Volex Share Discussion Threads

[mikepompeyfan] 18/11/2013 13:11

Volex (VLX) has lost a quarter of its value after falling victim to a vicious price war in Asia and customer product delays. Even with $7m (£4.4m) of cost cuts, and after stripping out $5.8m of redundancy costs and write-downs, the power cable and electrical components supplier made just $98,000 profit during the first half. It's axed the dividend, too, and while a transformation plan should at least stabilise the business, investors are being asked to place a lot of faith in the new management team.

Bosses have already restructured the company into two divisions. Hardest hit was the new power cable unit where high fixed costs meant a 24.9 per cent dive in sales and a 58 per cent slide in underlying operating profit to $3.9m. But new chief executive Christoph Eisenhardt has spent his first four months in charge improving relations with existing clients and courting potential new ones, and Volex is tightening up on design costs. There's potential at the higher-margin data division, too. Here, cost-cutting easily offset a double-digit drop in sales and profit grew 7 per cent during the period to $5.7m. Given high operational gearing, management is confident that a resumption of volume growth will rapidly inflate the bottom line.

Inevitably, full-year earnings forecasts have been slashed and broker Investec Securities now expects adjusted pre-tax profit of just $3.1m, down from $10.1m last year, giving adjusted EPS of 3.6¢ ($11.2¢ in 2013)

IC VIEW:
Analysts expect a rapid recovery next year and we think the experienced new management team are worth backing. Speculative buy.

[zoolook] 18/11/2013 12:59

Ive had second thoughts on this after reading Paul Scott's comments and sold this morning for a small gain. Good luck to holders.

[wylecoyote] 18/11/2013 12:52

Bones,

completly correct. However, it should be pointed out that I studied this over the weekend and can clearly see where I made my mistakes. I have been interested in VLX for a while now and thought that it had great potential and seemed to have a track record until the last 18 months I incorrectly assumed that the chart pattern suggested that the market anticipated improving fortunes. I thought it was a short term hickup. Reading through the RNS's over the last 18 months it is apparent that they are continuing to struggle. Yes, it looks cheap, but it is going to get cheaper. In July for the period ending 30/06/2013 net debt was around $10million(actually, I thought this was a good sign), in period ending 29/09/2013 it is $43million. A considerable jump in such a short space of time. Cash flow is dire too.

People on here talk about 'kitchen sinking', at a guess I assume they mean that the new management team issue all the bad news now. Fair enough, but they have not issued anything tangible going forward and it is difficult to manipulate the net debt and cash flow statements.

So yes, this is a potential recovery story, but I will not jump in until I see some positive numbers.

[deanowls] 18/11/2013 12:45

Anyone know whether we supply Sony for the ps4? Four million sold on the first day.


Wyle rushes off to check?

[toffeeman] 18/11/2013 11:44

Revenue is a wish best served at all!

[bones] 18/11/2013 10:11

Revenge is a dish best served cold Wyle!

[wylecoyote] 18/11/2013 09:01

why? what improving fundamentals will support the SP? In addition, DIA was shorted for less.

[naed] 18/11/2013 08:58

Brave man Wyle

[wylecoyote] 18/11/2013 08:32

Well, I have opened a short at 96.0p and my first target is 80.0p. Oh yeah the spread is getting wierd again.

[mikepompeyfan] 18/11/2013 06:31

'Mr Eisenhardt reckons it will not be that long before revenues are back to $500m and pre-tax profits are $30m again, although Investec calculates that won't happen until 2016'.

[napoleon 14th] 17/11/2013 14:43

bones - agreed, but am I gonna hang around waiting here?.....

[thorpematt] 17/11/2013 09:50

Can't remember the exact quote from Buffet, but it goes something along the lines of:

I don't have a problem with birds in bushes. But I like to know what the probability of me getting the bird is and also how long the bird's gonna be in the bush.

:-)

Always good value is our Warren.

[bones] 16/11/2013 17:43

Nap14, as a shareholder I would be happy with a bid well above the current price, whoever it came from. "A bird in the hand...." works well for me as I can then take the premium and immediately put it to use elsewhere in the market. Not interested in having dead money sitting in a 2 or 3 year turnaround if there is cash to be taken out at a good margin right now. Problem is that margin is not yet available..... so bid away whoever you are!

[napoleon 14th] 16/11/2013 12:34

Apart from very poor figs (I'm glad I had sold 75% of mine), there's bits I wonder about, like

"Geraint Anderson, CEO of TT Electronics, is appointed as Non-Executive Director" - TTG are competitors, or lining up a T/O?!

"recently initiated Volex Transformation Plan " - I thought there was one already!

[rimmy2000] 15/11/2013 17:30

freddie, you summed it up in a sentence mate

[freddie ferret] 15/11/2013 17:23

I think the markdown was reasonable, I think some bounce back is to be expected. However that half yearly report was not what I expected.

[fozzie] 15/11/2013 11:38

Ah CR Manilow magic, you cant beat it. All joking apart he has been a great entertainer, underappreciated imo. I enjoyed it, these little vignettes are what makes CIN so successful.

[maurillac] 15/11/2013 11:34

well i sold half today and took the hit. prepared to let the other half run now. it could take a while before i see a profit so happy to use the realised cash elsewhere.
gla
m

[rimmy2000] 15/11/2013 11:32

imastu, i sold old ahead of results, as was wary of the IMS. It was also evident the trading volumes were extremely light dung the last week.

[cockneyrebel] 15/11/2013 11:31

Children in Need bringing back the memories ah Fozzie :-)

CR

[cockneyrebel] 15/11/2013 11:31

Children in Need bringing back the memories ah Fozzie :-)

CR

[imastu pidgitaswell] 15/11/2013 11:30

It's interesting to me, the trading patterns for the ten or so days before the results. By that point the numbers would have been done, as would the blurb, and more than a few people would have seen it.

Had I seen it (i.e. insider info) I would certainly have sold some and looked to buy back, as the share price drop would have fairly predictable (higher debt, bigger revenue drop than previously indicated and communicated).

But I am sure that has not happened here. Not at all...

[fozzie] 15/11/2013 11:26

I made it through the pain, kept my shares intacto, and bought a few more. Nearly had a Manilow moment there ;o)

[rimmy2000] 15/11/2013 11:21

an established technology charge, such as this, with *massive* limitations on barrier to entry, as well as patented IP will no doubt be a buy out target. Slate is clean, and business is re-baselined with yesterday's update. I remain optimistic for shareholders.