Share Name Share Symbol Market Type Share ISIN Share Description
Velocity Composites LSE:VEL London Ordinary Share GB00BF339H01 ORD 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -2.00p -3.20% 60.50p 57.00p 64.00p 62.50p 60.50p 62.50p 27,863 14:00:29
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Aerospace & Defence 21.4 -0.6 -2.0 - 21.66

Velocity Share Discussion Threads

Showing 826 to 850 of 850 messages
Chat Pages: 34  33  32  31  30  29  28  27  26  25  24  23  Older
DateSubjectAuthorDiscuss
14/4/2018
19:57
What has now happened to this co ?
vauch
12/4/2018
16:35
Looked at today - 15%, yes, 15% spread - uninvestable. PT
podgyted
02/3/2018
14:41
Here is the note. It is a bit long. I hope it is of general interest. 27 February 2018 Velocity Composites (VEL.L) Price: 70p Market Cap: £25m Velocity (VEL) was one of my favourite stocks for 2018. At the end of last year, the shares rose sharply, but the fell after the results as estimates were cut and again after the AGM statement. The reasons for the early reduction were partly for positive (possibly very positive) long term reasons and partly negative, but there was no further reduction in estimates after the AGM. The purpose of this comment is to look at the current projections, compare the difference with those previously published and to try to ascertain whether the shares can be considered a buy. If you read to the end, you will see that I am still very bullish. Velocity manufactures advanced carbon fibre kits, which are used by Tier I suppliers to produce components for the major aircraft manufacturers. Management state that they are unique and are the only company worldwide to offer this service. Their USP is the reduction in waste by using their proprietary software to cut the carbon fibre rolls. There can also be a reduction in the rejection rate of finished components. The AIM admission document describes further significant benefits. It is worth reading for background and can be found on the company’s website. The company joined the AIM market last year to raise capital. The company’s facilities are replicable and the new capital would enable new sites to be commissioned in Europe. A secondary consideration was the status accorded to publicly traded PLC. This has proved to be the case and is discussed in more detail below. The results for last year are roughly as expected in that adjusted profits were in line. However, revenues were higher than expected, but gross margins were well down. There also unexpected and large marketing expense outside Europe. That will continue and is one of the reasons that profits and EPS for the current and next year will be lower than original projections. That is potentially, and likely, to be very good news. It was publicity from the flotation that led a number of non-European groups to approach VEL and ask for quotations. Management indicated that the most likely area to build a plant would be Asia where there were some nine hubs each of which was as large as the UK market. A site in this area is possible this year but more likely next. The first non-UK site will almost certainly be opened in the EU. The AGM statement reiterated this factor. I quote “Since IPO, the Company has won significant new business and momentum remains firmly with the Company as they are approached by more and more potential customers looking for significant savings versus their existing processes. Velocity has started to benefit from economies of scale and this will drive further cost savings, both for the Company and its customers. The Board remains excited about the prospects for the Company and this has been reinforced by recent additional industry accreditations that provide the Company with access to new platforms and programmes. In addition to the above, we continue to expand the customer base, including for programmes to be delivered to customers in Europe and beyond. The scale of composite production in these locations dwarfs the UK market.” In the latter context, virtually all historic revenues have been generated in the UK. The original projections were for EPS of 8.5p and 13.5p for the years ending October 2018 and 2019 respectfully. With a share price of then around 95p, there appeared very large upside as in January 2019, the current year PER would have been 7. That would have been ridiculous given the growth rate and the likelihood in the medium term of a growth rate of 20% made up from a 10% growth in industry demand and 10% from increasing market share. However, those projections have been reduced and the EPS estimates are now 5.5p, 10.6p and 13.0p for October 2018, 19 and 20. As one would expect the drivers for profitability are revenues growth and margin recovery. The AGM statement added “developments have had an impact of approximately £2m on the visibility of this year's revenue outturn, but management is confident that further work can be won to replace that and bridge the gap in order to meet market expectations for the year ended October 2018, if market conditions and customer demand remain stable.” Looking at the numbers in more detail, there is no change in revenue estimates for the current year but those for 2019 have been increased by almost 10%. That is almost certainly from the first non-European site. Gross margins are now lower, however these are expected to be more in line with the historic levels. Previously these had been projected to rise significantly, which with hindsight does look a bit strange. Marketing costs will increase as mentioned above and depreciation is forecast to increase in both years. The tax charge is expected to be lower. There were no previous estimates for 2020 as far as I am aware. The move into Asia and potentially into North America, from where there have also been requests, is likely in my view to maintain a 20% (plus?) growth rate for a longer period. On that basis, I consider that the shares should justify a PER in the range of 12 to 15 (a long term PEG of 0.6 – 0.75). However, if current projections are now accurate, in January 2019 the current year PER would be 6.6. A PER of 10, would give 50% upside and 12 would give over 81%. In addition, maiden dividends are projected for the current year. Management have stated that the results will be H2 weighted and that Q1 normally is the quietest, so it appears that there is some seasonal weighting not just growth. I consider this should be a winner. The safety play is probably to wait for the interim results, but I have recently added and it is now one of my largest holdings. I hope I am right.
sidam
02/3/2018
12:10
sidam - I'd very much appreciate reading your notes. Posting them here would help new arrivals in the future. Although I sold my holding a while ago (it was never meant as a long-term investment) it's still on my watchlist.
jonwig
02/3/2018
09:58
Interesting that the house brokers estimates have not changed following the AGM statement. There is the risk that the company wil not be able to generate sufficient additional business to clawback the stated shortfall, but if current estimates are correct the shares look to me to be stupidly cheap. I have written some chat to put my thoughts down and to send to my friends. This looks at the change in original estimates etc. It is rather long 2 pages. I can copy and paste it here, if anyone wants me to do so, or if you let me have your email, I will send you a copy.
sidam
30/1/2018
13:29
Sidam Thanks very helpful. I tracked down an old brokers note to see where they expected to be at YE. It is very clear that the key driver of revenues and profits is expected to be the A350 production ramp up and VEL's ship-set value on this programme. A very minor profit wrinkle at this stage does not worry me. My main worry in the points listed above is cash. The forecast in June 17 for the year end Oct 17 (i.e. 4 months away from forecast) was for working capital movement of -£1.6m. It was actually c. £2.7m or a £1.1m difference (c. 70% higher than forecast 4 mths before). The difference was not broken out. Taking trade debtors first, they were £4.65m or 79 days. Assuming 60 day norm (payments 45 days from month end plus average of days outstanding in month - 15) this suggests a "normalised" trade debtor balance of £3.51m or a difference of c. £1.1m (which is probably too neat). The other working capital items: inventory, creditors and other debtors were either as expected or, more likely, the differences netted themselves out. For marginally profitable businesses with significant development capex, control of cash is vital. If this repeats, it would be a concern. Interesting re results note. The company appears to give institutions much more detailed information than private investors. Also, the results report itself was not slick or that informative. Again, if this continued, a lack of enthusiasm for private investors would be a red flag. For me, it is too early to conclude, so let's see how VEL gets on. Thanks for your posts, they certainly improved my understanding of the business. MTIOC
mtioc
30/1/2018
12:11
MTIOC My broker arranged for me to obtain the results presentation and some notes on it. The new business contract and the sites and projects came from those. The cost of sales could have risen - ie margins fell - because production workers and systems were not as productive making one off sets rather than multiple sets. Therefore, their cost per unit of output were higher. On modelling, I have not used my own forecasts of revenues, but those of the brokers - just to make sure it makes sense.
sidam
29/1/2018
18:27
Sidam Thanks for your response, which was very interesting. 1.GM Where was the comment re contract versus spot pricing differential? Not sure what has driven COGS rise. Could be one offs, materials (but unlikely given stronger £) or manufacturing labour in COGS but not variable. Not sure sales/employee is too meaningful, but I was just trying to get a feel for sales versus labour. Overall, this has been poorly explained if at all. 2.Cash Yes, I included other debtors in my calc. I think if you strip these out and only look at trade it is c. 79.5 days, which is still a high, but I suspect understandable for "blue chip" customers on long term contracts. (Vel should factor this into margin.) Nevertheless, both are a cash costs. I appreciate there has been a lot going on in the cash flow for investment and from financing, but not to comment on a £2.4m outflow from cash from ops is again a bit odd/remiss. I missed development expenditure capitalisation, thanks. May be justified depending on its nature, but again no commentary that I could see. 3.Non execs I suspect share payments in the year pre and at IPO may have inflated non exec "emoluments". Again, these should have been split out more clearly than note 6. Increases in wages etc.. for non execs in FY17 may be full year of one of them and would need to check joining date. 4.Customers Where did you get your info re Safran, GKN and GE? I may have missed it in various docs, but it is very helpful. Like you, I don't think there is a panic. The reporting is bit clumsy and could do with crisper financial commentary (e.g. KPIs headed "Balance Sheet" and 4/6 are P&L related). Ultimately, VEL's performance will be driven by ramp up of major airframes (e.g. A320neo and A350) and increasing VELs shipset value on them. Not sure I know enough to model properly! Thanks for your post - it was very helpful. MTIOC
mtioc
29/1/2018
17:52
to MTIOC Thanks for your analysis, it made be go back and do my numbers in detail rather than just skim. However, here are some comments. Gross margins were down substantially. However, management did indicate that they expected margins to increase in the current year and that they were happy with the projection of 23% in the brokers projections. Time will tell! In addition they did say that this was primarily problems with a new contract and in particular with intermittent requests for deliveries against expected deliveries. This happened in H2 when gross margins fell to 16.5% against 20.8% in H1. They also added that this had led to a change in their future contracts. Now there will be two sets of pricing. A price for contracted volumes and a higher price for single kits. I have never really used sales per employee but perhaps I should look at that. In this case, my guess is that a very substantial part of the costs is raw materials. If I am correct, then Oct 2017 would have a big difference in foreign exchange against 2016. VEL sources composite rolls form the UK ,France and the USA so this could be a factor. I agree on cash flow and there was a change in the accounting treatment of development expenditure which is now capitalised. The net was £317K. I do not like that. However, £1.2m of the increase in trade receivables was categorised as other. Do you know what that was? If not I will try to clarify. If you take that out, the days look more reasonable. I will also try to clarify non execs pay. The execs look a bit low. They have now got Fareham from 1 machine and one shift to 3 machines and 2 shifts with the possibility to going to three shifts. I think that suggests that they can open further sites. Safran started the year at over70% of sales but was below 50% from July and by October was down to around 45%. The next big client is GKN 25%? followed by GE. They do all the work for Safran which is still growing. For GKN they do some projects at several sites and for GE 70% of the work at one site. So there is room for growth. The reason I like this company is the growth in possible/projected revenues - 46% last year, 60% this and 40% next. I consider (HOPE!!!) that this will filter down to the bottom line. If so, the shares should be very highly rated. Thanks for your input and the underlying message READ THE NOTES - it made me to properly build my models. Any and all comments appreciated.
sidam
29/1/2018
10:09
+1 , two great posts above , thanks.DbD
death by donut
29/1/2018
06:19
@ sidam, MTIOC - thanks for the last pair of comments ... very helpful analysis.
jonwig
28/1/2018
16:28
Sidam, one thing is certain: the stock does not love you. I've now had a look through the latest financial statements and, as usual, the more interesting bits are in the notes rather than in the blurb at the front. Sales broadly as expected, but gross margin down from c. 24% to 18% apparently due to slower ramp up at Southampton facility. Not sure this is consistent with sales increases. Also, sales per manufacturing employee (see note 6) are up to £287k in FY17 versus £238k in FY16. More likely there are increase costs expensed against the ramp up or in general overhead, but this has not been clearly explained. Cash flow was pretty grim. Huge increase in trade receivables. I calculate debtor days at 105 (there are various ways of doing this). Only 10% or so are overdue and even then the bulk are 3 months or less (see note 14). The major cost is labour, which is paid monthly or possibly even weekly in some cases. It is not surprising dominant customers take a long time to pay, but I would have expected 60-70 days. If c. 100 is normal, it raises questions about the model. With that spread, if it grows it will "suck in" cash. Converting debtors to cash is pretty topical at the moment. Cash flow from operations was £2.4m negative, but that included c. £950k of exceptional costs. Not a panic at the moment, but definitely something to keep an eye on in subsequent results. The board also seems odd. It is refreshingly small at two execs and two non execs. However, the ongoing non execs appear to be paid c. £400k combined pa and the execs £265k combined. There could be "one off" transactional or share payments in this. If not, it raises the question of the non execs real time commitment and roles. Overall, I am very cautious about further international expansion until the group proves its current model is profitable and cash generative. In any multi-site roll out, the move from one to two sites is the most difficult. Before then, the key managers are effectively on site the whole time. After that, they need to be able to manage remotely, which presents different challenges. These are increased many fold when expanding internationally. Also, we were told Safran is 54% (Note 4 combined with p36 listing doc). Suspect customers B and C include GE and Lockheed (see US$ receivable build up). This emphasises the customer concentration, which to be fair, we were told about in listing doc. Overall, the announcement raised questions. I suspect I will hold (based on favourable macro picture) but will certainly not add until things become a bit clearer. Hope this helps.
mtioc
25/1/2018
17:34
I should clarify my earlier comments on seasonality. I am sure that the business is not seasonal except possibly for holiday shut down reasons. However, management indicated that both revenues and profits should be higher in H2 against H1. The reason is that the business is still growing and new business is expected. They stated that there are firm orders covering 85% of this year’s projected revenues, which is in line with their usual expectations at this time in their year. However, I did say that part of the shortfall in this year’s projections was lower margins than historic. Management indicated that the fall last year was due to exceptional factors on new business and they said that their target for this year was margins of 23%. The main factor will be the expense to meet potential new non European business in Asia and the US. They said that there are a number of hubs in Asia which are each as potentially large as the UK market. This has been driven by request from potential clients following the AIM listing. They expect one or more hubs in the EU this year and the first Asian hub this or next year, but not in China. Asia is not in this year’s projections. Each Fareham look alike as a starter would cost about £1.5m plus working capital. I love this stock and hope this comment is of help.
sidam
25/1/2018
07:09
Velocity Composites plc ... announces that it has been notified that on 24 January 2018, Mark Mills, Non-Executive Chairman of the Company, purchased 50,000 ordinary shares of 0.25 pence each at a price of 95 pence per Ordinary Share. Following the Purchase, Mr. Mills has a beneficial interest in 1,934,024 Ordinary Shares representing approximately 5.40% of the issued share capital of the Company.
jonwig
23/1/2018
14:41
Thanks all for the recent posts. I must say that I misread the factors which drove the share price fall. However, as pointed out, future growth is bigger than originally anticipated, and capacity has to be bought. I hope the current management are able to manage the expansion. If the AGM is in Burnley, I'll be there. If Fareham or London, not.
jonwig
23/1/2018
10:57
Broker downgrade of 2018 PBT forecast by 36% and reduction in price target from 144p to 125p might have something to do with it. Now on a PE of 20 for FY18 which is probably about right given the risks of the H2 weighting IMHO.
wjccghcc
23/1/2018
08:35
Decent results, in line pretty much. I don't see any reason to need further funds, balance sheet is strong, plenty of cash there. Naybe just a forced seller in the market
bobmonkeyhouse
23/1/2018
08:18
Share price spooked by possible fundraising? What else could it be? EDIT - I've added.
jonwig
23/1/2018
07:14
Some outstanding results here: Https://www.investegate.co.uk/velocity-composites--vel-/rns/final-results/201801230700045949C/ They say 'in-line', but appear to have beaten FinnCap's estimates on an adjusted basis. The important thing is the outlook, as 2017 was never going to be profitable. Capital spending is going to be huge this year (new Europe facility being planned), and I suspect they'll be looking to raise more funds: As the global growth opportunity continues to be explored by the Company, we will seek the most appropriate funding route available for both the investment into those new territories and in particular the support of our cash flow to facilitate the purchase of materials for kitted supply to our customers. No dividend, but who cares?
jonwig
18/1/2018
11:50
The share price rose at just about the time this was released: Dubai’s Emirates Airline has signed an initial agreement to buy 36 Airbus A380 aircraft, including 20 firm orders and the option for 16 more in a deal valued at $16bn, marking a critical win that will salvage the super-jumbo jet programme. The deliveries, expected to start in 2020, will guarantee production of the plane for at least another decade, said John Leahy, Airbus’ sales chief. “I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s.” Https://www.ft.com/content/6e99d902-fc3b-11e7-a492-2c9be7f3120a The A380 was in doubt since November, when the orders appeared to be cancelled. It's one of the key models which will trickle all the way through the supply chain.
jonwig
03/1/2018
15:44
Great moves last few sessions. Thanks for posting that link jonwig...could be behind the recent rise
nurdin
03/1/2018
10:44
Prelims 23rd Jan.
death by donut
30/12/2017
08:20
$60bn rush for Airbus orders: Http://www.telegraph.co.uk/business/2017/12/29/airbus-gets-year-end-boost-60bn-order-rush/ From my pretty basic understanding, VEL should be a big beneficiary.
jonwig
20/12/2017
11:37
No, I don't think so. Finncap's estimates for eps are 2017: 1.2p, 2018: 8.5p, 2019: 13.2p, which would make the shares cheap if achieved. But the scaling up has to be realised, and this will gradually become clearer.
jonwig
20/12/2017
11:03
Is it a buy and sleep for an year share?
ashehzi
Chat Pages: 34  33  32  31  30  29  28  27  26  25  24  23  Older
Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P:42 V: D:20180420 00:40:02