Volex Share Discussion Threads

[paulypilot] 03/5/2014 18:10

markyjacob123,

I deal in facts & figures, not wishful thinking.

The fact is that broker consensus forecasts for Volex have been reduced steadily to around breakeven over the last 12 months, see the relevant graphic from Stock-opedia:

So the company has been talking up its recovery, whilst the figures have been deteriorating. GECR have been paid to shamelessly misrepresent the reduction in earnings forecasts, by pretending that the company is in line with forecasts, when actually the forecasts have been lowered. That alone puts the company in a very poor light in my opinion.

I hope they do deliver a decent recovery, but there's no tangible evidence of it yet, and patience is running out. My view, FWIW, is that the previous high margins achieved by the company are probably not unrepeatable. It's making products that can be easily undercut in price by numerous competitors, so it will probably eventually settle at making a low single digit operating profit margin. Therefore the shares probably don't have a great deal of upside.

Am happy to be proven wrong if/when they actually deliver some profit growth, but no sign of that so far.

I know people here hate to hear neutral or bearish views, but that is actually the purpose of bulletin boards - to discuss differing views, not be shouty bulls intolerant of anyone who dares to question the bullish view!

Regards, Paul. (no position in Volex)

[paleje] 02/5/2014 16:23

I think the only thing wrong was the header on the last RNS, if it had said 'New Customer Win' that would have been fine. I'm relatively new so no long time grievances with the company, to me it looks like a turnround working and I hope an outlook statement in June will confirm that.

Although there were no numbers in the RNS we already know they're trading in line (albeit low end) and the RNS said the new client will result in 'unbudgeted revenue growth and improved plant utilisation' so higher revenue and better margin. Good enough for now, they just got the header wrong, as much the nomad's fault for not spotting it but minor.

As for asking GECR to over egg the prospects I can't see why they'd do that as it only falls back in management's lap at the end of the day anyway so what's the point unless they need to raise funds but they did that a few months back at well above today's share price and oversubscribed too.

[markyjacob123] 02/5/2014 15:18

Paulypilot,

So you think the company has made no progress even though it has stated many times it has made progress?

"Group trading stabilised through the final quarter of 2013 and the Board anticipates full year results will be in line with expectations."

"The Group is making good progress in delivering its transformation plan with clear signs that the return to revenue growth is now being achieved."

Christoph Eisenhardt, CEO of Volex, commented:

"I am delighted with the good progress that is being made with the transformation plan and we are particularly pleased with the revenue growth delivered in the second half of the financial year. Order intake for the new financial year is also encouraging."

Essentially you are saying the management team is lying to the market.

I suggest you may be the deluded one...

[andyview] 02/5/2014 15:03

I think the last update on the back of the earlier update makes for very positive reading. The company has had issues in the past which are rightly reflected in the current price however i think there is plenty of upside here imho

gla

[don777] 02/5/2014 14:59

paul,
the new business only started this month, there is no date available yet.
they might write some sth on AR shortly.

"
Production and delivery of power cables for its new audio visual product range has commenced this month and resulting in unbudgeted revenue growth and improved plant utilisation at Volex's Zhongshan facility, in the first months of the new financial year. "


D.

[paulypilot] 02/5/2014 14:55

Hi imatsu,

Fair point, the trading update on 9 April 2014 was more detailed. Although I find Volex's trading updates pretty disingenuous. The one on 9 April tries to create the impression that things are going well, but it is actually a mild profit warning! Sales are up, but this is being achieved by cutting gross margins;

Revenues are growing as a result of Volex better leveraging its global presence, operational excellence and increased focus on price competiveness. In the short term, this has led to reduced gross margins and an impact on operating profit. As previously announced, underlying operating profits in the year ended March 2014 will be materially lower than prior year, but within the range of market expectations.

Furthermore, they then paid GECR to put out an incredibly misleading update, which completely misrepresented the facts, trying clumsily to cover up the fact that profit expectations have actually reduced.

I hope the company is successful in its turnaround plan, but their credibility is now stretched to breaking point in my opinion, as it's been all talk so far, with continuing poor results.


I supposed my main issue with the 30 April 2014 statement is that it is called a "Trading Statement", when actually it's just a bit of PR puffery about a new customer. They should have headed it as such, so that people would not have expected to see trading information in it, when none was actually forthcoming.

Good luck with it, but I reckon this one has another profit warning in it.

Regards, Paul.

[imastu pidgitaswell] 02/5/2014 14:42

Bit harsh pauly, the RNS on 9th April (3 weeks earlier) gave quantification - this one just reported some customer-specific progress since then.

[paulypilot] 02/5/2014 14:32

Hi Marky,

I think you're deluding yourself.

If the company really was making good progress on the turnaround, then they would have quoted some figures. In fact, the recent trading statement didn't give any figures at all. Instead it was just PR hot air about a new customer in China.

Therefore it's almost certainly the case that trading has actually been poor.

Regards, Paul. (no position)

[buywell2] 02/5/2014 13:46

Chart says it isn't





markyjacob123
2 May'14 - 13:39 - 2090 of 2090 0 0



This is a quality management turnaround play.

[markyjacob123] 02/5/2014 13:39

Tiny volume, small trades disproportionately moving the share price.

This is a quality management turnaround play.

The price at these levels (approx 98p) is the market saying the company has made no progress since the profit warning in November which is utter rubbish. Read the RNSs! Revenue is growing strongly and the high operational leverage will mean its only a matter of time before this feeds through into profits. The market has got it wrong.

[cboney] 02/5/2014 09:14

Just bought 7000 , shown as a sell.

[buywell2] 02/5/2014 09:06

Chart does not agree

[andyview] 02/5/2014 08:56

I've added more on the back of the recent trading statement and general outlook for VLX, looks a promising recovery play imho.

gla

[cheiftown] 01/5/2014 11:43

Just bought 3000 @98.575 shows as a sell.

[sportbilly1976] 01/5/2014 11:37

GECR note just emailed out - buy with tp of 295p

[sven2006] 30/4/2014 16:02

Thanks, nothing to really worry about.

[sven2006] 30/4/2014 13:19

Buy well ?

[buywell2] 30/4/2014 13:11

What a desperate thing for them to do


I see this as a very dangerous move

[sven2006] 30/4/2014 13:05

Just bought in

[andyview] 30/4/2014 09:09

It does look very positive and I'm in..gla

[imastu pidgitaswell] 30/4/2014 08:52

Well, that's nice...

Go on Xiaomi, buy Volex, take them over - I'll take 280...