Volex Share Discussion Threads

[bones] 05/6/2013 14:21

The break below 100 is due to a couple of AT traders with 98 asks for a couple of thousand shares each. The nearest MM on the ask is at 101.

On this basis, you should get under 98 if you buy now. Not saying this is good value but that the opportunity is there.

[fozzie] 05/6/2013 13:53

I think we need to break 100p conclusively before we start looking at bigger numbers. Todays move down just shows the lack of confidence here imo. I am averaged at 108 but wont be buying anymore just yet.

[mreasygoing] 04/6/2013 14:11

Lovely looking chart. I've been buying. 140p is the target once 120p is broken. 200p longer term.

[brucie5] 04/6/2013 14:03

I'd see 110/12 as overhead resistance, clearly shown on the chart. But it's been consolidating sideways since December. Good sign to see director buys and presence here of PP. I tend to like the £1 level, and looking here to see if it holds, as this might be a higher low after May's low. If so, it's a strong base. aimho. nai.

[solomon] 04/6/2013 13:37

Really wondering whether I should take a hit on this one. Naa ... in for the decade.

[wylecoyote] 04/6/2013 12:43

Looks like it is drifting for the moment...:-(

[cyberbub] 03/6/2013 23:19

Thinking about finally buying some here. Is the $43M debt not a bit of a concern? I know they have a substantial positive position on current net assets, which is reassuring, but most of this is due to the large inventory position they have. Can any of you fancy-pants accountant types ;-) tell me whether inventory is shown on the balance sheet as (i) the likely sales revenue, (ii) the likely gross profit, or (iii) the cost of production, of that inventory??

TIA

[tratante] 03/6/2013 10:15

PP. Good they now have dedicated people looking after the key accounts and that they are developing relationships with the design and engineering people not just procurement. Yes, pity about job losses - although one at least was carrying the can for messing up with their biggest customer!I am also impressed with the attention vlx give to the working conditions in their factories. Something they highlighted in an earlier webcast. All in all get the impression that they are about building a sustainable business.

[snatander] 03/6/2013 10:04

pushing ahead

[paulypilot] 03/6/2013 09:30

tratante - I agree wholeheartedly, that was my impression from the webcast too. The problems last year are down to very specific, correctable issues. Remedial action has already been taken. Hence gives strong reasons to believe trading will be better in 12 months time. Although I note they say H1 this year likely to be tough, then H2 better as new product launches kick in. Deep cost-cutting already done, 20% of entire workforce gone - sad for the individuals concerned, but that should have a pretty dramatic impact on profitability.

P.

[tratante] 03/6/2013 09:14

Very impressed by the webcast. Not often you hear a company admitting the full extent of its mistakes and making a no bones about it apology. CEO taking responsibility. Demonstrates how they have learned from the experience and are working to put things right. Gives me a lot of confidence that vlx share price will recover strongly over the next 12-18 months.

[steveo18] 02/6/2013 16:54

..."WHEN YOU GET TO WHERE YOU WANT TO GO
AND YOU KNOW THE THINGS YOU WANT TO KNOW,
YOU´RE SMILING.
WHEN YOU SAY WHAT YOU WANT TO SAY
AND YOU KNOW THE WAY YOU WANT TO SAY IT,
YOU´LL BE SO HIGH YOU´LL BE FLYING."...


140p gap on the chart

[mreasygoing] 31/5/2013 19:24

Long term support around £1.00 is very strong, rallies back to 200p are clear to see. The gaps on the other chart show that longer term 250p looks a likely target.

[idomeneo] 31/5/2013 17:16

The Chairman's remarks in the webcast leave absolutely no doubt that it is Apple in the way he refers to their design and quality leadership in the marketplace. He didn't mention they have morals no better than crooks in the way they legally end up paying very little tax. Strange that.

[paulypilot] 31/5/2013 17:09

WyleCoyote,

They don't state the customer name in the Webcast, but it's common knowledge that the biggest client is Apple. Broker notes for Volex have referred to Apple.

Regards, PP.

[mreasygoing] 31/5/2013 16:40

Chart is forming a very solid bottom. Long term this area has been very good support. I'm in today :)

[imastu pidgitaswell] 31/5/2013 16:38

They will never state it was Apple, but it obviously is. They are still the largest client, with more business now (up 35% without that contract) than ever before.

[wylecoyote] 31/5/2013 15:39

Paul,

I never saw or heard anything to suggest that it was 'Apple', was that stated in the webcast? (I am hard of Hearing and listening to these things is hard work)... thanks for clarifying.

[paulypilot] 31/5/2013 15:29

cyberbub, Yes that's exactly right (post 1095).
The management presentation webcast on Volex's website (investor relations section) is very informative, and gives lots of background info as to what went wrong in 2012/13, and what they've done to fix it.

It boils down to specific reasons things went wrong - serious defects with the Sales team, not handling client relationships at the top level, which resulted in them losing a $50m order from Apple, which they had spent a considerable amount of money preparing for, in ramping up production capacity.

However, they have taken drastic remedial action, and have reduced their headcount by around 20%, with cost savings of $17m p.a. already done, and more in the pipeline. Plus, margins are being pushed up by stopping low margin business. New product lines kick in in H2 this year, etc.

So there are very good, specific reasons to expect trading to improve considerably from last year. They also confirmed they are comfortable with market forecasts for the current year, which show the forecast PER being less than 10. So the shares are actually looking quite cheap if you look forwards, rather than backwards.

I think there are other good signs too - the 3.3% dividend has not only been maintained, it was increased. The outgoing CEO has just bought some more shares (I've never seen that before).

It looks to me like a company where there were multiple management failings, which they are refreshingly open about in the Webcast. Things are well on the way to being fixed already, so I think it is logical to price in a turnaround.

This seems a strong candidate for a (say) 12 month rise to potentially up to 200p in my opinion, based on the above analysis of the situation. Hence why I've bought a few just over a quid, with a 12 month view.

DYOR as usual, let's hope I'm right!

I've also read 3 recent broker notes which all buy into the turnaround story too, although their price targets are quite low, at 120-140p. Although broker price targets are usually rubbish - they just follow the share price up & down, and never like to be more than about 25% away from it, just in case.

Cheers, Paul.

[cyberbub] 31/5/2013 15:16

Can I just sum up the results? They made a normalised profit of 11cents, having been at over 40cents the previous year. But the share price is at 165cents (p/e of 15), which seems a little high to me for a troubled (albeit by no means doomed) company. So by taking it up to a p/e of 15, Mr Market is assuming that they will continue to make a turnaround in the coming year or two? Is that fair?

[tratante] 31/5/2013 10:56

Nice steady rise is what's needed over the course of a few weeks. Don't want to attract the pump and dump brigade.

[wylecoyote] 31/5/2013 09:09

Well, I am happy, it feels like TCG again.. This time I will probably hold a little longer than TCG... (If I had, I probably would have been able to afford a house...lol). It can be quite lucrative if you get it right and let it run. My first target is 120.00p, beyond that 150.00 to 170.00. Obviously it is all dependent on how the underlying stock performs...;-)

[imastu pidgitaswell] 31/5/2013 08:35

I'm thinking that's a bit less encouraging than the one a week or two ago (that when I commented caused a bit of a toy-throwing incident), which (from memory) was for 40,000 shares at just under 120?

Looks like it's a bit more liquid if that's the quoted price, although we haven't particularly high volumes since the results, just a bit more than the dog days before them.

But still good (before anyone gets upset again...)