Vanco Share Discussion Threads

[masurenguy] 08/2/2008 09:47

"windjammer - 8 Feb'08 - 09:08 - 651 of 653: Masurenguy, well based on your findings what value do you put on barratt"

Not really interested in housebuilders at the moment so I have no view on value. The point here is that Vanco needs to address their undercapitalization issue !

[02bursar] 08/2/2008 09:25

M650

Debt to current market value is meaningless. That's no measure of gearing. Vanco's MV was six times higher a year ago yet its debt isn't six times as high now. Debt is medium term - not short term. The business in which it operates is growing - the same can't be said for housebuilding. The company itself is growing in that business - not the other way around.

Some investors think the finance risk is worth that discount. They want their cake and eat it.... a growth stock with no risk. The institutions must be licking their lips. ... a growth stock with a track record of delivering at a massive discount.

[windjammer] 08/2/2008 09:19

barratt 70% fall

[windjammer] 08/2/2008 09:08

Masurenguy

well based on your findings what value do you put on barratt

[masurenguy] 08/2/2008 08:57

"windjammer - 7 Feb'08 - 15:19 - 644 of 649: errr off the top of my head barratt development"

Well that's not quite correct. Barrett are currently circa 65% down from their high over the past year and Vanco are 83% down on the same basis !

Both companies have debt that exceed their current market cap BUT Barretts have landbank and property assets that are 50% higher than all outstanding debt so they have plenty of collateral. Different businesses and sectors but Barretts balance sheet is much more robust than Vanco.

[02bursar] 08/2/2008 08:29

M648

"Sell recommendation in IC today - For what it is worth."

All the more for the financial institutions, who take the long term view on growth prospects, to mop up.

[pugugly] 08/2/2008 08:24

Sell recommendation in IC today - For what it is worth.

[02bursar] 08/2/2008 08:20

M646

"yes they are a takeover target but i don`t think they would sell. not for 3 x this share price 6 x yes maybe"

Naturally they are a target at this P/E. The discount to the market for the finance risk is absurd IMO. Either it is a growth stock or it isn't. It's track record says it is.

Directors bought up in H2 - Wayne Churchill bought 100k for £1.55 from memory and the price was up to £6 just a year ago based on the forward trading position.

This business has tremendous potential. The Board believes the market view is miopic. I agree with that sentiment.

[windjammer] 08/2/2008 07:54

GMoney69

yes they are a takeover target but i don`t think they would sell. not for 3 x this share price 6 x yes maybe

[gmoney69] 07/2/2008 20:55

windjammer - so do you see VAN as a takeover target?

[windjammer] 07/2/2008 15:19

errr off the top of my head barratt development

[masurenguy] 07/2/2008 15:01

Clearly the market is in significant downtrend, which of course has some varying negative effect on most share prices. However, name me one other company that has increased sales and profits consistently for four years in a row, who have also reported sales +25% & PTP +48% at this years H1 interims, and seen their share price collapse by 80% over the last 10 months !

The only other companies who have suffered enormous share price falls like this are either losing money or have issued significant profit warnings. The debt issue here far outweighs the negative market sentiment on equities in general.

[windjammer] 07/2/2008 14:44

masurenguy

its not just here its the whole market, as soon as anything rises the profit takers move in.
take MRP for instance they anounce that they have been approached by two buyers the share price goes up 60% and everybody starts selling the co is worth 600% more but there is no confidence in the market

take the long term approach this will returne to 190 ish

ask Fidelity they think so. plus the ftse 100 tanked that didn`t help

[masurenguy] 07/2/2008 14:17

Well, that 10% rise was shortlived - holders are selling into spikes which is a classic symptom of negative sentiment. Prople who dismiss the large level of debt here have failed to recognise this as the main cause of the 80% decline in the share price in less than a year.

[02bursar] 07/2/2008 12:58

The financial institutions continue to be active. Fldelity has raised it's stake from 7% at 2007 year end to 10%.

[windjammer] 07/2/2008 10:08

here we go its starting to hurt

[windjammer] 07/2/2008 09:56

well looks like the overhang has gone now shorters will start closing
come on TNT tell us you now long.

[finess] 07/2/2008 09:36

Oh Dear, That TNT short is a worry. ;-)

[02bursar] 06/2/2008 09:38

M634.

Debt is a source of finance for most businesses - typically for capex and thus over a term to reflect the longer term nature of the cashflows required to be generated from the capex to service and repay the debt. The 2007 accounts indicated that £4m was repayable in 12 mths and circa £30m in 2-5 years. Since then, new debt has been taken on to cover the increased working capital requirements due to the growth of new business which is of a medium term nature with a skewed cash profile. - consider the Ernst & Young deal.

Finance risk - leaverage [debt / equity] .... whilst gearing is high [0.5 / 1 would be ideal] IMO it is not catastrophic [as the massive decline in the share price would suggest] as long as cashflow from operations can service the debt and make the repayments. There is no evidence that the business is or has been unable to do that [interest is covered >4 times] and the last finance update affirms that position.

The high leaverage will be addressed to a certain extent if profitability is on target and average cashflow moves to neutral / positive.

This may be achieved if the order book content reflects the more mature contracts where the network is being managed, having already been designed / installed. My understanding is that second phase work is less profitable but more cash generative.

This may hinder the company's growth rate as management reflects on the consideration to balance cashflow expectations with new contracts taken [phase 1 implentation work - network design / hardware install - must be cashburning in profile in the early stages but the more profitable element of the contract overall]. Potential contracts may well be turned away and there was a hint of that in the last update.

Of course there may also be certain internal costs whose cash profile may be restructured or rephased. I have in mind any sales commission costs.

Given such strategies [slowdown of growth rate / internal cost restructuring] I think the company may well have room to maneouver and mitigate the need for further capital from the market at this time. A period of consolidation is needed in my opinion and I feel confident that the share price will then recover.

[tachycardia] 05/2/2008 21:26

VAN the crown jewell of telco did best in all downturn through 2000 to 2005, now suddenly 80P, extremely oversold position, openion please?

[finess] 05/2/2008 17:46

Windjammer
Your Post 602,
TNT can move the share price on small caps, you see big movements on small volumes when he takes a position. I am sure he knowes this and the timing of his updates are important to any share price of a small cap company. there may be some others involved pre - update. Only a thought , not wanting to start a "war of the rings" or fallout with anyone :-)

[davius] 05/2/2008 17:40

At the absolute risk of repeating myself, the net debt issue is not the same as negative shareholder funds or negative asset value. I suspect that the market cap is now below net asset value (which is what everything is worth once all the debts are paid). Net debt is a cashflow position, not an overall financial statement of the company.

My own company makes a profit, but has a relatively high net debt compared to overall profits. Provided the profit is sufficient to cover debt several times, and bank/overdraft limits are not being breached, there should not be a problem.

If they do indicate guidance of £20m profits in a fortnight then they will be at an extremely low P/E. If they cannot control the net debt this will risk slowing down growth, but will not bankrupt the company.

[windjammer] 05/2/2008 16:08

well just had to buy some more the co must be worth more now than when it floated. crazy
not saying it couldn`t go lower who knows these days. but 6 months time got to be higher than it is now.
preditors will be about, but don`t think they will sell

[taffee] 05/2/2008 15:09

ism lowest since october 2003,however, bloomberg fail to point out that after that the ism figure soared to 58