Vianet Share Discussion Threads

[whitestone] 06/1/2013 16:52

The links below give some insight, I suppose, into the introduction of iDraught. If the forum comments associated with the Morning Advertiser articles are representative of tied licensees then it was received with suspicion if not outright hostility! The older "spy in the cellar" monitoring system being replaced by iDraught was apparently very poorly regarded, quite how that trade now view iDraught is not clear.

In this respect it would be helpful to know to what degree iDraught is gaining acceptance and market penetration in the non-tied sector. Competitors here would seem to be Cotec and Smartcellar.

Mark Daniels: Why I love my Brulines...
1st December 2010


500 Enterprise pubs to get Brulines' iDraught
1st November 2011
Enterprise Inns is to roll out Brulines' iDraught bar management systems to 500 pubs after securing a long-term agreement with the beer flow monitoring firm.



Spirit Pub Company in long-term Vianet agreement to roll out iDraught to leased pub estate
11th June 2012
Spirit Pub Company has signed a new long-term agreement with Vianet (formerly Brulines Group) that will see the iDraught system rolled out to its entire c540-strong leased pub estate.

[simon gordon] 06/1/2013 14:38

I'm also in, thanks to Paulypilot's research and Glasshalful bringing the story to my attention, via a tweet, when he bought in.

I think Fuel Solutions looks a very promising market which was discussed in the 2011 Prelims:

Fuel Solutions division offers an integrated toolbox of best-in-class information management and associated products and services that allow managers of fuel installations to maximise return on investment from fuel stocks and the assets which store, control and issue fuels.

The division's high calibre team is actively cross-selling to its existing customer base, which currently controls c.60% of forecourt fuel sales in a UK market. The Group estimates potential annual recurring UK revenues to be worth over £30 million, over £200 million across Europe, and many times that globally.

During what has been a transformational year, these acquisitions added £6.1 million to Group turnover, and helped the Fuel Solutions division progress towards profitability. During the past year, the Group has invested further to ensure that the business infrastructure and capacity is capable of supporting the division's growth aspirations. This has included carrying overhead and building stock in anticipation of increased activity.

====

In the FT, 7th June 2011, the CEO was quoted as follows:

The objective, he said, was to quadruple the group's market capitalisation to £100m ($164m) in four years.



£100m = £3.60 per share.

Time left = 30 months.

[masurenguy] 06/1/2013 14:04

I like the potential growth prospects here, particularly with VendExpert and iDraught, and therefore took an initial position here @102p a few days ago. I don't think that the slowing number of pub closerures in the UK is a particularly significant problem since it will just put more chains under greater pressure to implement cost effective business solutions to address the decline in profitability, which should be advantageous to the company. Furthermore, as has already been pointed out in an earlier post, the introduction of iDraught not only addresses a new UK market sub sector - independents - but it also has global prospects, especially in North America and Europe.

I also think that the prospects for VendExpert have great potential, also on an international scale. However, potential is one thing and managements vision and competence to successfully exploit it is another.

One area of research which has not been particularly fruitful so far is their competitive position. Does anyone have any good information on existing competitors, aside from Smartceller in the bar market, and the comparativre quality of their products and services ? Are there any major competitors to VendExpert
or is this primarily vulnerable to OEM installed technology at the point of manufacture ?

[strollingmolby] 05/1/2013 20:29

Thanks for the replies, guys - and Jeffian for observing that revenues will likely be linked to installations. Let's not also forget that the system can be used for draught soft drinks too as I believe was the case with Coke at the Olympics.

In the interests of fairness, typing 'Annual beers sales' into Google produces this article in #1 spot, stating:

"The whole world loves beer: There's no quenching global thirst for the amber nectar as sales rise for 27th consecutive year

It has been a popular tipple for centuries, but now the number of people around the world fancying a frothy beer has reached a new high.

A report has found that in 2011 the quantity of beer consumed around the globe increased for the 27th consecutive year.

For the tenth year running it was China that showed the greatest thirst for the alcoholic drink, making up a quarter of the world's annual beer sales.

The U.S. retained its second place slot with sales in the country making up 11.7 per cent of the overall figure.

Party-loving Brazil with a population of just under 200million was ranked third with Russia coming in fourth.

The report released on Wednesday by Kirin Holdings, the research arm of the major Japanese brewery, attributed the rise to robust demand in Asia and developing countries.

It found that 250 billion litres of beer were produced last year, up 3.7 per cent from 2010.

China was the world's largest beer producer - accounting for about 25 percent - for the 10th straight year.

[cfro] 05/1/2013 18:41

Because of the enormous amount of pub closures in the UK, then perhaps they have reached saturation point for their products in this country, i dont know. Could be that they need to expand abroad and therefore the US expansion policy does look particulary exciting.

[paulypilot] 05/1/2013 18:34

Hi JEffian,

Of course! You're right. VNET's Brulines installations are on long-term contracts, and hence VNET's revenues are NOT linked to the volume of pints served, but more to the number of Pubs. So it's pub closures that impact on VNET, and they have said that the total number of closures has reduced to around 500 per annum, from memory.

There's an indirect impact though, in that the more beer sales decline, then the more Pubs might come under threat (although I think Pubs are replacing lost drink sales with more food offerings these days - pubs are becoming more like restaurants).

Thanks for mentioning this - obvious point, but the rest of us missed it!!

Regards, Paul.

[jeffian] 05/1/2013 18:09

Also, what makes you think that VNET's revenues from pub monitoring are directly related to beer volumes? I don't know (I should!) and I was trawling through VNET's accounts during PP's last post to find out, but it doesn't say on what basis they charge. I would imagine it's a rentalisation of the equipment plus a charge for the reporting services, so the number of installations is more important than the volumes in each pub. As the beer market shrinks, monitoring of beer sales by the pubco's becomes more important and, as PP says, the development of iDraught for the retail trade provides services beyond just checking that a tenant isn't 'buying out'. I'm not sure of my facts here, but I would doubt that falling beer volumes impact directly on VNET's business and may, indeed, be a driver for more installations as pubco's try to get the benefit of every barrel sold.

[paulypilot] 05/1/2013 17:56

Hi SM,

Fair point about beer sales declining.
Govt policy on beer escalator tax is lunacy - it should be reversed so that younger people learn how to handle alcohol on licensed premises, instead of on cheap supermarket booze, in the park!

However, VNET's market opportunity in the beer sector is potentially very exciting - because their traditional product is designed for monitoring compliance with the brewery Tie, hence only relevant to tenanted pubs.

However, the new iDraught product is applicable to anywhere serving draught beer, so much bigger markets including all Pubs, hotels, all other bars, etc. I particularly like the way it reconciles pints pulled with pints paid for through the till - that's a massive benefit to clients, who can eradicate staff pilferage from them giving away free pints to their mates.

The USA expansion has been 2 years in the planning, and is now happening. That could double the size of the existing business in less than 5 years, according to the last results video on VNET's website, and they kept referring to a "step change" in earnings.

So assuming the growth actually happens, and it's not just wishful thinking, then I think the re-rating here could be very significant (think share price 200-300p potentially), because we stand to benefit from being no longer on a low PER as a mature, even declining business, but now a growth company. Plus of course the impact of higher earnings, as well as a higher multiple on those earnings.

So I think it's a mistake to fixate on the UK beer market.

Cheers, Paul.

[strollingmolby] 05/1/2013 16:26

Whilst I'm long, it's worth adding this link (& related Statistics page) here for the bear case, for consideration of the long-term decline in beer sales and pub estate:

UK beer sales drop in Q3 – need for urgent freeze of Beer Duty escalator, say brewers and pubs - BBPA 'Beer Barometer'

23/10/12

- Pub sales down 4.8 per cent on Q3 last year, with off-trade sales down 6.5 per cent

[davidosh] 03/1/2013 22:09

The Mello events are third Monday in each month. www.freesharedata.com/mello

[whitestone] 03/1/2013 18:59

PP – Many thanks for your reply.

I have read and agree with your analysis of this company, on this board and others.

I suppose the following comment from the Smartcellar website :

'..The definition of the data harvested is remarkable compared to current systems' says Derrick Collin, founder of Brulines, now Smartcellar Chairman. 'The main driver for the service is the vastly improved reporting updated every 24 hours, but coupled with lowered service charges, there are considerable upsides for operators...'

prompted my original information request.

I have noted the rather colourful background of Smartcellar Chairman Derrick Collin and also acknowledge the current market leadership, recurring revenue argument and general investment case etc. in respect of Brulines and Viaweb..

However, are the Brulines/iDraught products superior to that of the Smartcellar EMS product referred to on their website and apparently released early last year.

And, are these two key Vianet products threatened by this Smartcellar offering?

I don't know and that's why I was seeking information regarding the apparent Smartcellar competitive threat.

whitestone.

[paulypilot] 03/1/2013 16:34

whitestone - Vianet (through Brulines) are the overwhelming market leader in beer monitoring, with (from memory) over half the tenanted pubs market (since it's main purpose was to monitor compliance with the Tie from the brewery, although that's changing with iDraught, which has broader market appeal).

Also, most customers are on long-term contracts (5-year), so considerable security there for the recurring revenues.

Therefore, VNET's core business should continue to throw off reliable cashflow (80% of turnover is recurring in the core business, 70% for whole group), whilst the growth kicks in with the new iDraught product, the US expansion (very exciting), and the vending machine telematics.

So we get all the growth potential thrown in for free, whilst the core business funds a whopping dividend.

I also see the New Solera selling/overhang as an opporunity - if that seller hadn't been there, VNET would probably have risen 30-50% in the last 6 months, like most other decent small caps, and the fundamentals support such a move. So New Solera selling just enables us to buy cheaply & in whatever size we want without moving the price - which is ideal in my view. Then when the seller is done, off we go upwards!

Cheers, PP.

[whitestone] 03/1/2013 15:59

Smartcellar would seem to be in the same business as Vianet.



Can anyone comment on their respective competitive positions – are Smartcellar a direct competitor?

[speedsgh] 03/1/2013 15:52

davidosh - would be excellent to get VNET along to present at Mello. what is the date in Feb exactly?

[capt bligh] 03/1/2013 15:49

Bought a few might add more. Thanks pp. Pace of sell off likely to increase as we near the end of the overhang? GHF... you again.

[cfro] 03/1/2013 15:42

Joined you guys long. Thanks PP for the excellent write-up. Totally agree that the overhang is holding this one back.

[davidosh] 03/1/2013 15:40

I have only been invested here in the last two months although I have looked at them due to the cross holding in UNG. I am trying to book them for a Mello presentation in February.

[speedsgh] 03/1/2013 14:15

davidosh - good to see you on board here. rgds.

[davidosh] 03/1/2013 14:05

Supply will probably be there until New Solera have completed their selling IMO. They seem to be doing it at agreed levels so the price is not collapsing. Would have beeen better for us as buyers to either have been able to negotiate a deal at a discounted lower price or for a new respected insto to come on board. It has allowed quite a few of us to build decent positions without moving the price at least.

In six months time we will hopefully look back with fond memories of buying at and below £1 though. The yield is good so not complaining and VNET have a holding in one of my largest small cap holdings which is UNG so I have a four way interest here...growth, yield and potential takeover or acquisition of key investment !

[speedsgh] 03/1/2013 14:04

Unless New Solera decide to turn off the tap or another insti takes out their holding completely, the share price could remain becalmed for some time to come. Remember, it took from July to Dec for New Solera to reduce from 15% to below 8%. The rate of further reduction in their holding might of course be expedited by any positive newsflow from VNET. Patience may be required here but it will imo be well rewarded.

[eeza] 03/1/2013 13:45

Ask has been steadily dropping even though almost all buys. So supply is still there.

[glasshalfull] 03/1/2013 09:49

Happy New Year BBD!
We meet again....;-)

Regards
GHF

[bigbigdave] 03/1/2013 08:33

maiden purchase for me here this morning, nice write up pp.

[melody9999] 02/1/2013 22:03

well 320K shown as 4 sells this pm so could well be New Solera again - look out for an RNS tomorrow. that would take it down to 1.75M.

[dangreen86] 02/1/2013 16:01

Hi Paul,

Thank you for your research and bring VNET on to my radar. The case for investment looks a compelling one. Are there many other companies operating in this space? I see in the interims it states that corporate strategy is to be market leader in the leisure and fuel solutions markets.