Vianet Share Discussion Threads

[jeffian] 06/11/2019 15:53

No, 'buy and hold' doesn't work on every occasion and that's the point. Yes, we'd all love to have bought every share cheap and sold at its all time high, but my attempts to time the market in that way failed, as most do apparently (although Mrs J has a foolproof method, looking over my shoulder at the graph of any share we own, pointing to the historic high point and announcing "I would have sold there"!). At one point, the biggest holding in MOM's portfolio was GEC which, as you know became the worthless Marconi, but she still died a much wealthier woman than she started. As I've said elsewhere before, my best-performing portfolio for years was the dummy one I kept with the shares I had sold at the prices I sold them (one of which, funnily enough was FSJ, sold in 2004 under £3 to 'protect a profit', and another one was Greggs and look where they are now!). Sure, there will be bumps along the way and maybe a few terminal cases but in the long term most good companies will prosper, I believe.

[galeforce1] 06/11/2019 12:09

CWA - There seems to be a keen buyer. Not much stock about, so any keen buyer pushes up the price.

Boulversee - Welcome! I think Lord Lee's interest in Vianet is one of several good reasons for holding here. The companies he follows and holds frequently seem to get bought.
The pub business is definitely 'mature', but it seems to be a nice, steady earner (paying the generous divi) while the vending machine business provides the growth.
Both sides of the business have very high % of recurring income.

[cwa1] 06/11/2019 10:46

Nice uptick just now, anyone seen anything that might be the reason for it?

[galeforce1] 28/10/2019 14:13

Jeffian - that's interesting that you are a satisfied client of Vianet's beer monitoring systems business ('Smartzones'). I think I have quite a good picture of how that business works. It's in about 25% of English pubs and its a profitable niche business.
I'm less clear about the Smart Machines business. 250k vending machines, many of them coffee vending machines, But also drinks vending machines. But what is Vianet's relationship with this huge number of vending machines? I think the answer is a variety things: (1) they monitor them for the operators, to make sure they are working, re-filled etc (2) they install their own hardware in vending machines which enables contactless payment. This hardware/software is leased to the operators. (3) they handle payments on some vending machines (??).
I think I need to sit down for an exciting evening with the annual report!
I agree with you that dividends are great, but only if companies can afford them. Vianet's divi is costing about £1.4m, which is a little over half of Net Profit. That seems sustainable.

[jeffian] 27/10/2019 11:34

Thank you, galeforce1. My company was one of the first to adopt the beer monitoring technology and I was an earlier investor in the previous ill-fated (well, ill-managed actually) incarnation Comprehensive Business Services which became Brulines, so I felt I knew enough about that side of the business. As you say, it is a useful base 'earner' from which to grow the vending technology business which now seems to have the more exciting prospects. I am also a big fan of companies which maintain a dividend whilst waiting for their growth plans to bear fruit. If the share price is going nowhere for a while, it makes it easier to hold if you are getting some sort of return on your money while you wait.

[galeforce1] 27/10/2019 08:55

jeffian - definitely flies below the radar.
But on Friday there was an interesting commentary about Vianet on Stockopedia's Small Cap Value Report, which I have copied below in case you haven't seen it.
It's very positive, although critical of the company's website which makes it difficult to understand what the company actually does. I agree with this. It took me a while to grasp that 'Smartzones' is the pub measuring business (which is non-growth) and 'Smart Machines' is the vending machine monitoring business (where there is 40% annual revenue growth and loads of potential).

Vianet (LON:VNET)
Share price: 137p (+3%)
No. of shares: 28.5 million
Market cap: £39 million
Trading Update (Tuesday)

This is a "provider of actionable data and business insight through devices connected to its Internet of Things ("IOT") platform".

This PLC has been around for a while - since 2006.

At its heart is the Brulines business, which records the volume of liquid that passes through beer lines.

Trading in H1 is in line with expectations.

CEO comment

The team has continued to make very good commercial progress, particularly with contract wins for our telemetry and payment solutions in the coffee vending and unattended retail vending market, with solid support from our Smart Zones business which is developing new revenue lines. Double digit growth in the period builds on our successful recent track record and further demonstrates that the strategy of leveraging the power of our cutting edge technology to bring game changing business insight to our customers has exciting prospects."

My view

I've just spent some time on the company's website and checking its most recent annual report. I'm very excited by what I've read.

See its investor relations website.

I wanted to remind myself which of its divisions did the beer monitoring, which I understood to be the activity responsible for most of its historical (and present?) profitability.

I was presented with two divisions: Smart Machines and Smart Zones.

Smart Machines:

5db30e6decc74VNET_20191025.PNG

Hmm. Where's the beer monitoring?

Maybe it's in Smart Zones:

5db30ebe8af40VNET_20191025_SM.PNG

Cloud-based, big data in the Internet of Things. Sounds like the perfect investment, doesn't it?

There is a reference to flow monitoring in the description of Smart Machines, so I guess this must be it.

Ah yes, iDraught:

5db30f5d361faVNET_20191025_id.PNG

Another investor keyword: "ecosytem".

So Vianet provides cloud-based, Big Data ecosystems in the Internet of Things.

That's almost everything that I'm looking for in an investment, but I also look for "software as a service".

Alas, I could find no reference to "Saas" on Vianet's website.

It took a little bit of digging but, thankfully, I was able to find a reference to SaaS on vianetplc.com.

Its "Statement of Compliance with the Corporate Governance Code", published last year, dutifully informs us that the company's Directors have the necessary "skills and experience, including in the areas of IOT, b2b, software as a service..."

Boom!

Vianet makes cloud-based, Big Data, software-as-a-service ecosystems in the Internet of Things.

If only it could apply itself to a hot sector like crypto or cannabis, then who could resist investing in it?



My actual view

Vianet looks fairly valued at 14x forward earnings: it has a stable beer monitoring business which is performing ok (even though pubs in general are doing poorly) and other activities which are growing more quickly from a low base.

"Smart Machines" (the growing part of the business) made PBT of nearly £1 million last year. Excluding the acquisition it made, profits in this division were £560k and revenue growth was 42%. Has potential.

[jeffian] 23/10/2019 15:38

I think it's the sort of company that flies beneath most investors' radar both because of size and the fact that it serves a rather 'niche' market. I was only aware of it because of my experience in the pub/brewery industry, otherwise I doubt it would have come to my attention at all.

[galeforce1] 23/10/2019 11:19

We seem to be in demand after the trading statement. But volume is still very low.

[its the oxman] 22/10/2019 07:35

New high come result hopefully.

[this_is_me] 22/10/2019 06:40

Recent impressive performance is continuing and prospects are certainly bright.

[cwa1] 07/10/2019 15:41

Hopefully that's it pulled off the bottom. Fingers crossed...

[zipstuck] 15/8/2019 07:31

I also think that in line means continuation of the slightly ahead announced in June.

Looks rock solid with good divi to continue IMHO

[zipstuck] 15/8/2019 07:06

Assume £2M ARR increase for next five years on these contracts.

[edpick] 15/8/2019 06:51

Aren't market expectations for FY revenue of £16.5m? So, given the contract wins, I would have expected an "ahead of expectations" update. Unless the new contracts only give partial benefit for this FY? Maybe they're just being ultra cautious with their guidance and are setting themselves up for further upgrades?

[this_is_me] 15/8/2019 06:20

It looks like Steve had to sell otherwise there would have been a conflict of interest after taking up his new appointment.

[zoolook] 09/8/2019 08:22

Had half an eye on this for years. Seems like they are at last at point of realising results of changing the mix of their business.

Is Lord Lee still a holder?

[jeffian] 08/8/2019 22:19

edpick,

If you edit your post and replace https: with it will form a link.

Steve Alton wasn't even a Main Board Director, so there's not much to be read into that as he is moving on to pastures new. 120,000 is a fair old chunk for an illiquid stock so I imagine it's just a case of market indigestion rather than a fundamental problem.

[its the oxman] 08/8/2019 15:06

Buying opportunity?

[edpick] 08/8/2019 14:54

Steve Alton... not listed as a Director in the annual report and he's on his way out anyway, so seems pretty logical to sell his shares hxxps://www.morningadvertiser.co.uk/Article/2019/06/18/Vianet-boss-leaves-to-become-BII-chief

[edpick] 07/8/2019 13:32

Yep, possibly. Oh well. 100p looks like the absolute floor in this share, absent a profit warning, and I intend to hold this for a few years.