Vianet Share Discussion Threads

[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.

[paulypilot] 02/1/2013 12:15

Hi,

What is interesting here, is that the news from the company has all been good (especially the video presentations on their website, which sound very exciting about imminent contract wins & "step change" in earnings).

Yet the share price has gone nowhere in the last 6 months, whilst most other small caps have had a big re-rating over the same period.

Why? Because the share price here is being held back by 2 factors;

1) It being largely off the radar, not many investors aware of VNET, and

2) New Solera have been steadily selling down their holding, which has created an overhang of stock, therefore the price never rises because the MMs are just fed with stock whenever they need it by New Solera.

Therefore, my advice to New Solera would be this - if you've got any sense, STOP SELLING! That will then allow the share price to rise, and once it begins rising, that will pull in new buyers, because most investors prefer to buy into a rising price.

The momentum could then re-rate this share 50% in my opinion, just to catch up with the re-rating that has already occurred in most small caps in the previous 6 months.

So the overhang actually provides us with a cracking opportunity, to load up with as much cheap stock as we want, and then once the overhang is cleared, off we go!

No guarantees of course, that's just my reading of the situation.

FWD PER of 6, and a 5.5% divi yield whilst we wait, is pretty good going!

DYOR as usual, just my personal opinion.

Regards, Paul.

[strollingmolby] 31/12/2012 12:46

Likewise, I made a maiden purchase of VNET this morning having read Paul's analysis in recent days and subsequent investigation.

GLA all in 2013 - may you be healthy (and dare I say it, wealthy!).

SM

[glasshalfull] 31/12/2012 12:18

I've been tinkering at the edges with a few stocks during the last few weeks & have purchased a modest amount of VNET. My thanks to Paul for highlighting as an idea which allowed me to research during the last fortnight.

Suffice to say I concur with his analysis.

Kind regards & best wishes for 2013.

Regards
GHF

[0rb1t] 29/12/2012 09:28

The value of transactions made on smartphones and other mobile devices around the world will more than triple to $1.3trillion by 2017, according to Juniper Research, a UK-based firm. That prospect has prompted a mad charge into the still embryonic market. Those after a slice of the growing pie fall into four main camps: the banks and payment processors such as Visa; retailers; mobile phone operators and handset makers and new entrants, such as Square.

"It's going to be a battle and the battle is just getting started," explains Mary Monahan, an analyst at Javelin and author of Battle for Control of the Mobile Wallet.

[0rb1t] 29/12/2012 09:18

UK will embrace paying via mobile phones in 2013, predicts Vodafone boss Vittorio Colao

Mobile phones could hit the mainstream as a method of making payments in Britain next year, the boss of Vodafone has claimed – finally helping the UK to catch up with much of the rest of the world.

Vodafone chief Vittorio Colao has formed a joint venture with rivals O2 and EE that aims to accelerate the roll-out of mobile payments in Britain Photo: Newscast
By Katherine Rushton, Media, Telecoms and Technology Editor
12:01AM GMT 29 Dec 2912
4 Comments
Britain has fallen behind the US and many developing countries such as India and Tanzania in developing mobile phone transfers as a widespread alternative to cash or credit card payments. However, Vittorio Colao, group chief executive of Vodafone, said it is finally set to kick into gear closer to home.

"I hope 2013 will be the year of launch," he told The Daily Telegraph.

Earlier this year, Vodafone formed a joint venture with rivals O2 and EE, the company behind Orange and T-Mobile, which aims to accelerate the roll-out of mobile payments in Britain by developing a single set of technical standards for use on all devices and networks. The company, Weve, will also act as a "one-stop-shop" selling services to advertisers.

The joint venture plan was first made public in summer last year and aimed to launch widespread mobile payments in time for the London Olympics. However it became mired in red tape over competition concerns, and did not win European approval to get going until September.

Mr Colao would not say when in 2013 the joint venture will begin rolling out products but it is expected to be towards the end of the year. He blamed the delay on European bureaucracy, which had put the UK well behind America on the mobile payments front, even though both countries had started work on their respective schemes the same time.

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"In Europe everything takes too long because we have organisations and bureaucratic controls that are excessive," he said. "Now that we have the authorisations we will do our best [to launch mobile payments as soon as we can] but getting the permissions takes longer in Europe. Everything takes longer. It's a general problem of Europe. Even within each country, there is too much bureaucracy."

America's leading mobile operators, AT&T, T-Mobile and Verizon, which is 45pc owned by Vodafone, launched their own joint mobile payments scheme in October. The joint venture, Isis, was given the go-ahead despite objections from the likes of Google which also has a mobile payments scheme, which allows users whose mobile phones run on the web search giant's Android operating system to leave their wallets at home and instead make payments by waving their handsets over a device at the till.

However, mobile payments are most advanced in developing economies in sub-Saharan African countries like Tanzania and Kenya, where they have enabled people with no bank accounts to transfer money to each other over long distances. Around a quarter of Tanzania's GDP now goes through the M-Pesa system.

[0rb1t] 12/12/2012 13:42

New Solera has gone from 15% to 7% since July. So hopefully by next Interims they are cleared out.

[speedsgh] 12/12/2012 11:41

New Solera continuing to sell down their holding, I see -

I certainly had no trouble picking up these in fairly decent quantity the last few days thanks to the seller. Looking fwd to news on mooted vending machine telematics contract(s) soon.

I note that there has been no mark down on the share price today despite it going ex-div. Is it that much under the radar?