Volex Share Discussion Threads

[valhamos] 12/11/2020 14:25

You could image that Darren Morris having said in 2018 he wanted out in 2020 and they then recruited a top quality replacement to succeed him, found in the last 12 months life was quite good as his deputy was doing all the hard graft and he wasn't so keen to go after all and had to be pushed.

[valhamos] 12/11/2020 14:21

"some less than positive working capital changes this half - should reverse, but watch out for it."

Wasn't the point made in the presentation that they have already reversed? So if you take inventory plus trade debtors less trade payables at end H1 2020 ($67m + $71m - $48m = $90m) then it tracks working capital a year earlier ($54m +77m - $40m =$91m) on similar turnover. In other words it was just a Covid issue at year end in March.

[valhamos] 12/11/2020 13:19

"Finally, I believe they could do with some external help in managing their global exposure to currencies, commodities given the potential for "back luck".

Do you have any evidence that they need help? Because otherwise your comment sounds very patronising!


"The new CFO sounds awfully young." He is 41. I thought he came across well in the presentation and the Q&A and seems to know his stuff.

[imastu pidgitaswell] 12/11/2020 13:06

Fair points - I have always been wary of acquisition based growth, rather than organic growth. The accounting can be very opaque, with all manner of stuff thrown into the pre-acquisition costs.

Always follow the cash - some less than positive working capital changes this half - should reverse, but watch out for it.

[disneydonald] 12/11/2020 12:56

Always difficult to assess acquisitive companies from afar, given the potential for accounting gymnastics. The call did row back a little on a few areas, so maybe current trading not quite as presented at the last update. Also, always wary of CFO's who disappear in the night, without any exit management. Given that the CFO was an old University mate of the Exec Chairman.

So, I guess it depends whether you see this as glass half full, or half empty. I would suggest that there are enough uncertainties introduced to slow down the recent upward momentum. However, if the economy kicks back in post COVID and you believe in the Exec Chairman (his previous acquisition track record cost investors dearly), then maybe things will work out fine. After all this is an acquisition play, therefore need to keep a close eye on "goodwill".

Finally, I believe they could do with some external help in managing their global exposure to currencies, commodities given the potential for "back luck". The new CFO sounds awfully young.

I'll watch closely for a while, and stay invested for the time being. Of course, the above is IMHO.

[wanttowin] 12/11/2020 12:23

Blue finish please !

[shanklin] 12/11/2020 12:21

Yep, H1 performance has been achieved with far low a level of revenue than would have been the case without Covid. Whilst Covid has obviously provided a few positives for VLX, its mainly been a major kick in the proverbials. At some point, parts of their markets which have been hard will recover, with significant net benefit to VLX.

And then there is all their self-help measures.

[igoe104] 12/11/2020 12:16

The positive for me, they seem to becoming a dominment player in the Electric vehicles sector, they said they are involved in a majority of the programs. That area i can see the EV significantly growing. ALSO Demand for hospitals should start to increase, as covid levels deterate. As always some folks are looking for any excuse to sell, because they are weak holders. Ride your winners.

[miti 1000] 12/11/2020 12:15

Virtually impossible to pick negatives in that presentation or Volex as a company. Copper and US dollar , if any, but these are known.
Losing the CFO is a big blow and as a poster said previously, he was brilliant. Saying that, Nat is also terrific in explaining exactly what he wants and how the company will go forward.
'Revenue..vanity...profit...sanity and cash in bank reality'. Classic comment from him and volex shall remain by far my biggest holding.

Target price 6 quid in 2 years time...dyor!!

[imastu pidgitaswell] 12/11/2020 12:00

Just on the numbers - half year bottom line profit of $15.4m - after share based payments. That is after (they confirmed this on the call) a tax credit of $2.9m (note 4) from UK deferred tax relief on losses from years ago.

Now those benefits will continue for a long time (as the losses were so bloody big), but if excluded, as they will not continue forever, the bottom line, used for EPS calculations would have been $12.5m, which would give an EPS (for the half year) of around 7.5 cents, instead of the diluted 9.5 cents they show. Or 5.8p.

Now that is for a half year, and it is growing. But that is quite a large multiple; combined with the CFO going, I'm not tempted.

[shanklin] 12/11/2020 11:56

If Jon Boaden was openly recruited to be the next CFO with a start date some time in 2020, and the previous CFO was not in a hurry to leave, despite prior indications in 2018, there would probably have been some tension, which is perhaps reflected in today's announcement.

Only guessing but it would explain today's RNS.

[shieldbug] 12/11/2020 11:51

Political risk? Hence the diplomat NED.

[pugugly] 12/11/2020 11:49

Agreed lack of thanks possibly concern - Also possible political risk re Turkey

[melody9999] 12/11/2020 11:48

It does tie up that Jon Boaden joined 18 months ago - some 6 months after Darren made his intentions known. Suggestion that Jon has progressed well and so they bought the change forward to announce with the HY.

[nimbo1] 12/11/2020 11:46

Copper prices must be a risk going forward. I bought this as thought with the EV story it could get to 15-20x earnings etc...but going down market into white goods with the turkey acquisition Im not convinced thats in play anymore...might be wrong of course. Thought this was a slam dunk but am less sure than I was for sure! Plenty to mull over.

[luffness] 12/11/2020 11:46

Very abrupt and no hint of any thanks for his service so something has occurred to speed things along...

[imastu pidgitaswell] 12/11/2020 11:41

Yes just heard that - fair answer. But that is the first time anyone heard it outside of the Board. And it does seem very abrupt if all agreed and planned.

[valhamos] 12/11/2020 11:41

Darren Morris had indicated to the board in 2018 that he wished to retire within 2 years in 2020. On that basis Volex recruited the new CFO as part of the succession plan.

[gdjs100] 12/11/2020 11:39

Pro-forma earnings multiple for next year is 12x based off finncap's estimate of 27.1c.

[imastu pidgitaswell] 12/11/2020 11:30

The new CFO doesn't...

Just catching up on this, busy morning. Just logged on to the call.

The CFO going, immediately, is a bit of a shocker. He was very strong, imho, more of a COO, and was the main reason, more so than Nat, for my confidence in these. I'm not saying they are going to have problems, but he inspired a lot of confidence, based on the prior presentation, where he was excellent, especially in the Q&A. Really not sure about this new guy.

Not really studied the numbers yet, and as a non-holder anymore, may not do so. Quite stretched on an earnings multiple, and the latest acquisition is a large one. They can go wrong.

Not very tempted to get back in, but just my opinion, and not a very well informed one as I type.

[pugugly] 12/11/2020 11:19

Presentation live - Sounds very confident at the moment - John just starting to review results

[johndoe23] 12/11/2020 10:42

I'm surprised this is falling further...

[miti 1000] 12/11/2020 10:36

Agreed, on the last point but its well known and investors seem ok with it .Hopefully over time , Nat will change stance but no big deal for now as no plans to move and lets face it, he has done an amazing job so far.