Volex Share Discussion Threads

[cboney] 06/9/2021 11:13

quite happy to sit on these for a few years.

[sooty snipes] 06/9/2021 10:46

Been waiting for a bit of a pullback from circa 440p. Wanted a little top up. Looks like I'll have to settle with what I've got. Flirted and teased us for so long to break £4 now we're nearly at £5. I'm not complaining.

[dr biotech] 06/9/2021 08:50

Can only see EV market growing and us benefitting, but it’ll not be a cakewalk. A bigger market always attracts competition and if it’s to grow exponentially the there are capacity restraints.

Volex now my 2nd biggest individual holding so .

[nw99] 06/9/2021 08:42

700new target

[zingerburger] 06/9/2021 07:48

700p being called

[simmsc] 04/9/2021 21:35

Agreed, very well put Rainmaker. And i think what is worth adding is that these opportunities a) don't come up very often or b) we don't notice the opportunity. So when something like this does come up it's worth holding on to. I have 10 shares in my portfolio, but i only feel this strongly about 3 of them (Volex, Reach and MADE.com).

[onjohn] 04/9/2021 18:07

Bravo rainmaker
Excellent post one of best ever

[rainmaker] 04/9/2021 16:38

I think its very important as an Investor to look at situations like Volex and the EV market with a cool head and as dispassionately and logically as possible. Think of the new Electric Vehicle market share as a 100 storey building and we're currently in a lift on the third floor so really at almost the beginning of our journey but we're going to the 100th floor in 2040 or quite possibly much sooner-predominantly technological change happens much, much quicker than generally anticipated- and you want to enjoy as much of the ride and the benefits, as possible.


Really you've got to take as much advantage of an opportunity, as possible otherwise I feel you're being wasteful.I think you need to be fully cognisant of the full potential of any situation. That's what makes George Soros such an incredible Investor, if there's £1bln to made from a situation, he's not interested in a £100mln or £200mln profit but wants to make as close to £1bln as he can and I feel exactly the same way.It could be mistaken for greed but it's not, it's about making the most of an opportunity.I don't gamble but I think you can equate this to a game of Poker where you have a very strong hand-you want to play it really well and to derive the maximum possible return.In summary I think its about doing a job well but you need the right dominant personality traits such as honesty, patience, discipline and determination to really succeed.

AIMHO, DYOR as I have done mine

regards

[rainmaker] 04/9/2021 16:06

You're welcome BBD, I hope you make huge returns here, IMHO they will be easily achievable, you just need to resist the strong temptation to take profits prematurely on the way up, my firm advice is to run your holdings because IMHO you will rarely get better opportunities to make a real killing. I'm very cool about my holdings, it 10 bags and I just shrug my shoulders and think that's ok but my advice to all holders is to detach yourself from the huge returns you are/or will be making and instead focus on the fundamentals and operating performance of the business,its markets and its prospects.

AIMHO, DYOR as I have done mine

best wishes

RM

[bigbigdave] 04/9/2021 15:17

Interesting research Rainmaker, many thanks.
VLX already my largest position.
In a mining boom buy the makers of picks and shovels.
In an Electric vehicle boom buy....... not rocket science :o)

[rainmaker] 04/9/2021 14:34

Thanks Ijamlon, any thoughts on my post 4333?

regards

[ijamlon] 04/9/2021 13:43

Re thematic investors, I would say size has been an impediment. £500 mln is still considered something of a 'micro' cap nowadays, and typically shunned by most institutions. As VLX mkt cap grows through acquisition, profit and ratings growth, it will increasingly pop up in the investment screens of these thematic funds and hopefully drive more momentum. I would say we're already at or approaching that point with the mkt cap now >$1bln, but the bigger the better.

[rainmaker] 04/9/2021 12:11

I have to ask where are the Thematic Institutional Investors? I wouldn't name them but they are paid solely to seek and find such opportunities-its their job-to capitalise and exploit industry megatrends such as the emergence then domination of EV. With annual global automobile sales expected to reach 70mln this year, this is a multi billion dollar industry and Electric Vehicles is by far the biggest technological revolution to ever impact on this Industry.

AIMHO, DYOR as I have done mine

regards

[rainmaker] 04/9/2021 12:10

I have to ask where are the Thematic Institutional Investors? I wouldn't name them but they are paid solely to seek and find such opportunities-its their job-to capitalise and exploit industry megatrends such as the emergence then domination of EV. With annual global automobile sales expected to reach 70mln this year, this is a multi billion dollar industry and Electric Vehicles is by far the biggest technological revolution to ever impact on this Industry.

AIMHO, DYOR as I have done mine

regards

[rainmaker] 04/9/2021 11:51

Certainly for a Volex's incredible predicted growth rates to come-according to a UBS report, EV are expected to reach 25% and 50% market share in 2025 and 2030 respectively from just 3% in 2020(note there was a report released at the beginning of August stating that EV market share of new vehicle sales are now 8.7%) and margins that are an excellent at 9.7% and growing consistently,there is a major anomaly that Volex is trading at just 2.27 times annual sales v a sector at 6.41 times sales. IMHO this huge discrepancy can only be resolved by a sharply higher Volex share price.

AIMHO, DYOR as I have done mine

regards

[rainmaker] 04/9/2021 11:49

Certainly for a Volex's incredible predicted growth rates to come-according to a UBS report, EV are expected to reach 25% and 50% market share in 2025 and 2030 respectively from just 3% in 2020(note there was a report released at the beginning of August stating that EV market share of new vehicle sales are now 8.7%) and margins that are an excellent at 9.7% and growing consistently,there is a major anomaly that Volex is trading at just 2.27 times annual sales v a sector at 6.41 times sales. IMHO this huge discrepancy can only be resolved by a sharply higher Volex share price.

AIMHO, DYOR as I have done mine

regards

[cboney] 04/9/2021 11:45

as i have said before ,could be another ashtead

[rainmaker] 04/9/2021 11:12

Thanks F, I'm convinced there are spectacular returns to be made here and all holders need to do is just continue to hold and give the share price time and resist the temptation to take profits when it reaches £10 or £20 a share as I believe it will go much higher.

I've been holding for just over five years and when I studied the Company and its markets, particularly Electric Vehicles, I fast came to the firm and obvious conclusion that it would be an act of almost criminal negligence and stupidity to sell Volex at anything like current levels. Based on my experience of similar situations, I do expect a huge speculative bubble here,as all the conditions exist for one and massive gains. What surprises me was Volex's share price delay in breaking through the £4 barrier but I put that down to Investors "earnings myopia" an obsession with the very short term earnings outlook at the expense of all else.

AIMHO, DYOR

regards

[frankseluk22] 04/9/2021 07:42

Interesting post Rainmaker.

[rainmaker] 04/9/2021 00:11

Hi Oxman, Its funny you should comment on the rating because I'm very sure that we won't stay at circa 20 times earnings.

Hmmm Telegraph article. Reference the comment that US $70mln management's estimate of sales in the EV division for 2021 being too low because the it ended the 2020/21 financial year turning over US $8mln a month so US $96mln a year. But if you remember, the preliminary report released on 17 June 2021 for the 52 weeks to 6/4/2021 Volex said-

" Revenue from our electric vehicle customers grew to $53.1 million (FY2020: $18.1 million), a year-on-year increase of 193%. Demand in the first quarter of the year was subdued as our customers identified ways to re-open their automotive plants in a Covid- secure way. From the second quarter of the year demand began to pick up, with run-rates improving further in the second half of the year. Over this period of time, we have been increasing our capacity to support production for our electric vehicle customers with additional capacity becoming available in the first half of FY2022."

So demand was "subdued" in the first quarter but still running at close to US $100mln annually. The evidence since suggests that EV are now making up 8.7% of all new vehicle sales up from 3% in 2021(see my link on 1/8/2021). We could use those figures to derive an estimate of US $154 EV sales in 2021 which almost identical to the continuation of the 2019/2020 growth rate at 193%.

IMHO with an explosion in the growth rates of EV sales and the Company's shrewd and disciplined acquisition policy,we're going to be dealing with a "runaway train" here and long experience has taught me that in such situations the earnings multiple will balloon, as the penny finally begins to drop that Electric Vehicles are the biggest revolution to ever impact on the global automobile industry, I really don't see £20 s share as a problem as the Herd, Thematic Investors etc begin to arrive paying any price to hold and Volex becomes very popular because EV are an easy concept for them to grasp. Forget growth rates for a moment and just apply a p/e of 100 times then we're already trading at circa £20 a share.

AIMHO, DYOR as I have done mine

regards

[rainmaker] 04/9/2021 00:08

Hmmm Telegraph article. Reference the comment that US $70mln management's estimate of sales in the EV division for 2021 being too low because the it ended the 2020/21 financial year turning over US $8mln a month so US $96mln a year. But if you remember, the preliminary report released on 17 June 2021 for the 52 weeks to 6/4/2021 Volex said-

" Revenue from our electric vehicle customers grew to $53.1 million (FY2020: $18.1 million), a year-on-year increase of 193%. Demand in the first quarter of the year was subdued as our customers identified ways to re-open their automotive plants in a Covid- secure way. From the second quarter of the year demand began to pick up, with run-rates improving further in the second half of the year. Over this period of time, we have been increasing our capacity to support production for our electric vehicle customers with additional capacity becoming available in the first half of FY2022."

So demand was "subdued" in the first quarter but still running at close to US $100mln annually. The evidence since suggests that EV are now making up 8.7% of all new vehicle sales up from 3% in 2021(see my link on 1/8/2021). We could use those figures to derive an estimate of US $154 EV sales in 2021 which almost identical to the continuation of the 2019/2020 growth rate at 193%.

IMHO with an explosion in the growth rates of EV sales and the Company's shrewd and disciplined acquisition policy,we're going to be dealing with a "runaway train" here and long experience has taught me that in such situations the earnings multiple will balloon, as the penny finally begins to drop that Electric Vehicles are the biggest revolution to ever impact on the global automobile industry, I really don't see £20 s share as a problem as the Herd, Thematic Investors etc begin to arrive paying any price to hold and Volex becomes very popular because EV are an easy concept for them to grasp. Forget growth rates for a moment and just apply a p/e of 100 times then we're already trading at circa £20 a share.

AIMHO, DYOR as I have done mine

regards

[miti 1000] 03/9/2021 16:32

Oh , I shall certainly comment on that laughable article on volex over the weekend!!

[jatin724] 03/9/2021 16:27

Downing strategic microcap fund investor letter

[its the oxman] 03/9/2021 11:34

Clearly market is forgiving the past and increasingly willing to accept the rerating argument that volex is fundamentally a higher quality business today with a strong market opportunity ahead of it. Will be interesting to see how high a multiple it will command, some way to go I suspect.