Touchstar Share Discussion Threads

[likitorma] 05/6/2020 15:25

Sheldon normally does it three times.

[rivaldo] 05/6/2020 15:14

You said that in post 978, post 973.....it's a microcap with a small following which others may latch on to sooner or later. Patience :o))

[likitorma] 05/6/2020 15:09

How come noone is buying the shares then?

[rivaldo] 05/6/2020 14:55

Hi Pavey Ark. My aim was simply to inject a little caution and not for you specifically at all - management were keen to stress that COVID-19 will have an effect for some time to come. I just wanted to put down some musings to reflect that.

As for ALS' post, TST had £850k cash at 31/12 comprising cash less borrowings on the Balance Sheet. It's easy to check and is the figure quoted by TST in th results. That will presumably have been increased since by profitability and soon by the R&D tax refund.

There are other assets and liabilities in net current assets, but these net out to not much (the £1,53m of "Contract liabilities" in payables is actually accrued income under a different name so can be ignored).

[arthur_lame_stocks] 05/6/2020 14:29

TST doesn't have 1m in net cash. Net current assets at the results were just approx 450k.

[likitorma] 05/6/2020 14:29

If you guys are so confident, how come there is no buying pressure?

[pavey ark] 05/6/2020 14:16

Rivaldo,

The order book was £1.7m at the end of January.

"However, we must be a little realistic." One of my obvious an uncorrected failings is my willingness to take offence but my very detailed post could not be described as anything but realistic and factual.
I do admit it relied on certain assumptions and projections but I considered these realistic.

My original musing was: could the company justify a share price of 100p?

I think I demonstrated that it could and that it MAY not be that far off.

You simply cannot go wrong if you are in the right place, with the right product, at the right time.

Big time high street retail is on its last legs ....as I wait for my parcel delivery 2.30-3.30pm !!!

NB. In my calculations I reduced the ADMIN costs from c.£4m to £3.8m.(continuing operations)
A 5% admin reduction should be very achievable and sustainable in any company belt tightening/cost cutting exercise. With or without Covid Virus.

If any other company wants to reduce their admin costs I suggest they call Touchstar.

Rest assured I'm not taking your figures as a guarantee of my figure being right.

I greatly appreciate the time you spent in the Zoom call and certainly appreciate the time and effort spent in passing the information on but my figures are certainly MY best interpretation of ALL the data available.

[rivaldo] 05/6/2020 13:47

TST is good value imo at just a £3.7m m/cap given the roughly £1m net cash, the profitability, the prospects, the recurring revenues etc.

However, we must be a little realistic. The profitability is from the combination of what was a transformed business with a pre-COVID booming order book combined with pre-COVIC cost cutting and further substantial cost cutting during the pandemic.

I think we can expect that at H1 the order book will have dropped materially from the opening £1.2m, though it will probably still be very good against the prior year.

And whilst the H1 results should be good - and perhaps surprisingly good - thanks to the above, COVID-19 will have had an effect on the 30% of the business which is "non-essential", and who knows how long TST can continue to rely on furloughing and temporary salary reductions.

With the lockdown now easing, H2 from 1st July may quickly re-establish the excellent upturn which TST was previously experiencing, or we may find that a general slowdown impacts the overall business more generally.

Anyway, the substantial recurring income, already secured income for 2020, order book and cash pile should ensure that at these levels TST remain at worst a pretty decent bet.

[cocker] 05/6/2020 13:21

Not on ii on line. Market best only

[cocker] 05/6/2020 12:46

One would say remarkable that share price hasn't risen on such an update. However, no quotes available on line again to buy. Did anyone mention this problem during the event?

[pavey ark] 05/6/2020 10:04

The 2019 H1 revenue figure was £3.244m and this included revenue from the now sold Onboard unit.
In the first FOUR MONTHS of 2020 the revenue was £3.1m from continuing operations.

Edit: The onboard unit was due to receive £740k investment over the three year plan.
Obviously a part of that has been spent AND LOST but it shows the strength of the remaining business that it could take this hit and push on.

Enough of this nerd talk.
Achilles is on the mend , the sun is shining and I'm going a run.

[pavey ark] 05/6/2020 09:26

These really are impressive figures.

£2.3m revenue (excluding recurring revenue)in the first four months.

Add in recurring revenue of £200k/month gives £3.1m.

The company is heading to a revenue figure of £9m-£10m for this year.
The revenue for continuing business was £6.54m last year.


For any business March and April were hardly a barrel of laughs yet they remained profitable and continued through May.

Most of TST's customer base did quite well in comparison with others and the steep rise in volume for some may have exposed a weakness in their systems.
Other companies may see increased automation and remote data gathering as the way forward.

My comparatively short term expectation is a share price of 100p.
(when I say expectation I mean I don't intend to even think about reducing my holding until the price is at least 100p).

So let's see:

100p means a market cap of £8.5m but given the current cash and rate of cash generation I'm going to assume cash of at least £1m.

So lets value this on an EV of £7.5m

If revenue reaches £9.3m this year (you work it out !!!)and margins remain at 53% we get a gross profit of £4.93m
Admin was £4m but they are saying that has been reduced significantly but I'll go for a cautious £3.8m.

We now have £1.13m to play with.

Cap ex is usually significant (three year master plan and all that) so is the tax rebate.

An EV/earnings ration for this sort of business is usually much higher than 12 but if we chose 12 then the earnings figure required is £625k.

Given the company's and rivaldo's figures this does not look difficult.

[smithie6] 05/6/2020 09:17

Rivaldo
thanks for taking the time to share that info

[likitorma] 05/6/2020 08:42

Rivaldo,

Assuming the recurring is not included in the £2.3million:

Recurring turnover to end of Apr: 0.8mil
Non-Rec turnover to end of Apr: 2.3mil
Total to end of Apr: 3.1mil

Normally, at half Yr stage, they tend to hit just above the £3mil mark. In that case, they are doing pretty well.

Great to see May was also profitable.

[rivaldo] 05/6/2020 08:13

No probs. Pavey Ark, yes, I'm pretty sure that the £2.3m was additional to the recurring revenue. Presumably the £900k pipeline is additional revenue for the rest of 2020 which is in the order book/agreed/contracted (not "banked" as in cash!).

[pavey ark] 05/6/2020 07:51

rivaldo, big thanks for that.

Just a few points:

"£5.6m revenue banked for this year".

In the first four months the revenue was £2.3m did this exclude recurring revenue ?

If they stop here and no further orders/delivery of orders then the revenue for the year would be £2.3m + £2.4m ?

Can you explain about the £900k "in the pipeline"......yet "banked" .

Just a little clarification on some points but these figures look very good to me.

The R&D refund had slipped my mind and slipped from my calculations so a big bonus for me.

Thanks again
PA

[cocker] 05/6/2020 07:47

Great update Rivaldo, much appreciated

[rivaldo] 05/6/2020 07:23

I was on the Zoom call, along with just a few others plus the Chairman and CEO (Ian and Mark).

It went very well and was as positive as one could expect in the current circumstances.

In particular (from memory, so any corrections welcomed!):

- May was again profitable as well as January-April per the latest figures
- £5.6m of revenues have already been banked for this year, being (1) £200k per month of recurring revenues, i.e £2.4m, (2) £2.3m of revenues already booked to 30/4, and (3) £900k in the pipeline
- TST get 30%-40% of cash upfront, which is one of the reasons why their cash flow is so healthy
- they're also due to receive a substantial R&D tax refund in the next few weeks
- the business was really motoring prior to the pandemic, with order books up hugely as we know but interrupted by COVID-19. With a dominant position in certain sectors, whilst business will be slower for a little while they're optimistic that prior levels of demand will return
- 70% of revenues derive from "essential services" as defined by the Government