Vianet Share Discussion Threads

[yupawiese2010] 06/12/2013 12:18

xdavid.

It is common knowledge within the workforce that when the management have turned the fuel solutions division around, they will be looking to sell this division, due to the low profit margin.

It is important to remember, they are not forced sellers & no timescale has been given for the disposal.

[alan@bj] 05/12/2013 14:25

PP - thanks very much for the feedback on your wildly expensive lunch date. It's very good of you to take the time to do this, and of Vianet's CEO too. I thought it was quite encouraging and am sure we'll see a decent jump in the share price if the outcome of the Statutory Code is reasonably positive for the company. All IMHO, of course.

[xdavid] 05/12/2013 13:00

PP, firstly thanks for the recents reports!

I'm not sure why you are discounting Fuel Solutions at the moment. Hopefully you can consider the following and give me your thoughts...

Fuel Solutions accounts for 20-25% of total revenue (according to latest interims but I am confused with their handling of the "revised reporting segments").

Running at 140k (or 257k?) loss for the 6 months, they report that the "last two months of the period were profitable at the operating level, a trend which is expected to continue". Reinforced with outlook for H2... "making solid progress towards trading sustainably at breakeven level during H2 2013".

So... what effect on bottom line if (when?) the division moves into profit? A quarter of the revenue - what sort of profit margin can be expected to move to bottom line? That's the big question I guess. Can they get the recurring revenue up enough to make a sustainable difference to the EPS... Can we get 1p? 2p+?

I don't suppose you had any exchanges with management as to how geared the Fuel Division was to an increase in revenue? (I should have thought of that question before your meeting :-0

--------------------
Now I'm at risk of getting too close, but bear with me...

"Fuel Solutions has made good progress in establishing a relevant offering for the independent forecourt sector, which comprises approximately 5,000 sites. The division is successfully aligning itself to the Petrol Retailers Association's ("PRA") Big Oil membership as the preferred "one stop shop" service provider to fuel forecourts. During H1 the division took responsibility for the Big Oil fuel pricing portal which has included a completed re-development, introduction of several Vianet fuel management modules, and migration of existing subscribers. The formal launch to the wider PRA membership and the independent sector will commence in Q4 of the Group's financial year which the Board anticipates will lead to increased traction and growing recurring income through the next financial year."

Looking at the Petrol Retailers Association's ("PRA") website...
and from their Facts & Figures page, independants make up 61% of all service stations, 5,300 potential sites. (Mind you, it is still less than one third the size of actual beer monitoring sites but surely higher value?).

There is a link on the PRA page to Big Oil which takes you direct to a Vianet sub-page off their Fuel Solutions website (so not just restricted to members of the PRA)...


(Actually, its also worth taking a look at the main site...
to get an idea of the extent of all their offerings to fuel suppliers)

Initially launched in April, there are various bits of good promo info out there in webland...



For more, just enter "vianet" or "bigoil" (one word) into the search field of above site. For example, this is another article from May...



-----------
CONCLUSION: Fuel Solutions have _already_ undergone the required recovery work and look well positioned for growth. With a quarter of the revenue, should we not now be looking forward to a meaningfull contribution to EPS in the next full year and hopefully an indication of movement to this in this year-end's results?

[paulypilot] 05/12/2013 11:01

Hi Jeffian,

I wouldn't say its going nowhere. They're getting growth in vending, and that's moved into profit, with further progress expected in H2. It's recurring revenues mostly, so that should build over time.

Fuel - the least exciting part of the business, I'm largely ignoring this. But it's around breakeven, so that's acceptable.

Core business - they think they can move clients over to iDraught better once the Statutory Code issue is resolved. Although take-up of it was slow even before the Stat Code issue surfaced.

USA - could become pretty exciting if pilots currently underway with bar chains convert into contracts & roll-outs.


If a few things come together, the price will be a good bit higher than now in my view. In the meantime we can lock in an 8% yield at the moment. So if you think they can make some progress (which I do), then it's good value. But rapid growth is probably not going to happen any time soon, but who knows?

Cheers, Paul.

[jeffian] 05/12/2013 09:25

Only just had a chance to catch up here and grateful to Paul for his report. Grateful, but rather depressed. In the context of my #424 -

"a) selling iDraught as a 'management tool' rather than a system simply to police the 'tie'
b) Fuel
c) Vending.

We need to hear about progress on a) and an explanation of why b) and c) are taking so long and whether they will ever be profit growth centres."

- the answer seems to be:-

"It's fair to say that the core business is declining........
Vending could become a decently profitable business in time, and fuel is really a wild card - personally I'm not placing any value on that"

- See more at:

Sounds to me like it's going nowhere.

[paulypilot] 05/12/2013 00:41

Happy to be of service! I had a couple of hours free between meetings today, so dropped into the IoD to use their WiFi and type it up. Hope to do more of that kind of thing - i.e. getting Qs from investors, and then getting As from management & disseminating it out again. Trouble is just finding the time - if you don't immediately write up things, it just gets to the back of the queue & then never gets done.

PP.

[prop_joe] 04/12/2013 16:38

Thanks for the clear Q&A write up. All the key points covered.

[deanowls] 04/12/2013 16:15

Thanks paul, much appreciated.

[masurenguy] 04/12/2013 16:13

Thanks for the feedback Paul.

[paulypilot] 04/12/2013 15:34

Hi,

I've had my meeting with Vianet mgt today.
Have (hopefully) answered all your questions, and written up a post about it on Stocko-pedia, here:

Hope this is helpful. Comments/questions to the article would be best put after the article please (it's free to register just to comment, there is an option for that tucked away on the Plans page).

Regards, Paul.

[jeffian] 03/12/2013 23:26

Tech,

See #420. They are not going to increase turnover and profits from the core business; that has been tacitly acknowledged for some time. The best they can do is maintain a positive cashflow from that (Statutory Code permitting) while they build a new growth stream from
a) selling iDraught as a 'management tool' rather than a system simply to police the 'tie'
b) Fuel
c) Vending.

We need to hear about progress on a) and an explanation of why b) and c) are taking so long and whether they will ever be profit growth centres.

[tech] 03/12/2013 21:14

All I see is pubs closing every week, so how are they going to increase turnover and profits. Can somebody please explain.

[ccraig69] 03/12/2013 20:55

I would like to know more about us expansion. Are the 100 pubs just trials? If so what and when will they be extended to the pub chain. Are more than 1chain interested? Are their good noises from the chains. What is the potential and time frame. Are the big deals imminent or medium term.

[simon gordon] 03/12/2013 20:41

This stock reminds me of the old market cliche:

"More money has been lost reaching for yield than at the point of a gun."

[jeffian] 03/12/2013 20:08

The issue at VNET is that the core business (beer flow monitoring) is at best flat and at worst about to take a severe knock from the Statutory Code (if implemented). Regardless of politics, the scope for long-term growth in that part of the business was always going to be restricted by the pubco's reaching 'maturity' (i.e. not increasing the size of their estates). The plan was to make the beer monitoring equipment attractive to a wider market by developing it as a 'management tool' (iDraught) which went beyond its original purpose of just trying to catch tenants 'buying out' and becoming built into stock control and quality management systems which would be of use to Managed pub chains and independent operators as well. This, I understand, is the basis on which they are trying to sell into the US market. At the same time, they used the breathing space afforded by the cashflows from beer monitoring to expand into the petrol forecourt and Vending markets. The big question, it seems to me, is 'are these two other divisions (Fuel and Vending) actually going to deliver and when?'. We've been in the fuel market for several years now and both divisions seem to creep along marginally either side of breakeven. If we can't see a fast and sustainable growth profile for these 2 divisions, what are we doing with them? I would question the Board about their vision for these 2 divisions and the prospects for selling iDraught into US. Without a convincing answer, I can't see a happy outcome here.

[alan@bj] 03/12/2013 17:00

bsharman3 - I am told the indications are still that it will be out this month. But it's government isn't it, so it will always be tomorrow, until it becomes next week, or the month after.

[bsharman3] 03/12/2013 16:03

Paul - could you ask about the sales team/incentives when selling the product into the US market. Will this add greatly to costs or it it on a commission basis. We are all keen to hear the results of the Statutory Code - is there any indication when this will be - will it be weeks or months...?

[deanowls] 03/12/2013 04:00

From me if there has been any developments with the vending side of the business?

[bsharman3] 02/12/2013 18:24

Hi Paul,

I would like to find out how safe the dividend is - perhaps we will be told this tomorrow? The cover is less than 2 at the moment. I would also appreciate more information about the expansion/sales into the US and any competition in this market. i.e what is their growth strategy and how are they executing this plan.
Thanks.

[masurenguy] 02/12/2013 08:43

Cheers Paul - a more detailed review on the anticipated growth in US sales over the next 18 months would also provide some very interesting insight.

[alan@bj] 02/12/2013 08:35

The biggest question of course is what the outcome of the governmental review will be. It would be good to know whether they're feeling optimistic, or pessimistic.

[paulypilot] 02/12/2013 00:26

I'm hoping to see the company on Weds, so let me know if you have any concise questions & I'll report back.

Cheers, Paul.

[alan@bj] 01/12/2013 16:36

Interim results due out on Tuesday.

[alan@bj] 29/11/2013 16:38

Thanks Yupawiese. Point taken about the pub closures.

[tadders2] 29/11/2013 16:02

Good to see one or two buys.