 Zeus summarise as follows:
"Change of CEO to accelerate organic growth plans
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the Group has announced the appointment of Lynden Jones as CEO in the first step of its strategy to increase the rate of organic growth and realise shareholder value following the conclusion of its strategic review. Having introduced a high-level outline last month, today’s announcement provides further details on this plan, including the change of CEO, the Chair’s intention to remain in place to oversee the transition and next stage of growth, as well as aiming to return up to £1m of surplus cash to shareholders over the next year.
Additionally, Touchstar reiterates its expectations for FY25E, with our forecasts implying 20.3% revenue growth and PBT growth on the back of a healthy orderbook and sales pipeline. Trading on a FY25 PE of 11.4x and EV/EBITDA of just 2.6x, underpinned by £3.0m of net cash (40%+ of the market cap), we see scope for the shares to move higher during 2025 as the strategy is delivered."
"Renewed strategy for value creation:
Following the conclusion of its strategic review in February, in which a number of indicative proposals were received and ultimately rejected, Touchstar has announced a renewed strategy to accelerate growth within the business. Key steps to the plan include increasing investment in the fuel delivery business overseas, building the technology platform to address a wider range of verticals, and increasing marketing and promotional activities. Today, the company has also firmed up plans to return surplus cash to shareholders, now providing guidance on the quantum of returns, stating that up to £1m would be returned via share buybacks or dividends over the next year.
Forecasts illustrate 20% organic revenue growth: Following the February update, we reintroduced forecasts expecting 20% revenue growth and PBT of £0.7m, up from £0.5m in FY24E. Management has reaffirmed expectations of revenue and profit growth this morning, which are premised on an order book of £1.0m, up 130% on the prior year, a healthy sales pipeline, and high levels of recurring revenue in the business.
Zeus view: We view the appointment of a new CEO as a positive step in reinvigorating growth in the business, capitalising on Touchstar’s solid product portfolio and strong position within the fuel delivery market. We believe that the business is fundamentally well positioned for growth, with contracted recurring revenue totalling 44% in FY24 and expecting to increase, a much improved orderbook and backed by a strong balance sheet, including net cash of £3.0m equivalent to 40%+ of the market cap. As such, we see scope for the shares to outperform in 2025 as the strategy is successfully executed." |
Zeus's update this morning forecasts:
- 7.2p EPS this year
- £3m net cash (44% of the £6.8m m/cap)
- £1.2m operating cash inflows this year
In which case there's serious upside here this year assuming forecasts are merely met. |
Agreed. Today's news is extremely positive imo. Plus there's this as regards current trading...
"As reported in the trading update on 17 February 2025 we entered 2025, with optimism of a good year, with the expectation of growth in revenue and profitability - we remain of that opinion."
MH is a good guy, and it's nice to see him staying on, but the new COO is young and appears to be a high-flyer who'll get things done (and a likely successor to IM).
The entry into overseas markets began a while ago and will now hopefully accelerate.
Use of the huge cash pile for entry into wider verticals and for marketing plus bubacks and dividends is all good and shows the necessary ambition to attract investors.
Perhaps things are about to take an interesting turn here. |
well there it is & at the very least a positive move in the right direction. MH leaving & being replaced by a much younger enthusiastic player gets my vote, as does the thought of entering overseas markets. Also on the plus side 1mill to be returned either via buybacks or divi's. |
"News this week!"......what are you expecting ? |
News this week! |
Contract with James T. Bilsland who cover Scotland and North of England. So one would assume a decent size |
TST newly tipped here (subscriber-only though):
"Touchstar – trading better than most recently expected and “conclusion of strategic review”, Buy
By HotStockRockets | Wednesday 19 February 2025" |
If you want a laugh, read their Google reviews. |
This would seem to be a sizeable contract win for this year - looks like TST are able to publicise news like this now that the strategic review is over:
"Houghtons of London select ‘PODStar’ from Touchstar Technologies
18 February 2025
Houghtons of London select ‘PODStar’ from Touchstar Technologies to transform their distribution operation
Background
Houghtons of London are a family run national supplier of fresh fruit, vegetables, dairy, frozen and dried goods, to over 500 individual clients daily. The company operates from a custom built, fully refrigerated 7,000 square foot distribution centre in located in Croydon. They operate 25 refrigerated delivery vehicles, all of which are ULEZ compliant
".... The Project Goals
Lucie Houghton, Sales Director and Financial Controller for Houghtons of London will be working closely with the business development and project management teams from Touchstar.
She anticipates many tangible benefits from the introduction of the system: “The PODStar system will be receiving data from our existing IT system. Touchstar have an impressive integration tool, called EvoLink, which will handle this requirement. Once we go ‘live’ with the new system we believe it will transform our operation in a multitude of ways.
It’s going to be an asset for customers chasing POD’s or wanting ETA’s on their deliveries and for locating the drivers and assets. It was also very important for us to have an irrefutable record and evidence of what has been delivered – to hand within seconds. The proof of delivery system will immediately reduce our paper usage by at least 80 per cent. The PODStar mobile app is very easy to use with very minimal driver training on the handhelds required. I’m anticipating rapid roll out of the system out to all of my drivers with very minimal disruption to our operation.” |
I think what people are saying is that TST needs a new top management team with ideas to spend the cash and grow the Company. Touchstar hasn't made any acquisitions. The last corporate transaction was when it acquired Feedback Data and it was then Belgravium. Rachel Reeves would like TST to pay a special dividend but I certainly wouldn't. TST is trundling along. It really should just be a small part of a division of an industrial holding company. Sadly with the de-industrialisation of the UK there aren't many around now to acquire it. |
I agree. An acquisition would be a good use for the money. |
TST should be adding scale instead of thinking smaller.
No point being quoted. |
I'd like to see TST using its £3m cash to make a complementary - but earnings-enhancing - acquisition if possible. Ian Martin is certainly capable of handling this and ensuring its success.
More likely though imo is a special divi combined with buybacks (though these must be difficult to find in size given the tight shareholdings), together with increased spending on:
(1) International expansion - perhaps via acquisition, partnership more likely
(2) More/better products
(3) Increased marketing/sales expenditure |
1st of all they need quality salesman who can deliver on their quality products. With even a small tick up in Revenue,I suspect it would mean a massive boost to the bottom line, but TST has tread water for far too long. Cash, well I can think of quite a few options, special divi on top of normal one, share buy back or even possible purchase of industrial buildings where rent alone would bring in a decent Revenue & keep an asset within. |
Davidosh, a tender offer is a good idea but sadly it is expensive to set up and for a microcap like TST it is a complete non-starter.
Ok how about a one off special dividend of 15p per share as that may also create some liquidity at the same time and boost interest in Touchstar.
If the company do not need the cash buffer it is better used by me reallocating it elsewhere. |
Zeus have updated today and summarise as follows FYI looking forward:
"....Touchstar reports a strong performance in the final few weeks of FY24, resulting in a better than expected outturn for the year. We reintroduce forecasts this morning following the conclusion of the strategic review, looking for FY25 growth in revenue of 20% and close to 60% at the earnings level, with the order that led to October’s weak trading update now confirmed for FY25.
Trading on a FY25 PE of 12.1x and EV/EBITDA of just 2.8x, underpinned by £3.0m
of net cash (40% of the market cap), we see scope for the shares to move higher
during 2025 as the strategy is delivered."
"Zeus view: While there will be some disappointment this morning with the outcome of the strategic review, we believe that the business is fundamentally well positioned for growth, with contracted recurring revenue totalling 44% in FY24 expecting to increase, a much improved orderbook and backed by a strong balance sheet, including net cash of £3.0m equivalent to 40% of the market cap. As such, we see scope for the shares to outperform in 2025 as the strategy is successfully executed." |
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