Touchstar Share Discussion Threads

[rivaldo] 30/1/2023 10:24

Good to see the spread narrow somewhat. Online you can sell an unusually large 10k at just over 80p, and the bid price has moved up on very small buying, so the signals are good at present.

EDIT - ah, the rise was caused by a 20,000 share buy at 90p just reported late. Nice.

[russman] 23/1/2023 19:01

Strategically, should be looking to bulk up with bolt-on cash acquisitions.

[rivaldo] 23/1/2023 14:09

Worth noting that sellers can get over 78p online now for quite a few shares, so the spread is somewhat less than the published prices might indicate...and of course the share price generally moves quickly with just a little activity.

WH Ireland's 120p valuation does look ridiculously undercooked now, but as I said it seems likely this will be moved upwards once the prelims are published in April.

I agree davidosh, the cash pile should be utilised on either or both investing in further organic growth and an acquisition or two. I usually quite like buybacks where there's genuine value to be added, but in TST's case we don't want liquidity to reduce further.

[davidosh] 23/1/2023 13:25

The spread at 75 to 90 is horrendous and will deter investors.

I am a long term holder but happy to meet in the middle at 82.5p if anyone wants to sell and my broker will arrange payment.

Buybacks would create even less liquidity and I prefer investing the cash wisely or build the company with sensible add on acquisitions

[rivaldo] 23/1/2023 12:09

WH Ireland have reiterated their 120p target price. They've left their forecasts unchanged at present at 6.7p EPS this year and 8.4p EPS next year, with the cash pile rising from £3.5m to £3.6m and then £3.8m respectively.

They "believe valuation multiples have significant scope to expand".

I suspect that WHI will upgrade their forecasts when the prelims are released as analysts tend to do.

Given the cash pile representing 50% of the m/cap, based on 8.4p forward EPS and a P/E of say 14, it's possible to see a sum of the parts valuation of perhaps 160p-170p, though of course we need to see the year end debtors/creditors etc.

Here's WH Ireland's summary:

"Full year trading update illustrates further positive progress in the year

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has reported a positive year-end trading update for the 12 months to 31 December 2022, pointing to revenue and PBT in line and cash generation well ahead of our forecast. Revenue is expected to be 10% ahead of FY2021A (FY2021A £6.1m), with EBITDA up 25% and PBT increasing 100% (FY2021A £0.2m), reflecting strong operational gearing and continued margin progression.

The year-end net cash position at £3.5m was significantly higher than expected (WHI est. FY2022E £2.5m), a result of strong cash conversion in the period. Looking forward, current trading is reported to be buoyant, with a significant increase in the order book to £1.7m (30 June 2022: £1.0m) and an increasing share of recurring revenue at 40% (FY21: 38%) supporting our forecasts.

The shares now trade on an FY 2023E EV/Revenue multiple of just 0.4x, EV/EBITDA of just 2.0x and PER of 11.9x. With 40% of revenue now being recurring in nature, we believe there is the potential for the shares to continue to re-rate as the strategy continues to be successfully executed. We see fair value for the shares at 120p."

[cocker] 23/1/2023 11:18

I think we are all more than happy to hear that Elited, but just sitting on it & doing nowt is crazy. If they bought a warehouse and rented it out it would give a better return, plus they would still have an asset.

[elited10] 23/1/2023 10:49

I'd have thought the change in cash strategy would be down to the prospect of expansion into new territories, they've mentioned that a couple of times over the past year

[cocker] 23/1/2023 10:42

interest @ 3.5 % is more than optimistic. With share price at this price although initially against such an option, buy back the best way to give value to shareholders. There was talk of cash distribution back along, seems acquisition or expansion is where its likely to go, either way truly undervalued & hopefully someone will later have access to broker note.

[johnwise] 23/1/2023 07:50

Touchstar PLC (TST)

Trading Update

[rivaldo] 23/1/2023 07:26

Indeed, excellent stuff. EBITDA is ahead of expectations, all other measures are nicely in line - and the cash pile is way ahead of expectations at £3.5m (forecast was £2.4m).

That £3.5m cash now represents 52% of the market cap!

Alongside this, the now historic EPS should be around 5.5p. This year is forecast to bring 6.7p EPS, but this should be conservative given the "buoyant" order book, which is up to £1.7m from just £0.6m a year ago.

With 40% recurring income now, TST are in a great place.

Plus with interest rates rising, the cash pile will generate very nice interest receivable to add to the excellent prospects.

And it's encouraging to note not only the various ways in which that cash will fuel organic growth, but also to see IM state for the first time that acquisitions are now on the cards....

[hastings] 23/1/2023 07:06

Excellent update here, strong cash generation ahead of expectations, building on recurring revenue, positive outlook.

[cocker] 18/1/2023 07:54

Was it April the 1st yesterday Dolittle, enlighten us all as to why Chelverton will be dumping 850k of TST shares. I suggest as a trust it will inevitably buy and sell stock like private individuals do & just because they are off loading one investment, it certainly doesn't mean any other in their portfolio is at risk.

[dolittle1] 16/1/2023 15:26

Chelverton has been dumping PEG. Only a matter of time before they do the same here and that could spell trouble due to illiquid nature of TST.

[cocker] 16/1/2023 14:59

With the order book @ 2.3 mill after the last rns, I guess one would hope to see T/O for the year as a whole to be in excess of 7mill given inflation as well.

[cocker] 16/1/2023 11:32

Atf fuel upgrade with TST annouced today. Looks like an add on to existing contract. Just maybe we might get a year where the share price finally pushes above a quid and where some of the cash gets distributed to we patient shareholders.

[rivaldo] 09/1/2023 14:26

Today is a rare opportunity for anyone wanting to buy a decent chunk of TST shares. There's 20,000 shares available to buy online at 85p. Most unusual to be able to buy more than a few thousand shares in one go.

[cocker] 04/1/2023 10:56

Happy new year to you all. Given that SCSW has covered these in the past as has techinvest, maybe they might just creep into their new year tips for 2023. Worth remembering cash pile is almost half the share price which is a massive safety net in the current climate.

[smithie6] 11/12/2022 15:36

btw
Suckling Transport
turnover £21 million
PAT. £1/2 million.

so Touchstar probably received a fairly small contract....but helps show the demand (& hence the quality/performance) for Touchstar products, especially in the fuel delivery sector.

[smithie6] 11/12/2022 15:23

the Touchstar tech ppl seem to be very good at connecting in other systems

every project seems to involve Touchstar technology being connected in at a different place in the client's system, & every client's system is different. And yet the Touchstar team seem to be able to take it their stride each time !. very good.