Velocity Composites Share Discussion Threads

[jonwig] 30/10/2017 06:42

Yes, FinnCap are the NOMAD. A canny BoD will underpromise so a small plus above forecast should be expected.

I get research notes from Research Tree (subscr.) but not all analysts are available. Will watch progress here with interest.

[mtioc] 29/10/2017 18:45

jonwig

Thanks. Don't disagree, but alternatives are limited.

I think FinnCap are the nominated (and company's) broker. Is their forecast freely available?

They raised the capital based on hitting FY17 numbers. It would be a big blow to management's and adviser's credibility if they missed. I guess it will be a tad more and that they will hold back more news until the results announcement.

[jonwig] 29/10/2017 07:34

MTIOC - interesting analysis, thanks. Actually, FinnCap's analysis confirms your views, as it gives EV/EBITDA of:

2016: 39.2(A), 2017: 26.3(E), 2018: 5.6(E), 2019: 3.7(E).

Since the year end is next week, we may get an "in-line" (or not) ststement pretty soon. It's a bit early for me to consider committing myself to this, though signs of progress at H1 2018 might change my mind. FinnCap's price target is 144p.

[mtioc] 28/10/2017 18:16

I agree that current performance does not justify share price, but nevertheless I have bought a small initial holding.

In general any shares that currently have the characteristics that I like (e.g. ROCE>15% and relevant profit margin at least 10%, consistent growth, cash generative and management on the right side of the table etc..), are all too expensive for me (e.g. EBIT yields<4% versus the 8% I would like). In that case, if I could be reasonably confident that a share could meet these thresholds in the medium term, I may take that risk rather than buying one I consider very overpriced now.

VEL has an EV of c. £30m and should make £1m EBITDA (normalised) on c. £20m sales. On its own, £30m is a ridiculous valuation, but if it made the forecast £4.5m EBITDA (on £35m sales) for the next year (and that was sustainable) it would be relatively cheap. Therefore the key is the confidence that VEL will grow to that level in the next few years.

Commercial airliner production is set to grow significantly over the next 15 years. The major manufacturers, Airbus and Boeing, have developed their platforms and the next airframes will not appear until the mid to late 2020s (i.e. this is the period for them to recover their development investment). This is covered in detail in the listing docs. VEL mainly provides services to the Airbus supply chain. The new-ish Airbus wide body, A350, will double production from 5/month to 10/month and has a c. 9 year order book. The narrow body, the A320 with new engines, will increase from 50/month to 60 and has a similar order book.

At the moment, we do not know how much revenue VEL gets from each aircraft produced. However, a bit of research suggests VEL is embedded in the supply chain and its sales should grow rapidly with production increases. In its latest news release it mentions a major US customer contract win. VEL only appears to have one major US customer, GE. Its composites (mainly for airframes) are done in Hamble (near Southampton) in an old Smiths facility. According to Googlemaps, VEL's facility in Fareham is 20 minutes drive away. Given Airbus order visibility the supply chain ramp up is no surprise - everyone in the industry has been talking about it for years. Since 2013, GE appears to have spent $50m on 2000m2 of composite clean rooms. In considering an investment of this size, it has still outsourced the relevant services to VEL (after making sure they could deliver on a PO basis first). VEL would therefore appear to be embedded in a very predictable and growing supply chain. The story of Safran Nacelles (mainly engine composites)in Burnley is very similar. (These big plant investments are covered in loving detail by local newspapers.)

VEL may be able to expand this model with existing and new clients. GE for example may take it into the Boeing supply chain, where the latest models have more composites than any others. There could be potential to serve other commercial aviation clusters (e.g. Hamburg or Tolouse).

I also like the fact the management team are at the right point in their careers, have significant shareholdings and a clear vision.

Hope this is helpful, but as always DYR.

[woodcutter] 23/10/2017 09:03

The business itself looks very interesting, another disruptive technology but the financial numbers aren't yet strong enough to justify the share price imv.

Gross margin is decling and at around 20% isn't strong enough to support the potential. There's so little cash at present that the balance sheet looks very weak and i would expect a further round of funding. The idea of paying a dividend looks rather silly imv. And i agree with dan £21m revenue this year may be possible but £35m next year looks rather stretching things.

If the share price were half where it is now i'd be interested

aimho woody

[timbo003] 23/10/2017 04:46

See write up in the Midas column in the Mail on Sunday this weekend:

[dan_the_epic] 14/8/2017 22:16

Not a huge fan of these. Revenues pretty lumpy, visibility relatively good, but constantly subject to any delays in aircraft manufacturing can leave forecasts light in any one year. House broker forecasts seem pretty punchy and not leaving much cash headroom for 2018...

[jonwig] 19/5/2017 15:25

I have to say that I agree with that view...

• It didn't take much reading to see that realisations were high compared with new money,

• Prtofitability and assets are poor,

• Present contracts are limited mostly to Cessna, expansion is promised,

• Brexit could be a problem for Airbus contracts (highlighted in the Risk Factors). The EU has leverage over subcontractors (and VEL is probably a sub-subcontracor).

[pugugly] 18/5/2017 08:59

Looks like a bit of profit taking by non EIS participants -

[jonwig] 18/5/2017 07:55

Thanks - they have done it the time when I've asked them.

[timbo003] 18/5/2017 07:26

I have asked ADVFN fix the ticker problem (VEL still shows up as Velti), hopefully this will also fix the chart

[jonwig] 18/5/2017 07:05

Clearly there used to be a company with ticker VEL which seems to have knackered the chart.

I looked at it and thought it quite risky and expensive (no profit 2016, Brexit risk) but I suppose the EIS breaks will help.

[timbo003] 18/5/2017 06:57

Thanks SE

I have my rocket animated "gif" at the ready for this one.

It was very difficult to acquire shares in the IPO, the VCTs were all over this one apparently.

[status epilepticus] 18/5/2017 06:39

t003

As requested

Cheers

[timbo003] 18/5/2017 06:36

I was fortunate enough to acquire a few in the IPO at 85p/share

They qualify for EIS tax breaks, so effective purchase price for UK tax payers is 59.5p

Can we a link to the Admission document and the web site in the header (please)

[status epilepticus] 18/5/2017 06:21

!FOLLOWFEED



They qualify for EIS tax breaks, so effective purchase price for UK tax payers is 59.5p

Can we a link to the Admission document and the web site in the header (please)

[dropside] 02/7/2015 19:33

Nice quote right now:


Last Price
0.015

Change $
0.01
Change %
200.00%
Tick

Bid
0.01
Bid Size
1,552,000
Ask
0.015
Ask Size
30,000

[dropside] 02/7/2015 17:22

Something stirring? 2.3m shares traded today so far, nearly all of them buys.

[dropside] 10/4/2015 19:39

Received this today:

The Final exercise Opportunity for the Vanoil Energy Limited CA$1.00 Warrants arises on 17 May 2015. Each Warrant is convertible into a Vanoil Energy Limited Ordinary Share at an exercise price of CA$1.00 per Warrant.

Please note that Vanoil Energy Limited Ordinary Shares are currently quoted with a mid-market price of CA$0.005 on the Toronto Stock Exchange. For each Warrant you exercise you are therefore paying CA$1.00 in order to receive an Ordinary Share currently valued at CA$0.005.


Decisions, decisions....

[dreggspicker] 19/11/2014 18:08

nope. just feels like we have all been kicked in the nuts..

[napoleon111] 19/11/2014 16:24

does anyone know what at all is going on?

[dropside] 18/11/2014 21:28

Haha I agree with you on that pisces, its painful and even a bit of communication would be like a drop of water to a man dying of thirst.

[pisces4] 18/11/2014 21:05

what a slow painful death this have been, would much rather have been shot!

[vauch] 06/10/2014 09:12

BUNCH OF WASTERS