintenance contract to support all 229 high street retail outlets across the UK.
HMV is one of the most well-known and respected music and video retail brands around the globe and as part of HMV group, Waterstone has recently been acquired.
TMG Telecom delivers national maintenance coverage and are providing resources to implement their CAPEX rollout upgrades to IP based telephony and data infrastructure.

Lookers Plc
www.lookers.co.uk
2005 turnover £1,231.6 million
TMG Telecom successfully won the maintenance contract to support the telephone infrastructure for 75 national car dealership sites.
Lookers plc is a multi-franchise main dealer group with sites across the UK. Impressed with TMG Telecom VoIP experience, manufacturer range of engineering support and UK coverage secured TMG the maintenance contract in February 2006. Lookers have asked TMG Telecom to work with their management team to formalise an investment programme to increase the efficiency of their telephone infrastructure.

Osborne
www.osborne.co.uk
2005 turnover £224.5 million
This contract became operational in May 2006, TMG Telecom has delivered efficiencies and network savings through implementing a complete managed service tailored to 49 sites.
Osborne's is a UK construction business focused on building and maintaining railways, roads, homes, hospitals, schools and offices. Core to Osbornes and TMG Telecom working effectively together is the agreed "Telecommunication and Managed Service Agreement" which is given to each of Osbornes` sites. This document simply and clearly provides information on how to access all telecoms resources, service processes and service level agreements. Benefits to Osbornes` continue to be: cost savings of fixed line services accessible online, administration efficiencies of a "one stop service" and a managed programme of VoIP technology.

Allpay.net
www.allpay.net
Westcom Technical Services (a recent acquisition) has secured a large installation project to provide infrastructure capability to Category 6 standard. This is one of many infrastructure upgrade programmes secured by Westcom to enable fast data and voice network performance.
Allpay.net is the UK's most complete Payment Solution Specialist, with over 40,000 UK outlets offering modern payment solutions to any industry requiring any kind of revenue collection."



This suggests that TEL's selling of systems to its maintenance customers is very successful, fuelled by the current move to VoIP (voice over internet protocol) technology. This should not only be great for TEL's turnover, but also its profit, as margins here are so good.

From the 28th. September 2004 research note by Hardman & Co. (the most recent TEL research note I have been able to obtain):-

"System Sales account for 43% of revenue, and has almost doubled over the past two years. System sales are in general made to maintenance customers who need to update or unify their systems, rather than the other way round.
Technological advances, such as automated switchboards where the payback in labour savings is less than twelve months, more sophisticated voicemail, and automated call transfers are driving the demand for new equipment.
Because TMG is not bidding for new business but merely servicing its existing customers, its cost of acquisition for new business is low. It also finds less pressure to quote crazy margins. Most telecoms equipment manufactureres allow their resellers a margin in the region of 40%. With volume rebates and other incentives, and the mark up on installation and staff training, TMG is able to improve on that."

This underpins my optimism for TEL's results in 2006 and 2007.

B.F.

[outsider] 24/8/2006 21:07

All shares have a value trigger & a risk reward level that can be attractive.


TEL has dropped to such a level & was indeed helped by the 50-1 consolidation, which has narrowed the spread significantly again helping it's merits to the eye of the PI.

Albeit my TEL purchases are small & only about 5% of what I have invested in SIN, (at 18-25p) I am very happy picking up at 52 & 53p.....which I hope will be the low for TEL too.

[blank frank] 24/8/2006 20:43

What for one person seems long-winded is for another person being comprehensive - and precise.

I'm glad that Outsider has now recognised the virtues of TEL; and apparently to the extent of actually buying some TEL shares, according to ten a pen on Aimquoted (posted 21-08-2006 11:30, referring to Outsider by the name Third eye):
.

B.F.

[outsider] 24/8/2006 20:20

Spectrum Interactive: Mkt. cap. £7.80M.
54.1% director share ownership
4 directors own at least 3%


I can't be bothered to read the long winded posts, but noticed another share I have recently bought along with TEL, posted by BF.

If I may say so on this TEL thread well worth checking out on a p/e of circa 4 & a cash cow, transforming into a tech share....it might just make you some cash....but hey feel free to be critical on the SIN thread if you wish :-)


Back to TEL....a bargain, but my confidence is hampered a little because so small, the forecast for next year if met will surely ensure a significant re-rating.

[blank frank] 24/8/2006 19:54

SteMiS - 24 Aug'06 - 08:46 - 644 of 644
"Straw man arguments and misrepresention, Frank, yet again ... "

Even if that was the case, it would still be much better than your persistent posting of inaccurate information, as at least readers could rely on my facts to be accurate. But it isn't the case.

" ... Firstly I don't have a bearish agenda. I am a shareholder, so it would hardly be of benefit to me. ... "

Persistently posting bearishly, as you do, whatever the good TEL news (e.g. positive trading update, new shareholder newsletter), is having a bearish agenda - in the sense of having an agenda to post bearishly. It doesn't really make any difference to your comments whether you're a shareholder or not. I prefer to judge comments on their own merits, whether the poster is a shareholder or not.

There may be different reasons for having a bearish agenda. Sometimes a person may be inadequate and incapable in real life (which could be shown by their apparent difficulty in constructing accurate posts), and they might try to compensate for this by publicly 'fantasizing' that they could run a sizeable listed company better than the directors. Or sometimes they may feel embittered at having lost money, so might want to try to 'get back' at the company by constantly attacking it. Or they may even want to 'get back' at another poster who has shown them up in posting. Eventually, they may even be more concerned at being proven 'right' in their bearishness than seeing their company doing well.

You do though also suggest that benefit to yourself is a consideration when you post, which could be revealing about your motives. You apparently only hold any TEL shares you have through a nominee account, so it is not possible to monitor the shareholder register re. this. But holding one or two shares in a company is I suspect an old bear trick; it allows them to posture honestly and innocently: "But I'm a shareholder! ... "

" ... Secondly (and how many times do we have to have this, Frank?) your comment "another poster to myself even described it as dishonest I recall" is a complete distortion of the truth, which I showed in post 471 (point 4). Just constantly repeating it doesn't make it true (although I know that's one of your strategies). ... "

skintflint2 - 24 Apr'06 - 02:00 - 349 did say " ... seems dishonest imo ... " about your posting. My point is that by persistenty posting in such a 1-sided negative manner, sometimes inaccurately, you do risk creating an initial impression of dishonesty. Thus your post initially seemed dishonest to him, even if it wasn't actually dishonest. I may be less inclined to raise it again though if you stop attacking myself.

" ... I did not attack the overall level of director share ownership in TEL ... "

I didn't say that you did SteMiS. What I said was: " ... you complained about what you implied was a low level of director share ownership, and a lack of recent director share buying. ... " The key word here being IMPLIED. It was the impression you were seeking to create. And in my responses, I have not only addressed the overall level of director share ownership, I have also (first) addressed the ownership of individual directors, and the issue of share buying. In addition, my post yesterday did not only address the overall level of TEL directors share ownership; it also partly addressed the ownership of separate directors.

Three of the six TEL directors own more than a 3% holding (at least 4.5% in each case); and only two of the six TEL directors own less than about a 1% holding. Of those two, Greg Hallett invested £15K. into the company when he joined as a comparatively young man, with perhaps quite limited spare resources. I think that's a very encouraging sign, but the issue of whether it's a lot or not is subjective. Kimboy2 says it's not a lot; and yet he's recently suggested that he thinks I've invested TOO MUCH into TEL ... sometimes people just can't win!

That leaves just Lord Razzall. Is it unusual to have a single director of a company (especially a non-executive) who doesn't own shares in it? I don't think so.

You are dismissive of my suggestions for the lack of recent director share buying, but the one you are implying - i.e. that they don't think TEL shares are good value - seems even less plausible to me, as it flies in the face of all the evidence. And I don't believe that they've had an opportunity to legitimately buy in the market at the current low level.

" ... There may be no difference for the directors but there is for other shareholders. When directors buy in the market, they are buying shares which are/were available to other shareholders. Directors are getting no special deal and indeed may push up the price by removing surplus stock from the market. ... "

What I actually said was: " .. there isn't that much difference if the new shares are near the market price." The key words being THAT MUCH. I HAVEN'T said that there's NO difference. But I don't believe that the difference is often enough to justify blind fury when the shares are new, as opposed to unparalled delight when the shares are on the market.

Thank you though for admitting that there is no difference for the directors; the fact that there may be little difference for them was a large part of my point. (Remember that directors can't get EIS benefits when subscribing for new shares.)

You recently (21 Aug'06 - 13:55 - 624 of 644) said:
" ... Directors should know more than anyone when that is, which is why the market reacts positively to the news ... "
You admit therefore that directors may also be benefitting from a director advantage when they buy in the market.

And you also admit (21 Aug'06 - 13:55 - 624 of 642):
"The real reason that directors' buy shares is to make money for themselves."

Their buying on the market may help to push the price up (temporarily at least), but the share price should rise eventually anyway if the company does well. And removing surplus stock from the market is of course reducing the supply of cheap shares for other investors to buy. I also repeat the point that directors investment into new shares can benefit the company by providing funds for it. Of course there may be instances where the level of dilution, market price spread etc. mean that extra annoyance at the issue of new shares to directors is justified, but I was speaking in general terms.

I must say that I wasn't expecting to have a long debate on this point, as I didn't make a big thing of it initially. But I sometimes observe inconsistencies in the thinking of many investors, and I thought that it would interest people to share this point.

And I think that if anything my view is the anthesisis of naivety. It does after all emphasise the personal benefit to the directors of their buying in the market.

B.F.

[stemis] 24/8/2006 08:46

Straw man arguments and misrepresention, Frank, yet again

but your persistent posting of false and misleading info. to support your bearish agenda clearly is (another poster to myself even described it as dishonest I recall).

Firstly I don't have a bearish agenda. I am a shareholder, so it would hardly be of benefit to me. Secondly (and how many times do we have to have this, Frank?) your comment "another poster to myself even described it as dishonest I recall" is a complete distortion of the truth, which I showed in post 471 (point 4). Just constantly repeating it doesn't make it true (although I know that's one of your strategies).

you complained about what you implied was a low level of director share ownership, and a lack of recent director share buying

I did not attack the overall level of director share ownership in TEL (so the last couple of days going through a variety of companies to obtain comparable data was a bit of a waste of time). I said that it was not exactly encouraging that none of those directors who own few, if any, shares (such as the de facto FD and Chairman) have bought at these low level. There is a world of difference between the two.

I've also previously observed that it's funny how shareholders may call for directors to buy in the market, but may get very cross about them buying new shares, when there isn't that much difference if the new shares are near the market price.

There may be no difference for the directors but there is for other shareholders. When directors buy in the market, they are buying shares which are/were available to other shareholders. Directors are getting no special deal and indeed may push up the price by removing surplus stock from the market.

When directors issue new shares to themselves, they are not available to other shareholders. Directors are getting a special deal. A lot of PI's don't think that's fair, especially when the price is low and the result is dilution of their holdings.

The fact that you think the two are the same illustrates your naivety.

[jonwig] 22/8/2006 11:15

LOL - "My Frank isn't the Messiah, he's just a naughty boy."

[blindfaith2] 22/8/2006 08:15

Jon - You must have been a Monty Python fan with humor like that, which is close to my heart too.

[kervanda] 21/8/2006 20:13

Sounds good to me!

[jonwig] 21/8/2006 19:17

I laughed at the caption on the last page:

TMG Telecom team contributing to the
groups continued growth

No they aren't - they're standing in the car park having a break.

[blindfaith2] 21/8/2006 19:02

SteMis - tut tut such smut should not be posted on this site as it totally down grades us posters !



















Mind you on second thoughts your right she can handle my account too please !

[stemis] 21/8/2006 17:48

Blank Frank - 21 Aug'06 - 17:45 - 634 of 635
"TMG PLC Shareholder News" is now on the company's website (Investors page)!:-



That's good but it shouldn't take until the end of August for a June newsletter to be available.

PS - I wouldn't mind that Jo Upton handling my account

[blank frank] 21/8/2006 17:45

"TMG PLC Shareholder News" is now on the company's website (Investors page)!:-

[blindfaith2] 21/8/2006 17:02

BF Post 632
"Let's just wait for TEL's results, and see how the share price develops. My guess is that one or two people may have to eat some humble pie, and/or their hats!"

I for one am starving !!!!

[stemis] 21/8/2006 14:42

LOL

You have Frank after you for a comment like that.

[blindfaith2] 21/8/2006 14:34

SteMis - thanks, so thats £1.75 per share in new money then and they have got until Sept. 2009, Hm........... could be a tight call then !