Volex Share Discussion Threads

[gripfit] 10/6/2014 16:38

331 million turnover ,, mkt cap as low as it is.... this could get gobbled up imho...

[imastu pidgitaswell] 10/6/2014 10:16

To be fair, it is in reaction to a heamorrhage (can't spell..) of revenue, which even after mitigation was some 20% from the peak in 2012. That's too much to manage easily, so they're right to price accordingly and 'overservice' customers in the short term - keeping existing ones, winning new ones and getting back lost ones.

And it's a small reduction in gross margin, not a slashing of it - I'd rather have a contribution of 16-17% of sales (down from 18-19) to the operating costs than no contribution at all.

The challenge is to take the margin back up and then into the mid 20s, as their best competitors do. Possible, but it will take time, not something that can be done in one or two years. In the meantime, take the gross margin you can get.

Market not happy for now though.

[ferrism] 10/6/2014 09:08

Agreed. There's been the inevitable attempt to buy market share at the cost of margin. The problem is if it continues into the long term. Lots of sales and no profit is a familiar "strategy" of late for too many companies. Oh well, we shall see.

[imastu pidgitaswell] 10/6/2014 08:39

I doubt there is much in Thursday's numbers that will have much of an impact. We know the revenue, net profit and net debt from previous RNSs, and there will be a lot of one-off kitchen-sinking, clear the decks etc etc. To be honest, I can't see anyone taking much of a future guide from the results to 31st March 2014.

So it's all about the blurb (again), particularly the forward guidance. Which has been positive in recent months, albeit with market focus on the margin. Clearly they initially decided they could price themselves to a higher margin, but their customers were having none of it. So it's the long haul, becoming more efficient on the production and supply side (hence the move to a multi supplier model and the resulting working capital movement - their choice to improve margins at the expense of short term debt increase), introducing new products (but being irritatingly slow about it - Active Optical Cables anyone? Anyone at all?) while sweetening customers as far as they can to keep the 'unincreased' gross margin coming in.

Simples...

[ferrism] 10/6/2014 08:11

Delayed trade sell of 40000 showing this morning. (Obviously showing as unknown but clearly a sell judging by the time.) I wonder if Thursday's information is being leaked. Surely not!

[buywell2] 09/6/2014 17:17

R U plugged in yet freddie ?

[freddie ferret] 09/6/2014 17:14

Very interesting ADVFN are not showing trades after 8.10am today. My guess is the drop in the share price around 4.00pm was arrested by buying around the close. It will be interesting to see if Mr Rothschild has picked up a large lump more, if he has price movements and his purchases will mirror what happend the last time he picked up a lump of VLX. Worth noting that he holds cira 25% of the stock.
If he has bought today expect a bounce to around 115p given past form.

[buywell2] 09/6/2014 17:10

No I have enough already thanks

Another update from VLX wood be good

[tom111] 09/6/2014 17:05

What do want a medal lol

[buywell2] 09/6/2014 17:03

buywell2 16 May'14 - 14:47 - 2130 of 2143 0 0 edit

I should be charging you guys for this

Support around 82.5p might be next test




buywell2
8 Apr'14 - 15:25 - 2063 of 2129 0 0 edit


Chart is not very good this year possible 90p retest ?

[supasapi] 09/6/2014 16:55

thank christ got this one right and sold ...... some things just don't make sense

[imastu pidgitaswell] 09/6/2014 16:42

Close, but no cigar. Really quite bemused about the price action - down by a third in a few months all the while the news has been improving consistently:

[imastu pidgitaswell] 09/6/2014 16:00

That was my first view on the negative reaction to the RNSs - but all of their competitors supply most of the top players (as do VLX), and none of the customers have supplier exclusivity (too risky for Apple etc to lose a single source of supply). It's not an exclusivity business, not should it be.

The margin issue might be a concern, but there is no indication (to me) that Xiaomi screw their suppliers or compromise on quality - just that they don't spend on marketing and other 'softer' expenditures, plus they are a private company and can 'invest' in lower pricing to build volumes with a view to higher returns long term - no short term stockmarket shareholders to placate (unlike bloody Volex...)

See more on Thursday, plus a further AGM update in July.

[paleje] 09/6/2014 15:35

You'd think so IP, with a foot in both camps, so what's bugging the market, is it just PI's going by previous management's performance or is it more.

Could it be the worry that margins will be squeezed bearing in mind Xiaomi's pricing reputation and the vague mention in a recent RNS about developing a relationship with them which could be come strategic. And if it becomes strategic to the point of helping knock Apple and Samsung off their top 2 slots mightn't they reconsider their business with Volex? I don't know, I'm just looking for possible reasons.

Lets hope current management have a clearer view on how things are going to work out than they are sharing with shareholders via their RNS's recently.

[imastu pidgitaswell] 09/6/2014 13:47

Seems that nothing is going to lift this - at least until Thursday, although doubtless that will see another plunge...

Apple launching iPhone 6 in October - VLX back on the supplier roster per the IC piece above?



And another piece (or two) on Xiaomi - strategic partner of VLX.





I dunno, I kind of thought that those two items would be good for VLX, you know sales and new products etc, that kind of thing, but clearly wtfdik?

[imastu pidgitaswell] 23/5/2014 08:38

Thanks for the IC detail - it had not been posted. Interesting comments about Apple - especially if true...

Naturally, no sign whatsoever if any share price effect - still a persistent seller, which in a closed period is never a good thing.

[paleje] 22/5/2014 19:59

Good stuff ima, thanks. Along similar lines IC ran an article in March, I don't think it's been printed, they obviously didn't have knowledge of the updates or the current selloff in small caps at time of publishing:-

Volex (VLX) is the second largest supplier of power cables and USB leads to the big electronics manufacturers. It should be thriving, but in recent years has been rather accident-prone - alienating its largest customer and discovering a knack for profit warnings. We first spotted its recovery potential last year, and new management's "transformation" plan is beginning to deliver results. A fan club is developing in the City, too, and the potential for earnings upgrades is becoming clear.

Much depends on the new board. It certainly has pedigree. After a successful career in automotive and industrial supplies, Christoph Eisenhardt took over last summer, six months after Volex's final profit warning. Nick Parker, who once ran Sheffield Wednesday Football Club, joined him from WANdisco soon after. They've been busy repairing relationships with customers and winning new business, and early signs are promising.

Most important is Apple. It's easily Volex's biggest customer, generating up to a quarter of sales, but hinting at suicidal price increases lost previous management a huge chunk of business - reflected in the forecast earnings fall this year. Apple buys iPhones and iPad cable from three suppliers, and margins are typically mid-single digits. We understand that everyone is friends again, and that Volex has actually won more business from Apple.

New products will likely drive demand, too. There's a lot of talk about an Apple television, or iTV, launch this year. Volex will make leads for other new gizmos, and while Apple's move to more environmentally-friendly Halogen-free leads has cost Volex millions in development work, it should prove worth it. Asian rivals such as Samsung will likely follow Apple's lead, pushing business Volex's way.

Trading stabilised during the last three months of 2013, and tightening up its processes and shifting to a multi-sourcing supplier model will slash spend on raw materials - about two-thirds of all costs - and narrow the significant margin gap to rivals. We expect confirmation in a trading update next month.

Despite ugly numbers, November's half-year results piqued City interest and a surprise, and heavily oversubscribed, placing and share sale just before Christmas at 116p, a small premium to the market price raised £7m. Not to be left out, new non-executive director Daren Morris has just bought 30,000 at 112p.

For now, analysts are being deliberately conservative. "Initial signs of progress are encouraging," admits Investec Securities, but believes it is "still too early for this to be reflected in our forecasts". Maybe, but keep this up and the first earnings upgrades may not be far off. Already, Investec forecasts EPS to more than treble in the 12 months to March 2015, then rocket two-thirds the year after to 19.6¢.

SHARE TIP SUMMARY:
New management is skilfully repairing Volex, and the City's backing should underpin the share price. It is operationally geared to any upturn in volumes, generated by the new international sales force, and any weakness would only make the sole supplier with global capacity an obvious takeover target. Yet, the shares are already inexpensive, trading on 15 times 2015 earnings forecasts, dropping to just nine in 2016. Likely upgrades only sweeten the investment case. Buy

[ferrism] 22/5/2014 15:25

Thanks for that, ima... Excellent analysis. Not optimistic but realistic, in my opinion.

[buywell2] 22/5/2014 13:39

And they have HEAVILY discounted prices to increase turnover

Short termism

Any numbskull can do that

[cjohn] 22/5/2014 13:31

The one thing you can be sure of with VLX is that adjusted profit each year will be significantly higher than unadjusted. Year after year - ireespective of who's managing at the time - it goes on, the writing off of "exceptionals". Different exceptionals each year, of course, just for variety's sake.



These need to be valued on basic earnings. Look at the record: not attractive at all. Why? Poor management, poor company culture, unfavourable sector. All these probably.

[imastu pidgitaswell] 16/5/2014 15:14

buywell, I'm pleased you value your opinion...

Whether it's 90,80, 110 etc is not of any great relevance to me - it's too difficult to buy and sell with the spread in any volume, inside of the prices since the 80p floor. Give me 140 (prefer 240) and I'll maybe think about it - the current movements are an irritation, that's all.

[buywell2] 16/5/2014 14:47

I should be charging you guys for this

Support around 82.5p might be next test




buywell2
8 Apr'14 - 15:25 - 2063 of 2129 0 0 edit


Chart is not very good this year possible 90p retest ?

[markyjacob123] 16/5/2014 14:31

Agreed - it is infuriating.

It was Ruffer who added 1,000,000 shares.

Ruffer's strategy is take big stakes in a small amount of stocks so hopefully they'll be increasing their stake further at these sorts of levels.