Velosi Share Discussion Threads

[jonwig] 08/5/2007 10:07

V - that explains the large number of small buys this morning.
Do RHPS always arrive too late for the party?

[vernkel] 08/5/2007 09:58

Recommended in Red Hot Penny Shares. Must be time to open a short!

V

[wjccghcc] 08/5/2007 09:42

Depends if they're rerating in line with the oil services sector. Both Hunting and Petrofac are on a PE of 20 and their growth is lower. Current PE still only 17 for VELO.

[hard work] 08/5/2007 08:46

Does seem a touch crazy

[jonwig] 08/5/2007 08:43

On 30 April (sp 143.5p), Charles Stanley reiterated BUY, with target price 150p.
What next??

[jonwig] 30/4/2007 08:32

Excellent news this morning of two contract wins - with Shell (Nigeria) and BP (Egypt).
It seems they are moving into a dominant position in Nigeria, and now have a big presence in Egypt.



EDIT: the share price doesn't seem to be objecting to the news.

[jonwig] 27/4/2007 16:56

Thanks pp.
I'm no longer a subscriber, but might get the chance to read it in the library.

Looking at the chart, the setbacks are getting briefer and less savage.

Charles Stanley's price target is 140p.

[penpont] 27/4/2007 15:08

Positive write up of results and Buy rec in todays IC.

[hard work] 23/4/2007 11:35

...the positive from this being the profit was $8m after allowing for the provision for the bad debt

[jonwig] 23/4/2007 11:30

Thanks for that, A_T.

Quite a bit of appreciative comment coming through about this company!

The Investors Champion note I referred to in an earlier post makes the point about poor cash generation relative to profits.

from the results RNS:
Cash generated from operating activities was US$0.6 million for 2006, compared
to US$0.5 million in 2005. The increase was mainly due to an operating profit of
US$8.0 million and an increase in trade and other payables of US$5.7 million,
which was offset by an increase in trade and other receivables of US$12.9
million.

And inside the numbers:

Allowance for doubtful debts: $1.16m

This will need watching. I suppose West Africa will have something to do with it.

[tole] 20/4/2007 18:20

Growth Company Investor – Peter Shearlock's Small Cap Stock Picks.

Velosi a winner from oil industry safety drive

Tipped at 97.5p in December last year, Velosi shares jumped to 119.5p last week following a doubling in turnover and profits. A provider of quality assurance services to the oil and gas industry, Velosi reports in dollars. The figures reflected three acquisitions during the year and good growth in Africa and the Middle East in particular. Earnings emerged at just under 30 cents (15p) per share.

Velosi says the oil majors have responded to the publicity that followed some bad accidents in 2006 (notably BP's refinery explosion in Texas) by stepping up their safety and maintenance measures – good news for Velosi, which provides rig inspection and similar services. The outlook for 2007 is positive. Stay with the shares.

[jonwig] 19/4/2007 07:01

Growth Company Investor:

Velosi probes acquisitions
Companies: VELO
16/04/2007

Oil and gas quality control provider Velosi is discussing two possible UK corporate deals after more than doubling annual profits.

AIM-quoted Velosi, headed by Malaysian nuclear physicist and significant shareholder Dr. Nabil Jalil, scored a 119 per cent increase in pre-tax profits to £4 million last year on turnover up 117 per cent to £35.5 million. Jalil said the company derives much of its business from Exxon/Mobil and Shell, and has been growing organically and by acquisition.

He said the company, most of whose contracts run for three to five years, is positive about business for the next two years. Velosi, with some £6 million in cash, is looking for acquisitions with new technology, which would also extend its geographical spread, thus helping the company match its multinational clients' requirements.

According to Jalil, Velosi is looking to pay with a mixture of shares and cash for between 51 and 60 per cent of 'partnerships', rather than outright acquisitions. That way, target companies' present drivers retain incentives to grow the business and maintain relationships with key clients.

Chiefly focused overseas, Jalil said Velosi is also hoping to break into the UK market, which is why it is talking to possible domestic targets/partners.

At 118.5p, up 13p today, Velosi shares are 40 per cent up since last January. Hold on for now.

[jonwig] 18/4/2007 15:58

Investros Champion issued a positive note on the company yesterday.
You can register with them (free) and request it.
They were involved in the IPO>

[britishb] 16/4/2007 23:33

I have a forecast dated 24/1/07 of £5.845 for 2007 and £6.853 for 2008...Charles Stanley.

[jonwig] 16/4/2007 16:01

britishb, hi.

The 2007 PBT was forecast as £5.14m in Oct - has it been updated to 5.84m? I can't find a current forecast.

£5.84m looks conservative to me, assuming the recent acquisitions aren't factored into it.
A forward P/E of 14 is cautious, but probably about right whilst the company earns a track record of growth, and integrating its acquisitions.
Anyway, 176p would suit me fine - and a divi of 0.5p - wow!

[jonwig] 16/4/2007 09:35

GD - I'll bow to your wisdom there, but kidnapping of oil workers in the Niger Delta seems to be big bucks.
VELO have nothing to say about political management in their results - maybe they know when it's best to keep quiet.

[britishb] 16/4/2007 09:34

Yes fine results as expected. What it is VELO worth?

I reckon if they meet next year's forecast of £5.84m pretax, apply a slightly higher tax rate of 17% giving a post tax profit of £4.8 and then apply a reasonable PE of 14...you get a market cap of £67m which is a share price of about £1.76 so some considerable upside from here. Other oil services companies trade on racey PE's. HTG 19.5, SDX 20, BNLN 20, PFC 19, WG. 18, ABG 14.5. Different companies of course but I don't think a target PE of 14 for VELO is in any way aggressive given the growth, net cash, market position etc.

[greatfull dead] 16/4/2007 09:30

jonwig, you would be surprised who wants the support buisness in Nigeria.

[jonwig] 16/4/2007 09:27

The AFX summary:

LONDON (Thomson Financial) - Velosi Ltd, a provider of support services to
the oil and gas industry, gave an upbeat view of the future after it delivered a
119 pct rise in annual profit.
The group, which listed on AIM in August last year, saw pretax profit rise
119 pct to 8 mln usd from 3.6 mln, after turnover jumped 117 pct to 70.2 mln
usd, buoyed by increased contracts in Africa and the Middle East.
The company will pay a maiden dividend of 1 cent a share.
Velosi remains confident about its prospects for the current year as it sees
no let up in the strong demand for its services. "We have won several new
contracts since the year-end... The outlook for 2007 is positive, with
continuing high levels of investment in global oil and gas infrastructure
creating strong demand for our services," said chairman John Hogan.

West Africa and the Mid-East make up 75% of the T/O. Nigeria is in the news again (and in a mess) - maybe nobody else wants that business.

[jonwig] 16/4/2007 08:04

Hi Rivaldo,

that's right - and why I quoted the 15.7c eps rather than the 'headline-grabbing' 27c or thereabouts.
The share price rise in the middle of last month might have been leak-inspired, in which case there could be some profit-taking.

EDIT: or maybe not ...

[rivaldo] 16/4/2007 07:44

Excellent results from a company I've followed since IPO. Mind you, there are 38m shares in issue and these results are on a much smaller number as VELO only floated in August - calculate the EPS on the full shares in issue and it's only about 7.9p, so whilst it's not expensive it's certainly not quite as cheap as the headline figures proclaim on a historic P/E of 13.4.

Then again, if you strip out the cash, allow for the growth...decisions, decisions!

[jonwig] 16/4/2007 07:18

With PBT of USD 8.0m and pro-forma diluted eps of USD 0.157 these are at the top end of expectations.
Very bullish director-speak and T/O more than doubling (though not all organically) this could see a decent rise in the share price.

Full results statement:

[jonwig] 15/4/2007 15:35

Many thanks for that, GD.

Every upward movement in the share price here is clobbered by a flurry of 5k, 10k, 15k sells (see the chart). I've no doubt there's more of that to come.

Overseas companies listing on AIM don't have the same requirements about disclosure of holdings, so it's difficult to know what's going on in that respect.