Volex Share Discussion Threads

[insideryou] 01/10/2021 09:42

20% correction is excessive I feel.

[sweetunicorn] 30/9/2021 12:25

2020. --> 15.October Trading Update

2021 --> we will see... i think it's possible we will get a TU in October again.

Another M&A RNS in the current FY also very likely.

VLX is investing heavily in production capacity and the expansion of its marketing and sales teams.

In yesterday's news update on gtk's homepage, it can be seen that the development and product portfolio in the area of display solutions is being strongly expanded, which fits in with Volex's strategy of further diversifying beyond the area of cables and connection solutions in the area of integrated manufacturing services.

"As technology advances, more and more electronic devices require a Human Machine Interface (HMI), usually a display that provides the user access to the functions of your product."

"GTK adds extended temperature range TFTs to its Display portfolio"



I sit back and wait for the next TU or M&A RNS or the half-year results. There should be enough catalysts to a new ATH over the next few months.

I am invested for the long term and think Rothschild and his team have provided an excellent growth platform to make Volex a great world class manufacturing and niche specialist.

Valuation seems very attractive to me.

No investment recommendation.

[igoe104] 30/9/2021 11:56

God knows why these are down today. When the government has announced it wants petrol cars off the road in 2030. Plans been forwarded to next Wednesday...

Surely that's got to good news for these.

[insideryou] 30/9/2021 11:44

With the dark prince at the helm, who knows where he will take volex...

[sweetunicorn] 29/9/2021 12:37

I compare Volex with a peer group of other worldclass serial acquirers active in niche manufacturing markets.

Diploma
Judges
Halma
Addtech
Heico
TransDigm
Ametek
Danaher


Volex: "..... our plan to build a world-class manufacturing business...."

[kaffee] 29/9/2021 12:20

Peers being ?

[sweetunicorn] 28/9/2021 11:15

Added a larger position of Volex this morning. 424p.

Volex is trading at 28x FY21 FCF with a market cap of $910m and FCF FY21 of $31.3m.

According to my fwd modelling (#4380) FCF FY22 42.5mioUSD, Volex is trading at fwd FY22 FCF multiple 21x.

This implies a massive valuation discount to peers.


In summary, the tailwinds for FY22 remain intact.

-Secular trend digitisation and electrofication. Global investment programmes for the next few years by governments at record levels.

-Strong start to the current FY22

-organic growth - capacity in Batam +50% due to very strong customer demand.

-Full impact DE-KA acquisition in FY22 (DE-KA full year to 4 April 2021 revenue of $60.7m and EBITDA of $13.0m)

-Irvine ~$2.5m impact on FCF FY22 (Irvine delivering current annual run rate adjusted EBITDA $3-4m)

-Normalisation of working capital -> positive impact on FCF FY22 (Working capital movement includes higher goods-in-transit due to longer shipping times from Asia to North America in FY21)

- Strong balance sheet+strong FCF+strong M&A pipeline = 1-2 M&A RNS expected FY22 (M&A firepower ->Debt facilities of $70m with $30m accordion feature).


No investment recommendation. Check the data yourself.

[ijamlon] 28/9/2021 10:09

This is already a good dip buying price imo. Nothing has changed for Volex except the price. EV trends are stronger than ever in both the near-term ("Tesla begins most intensive delivery week ever") and longer-term ("Electric Car Interest Soars"), copper prices have been stable, the global recovery is robust everywhere, supporting their business customers. If the eps beat that has been talked about materialises then the P/E multiple will be a measly 12x at this price, far below any comparable firm. Personally, I am greedy and may wait to see if some more weak hands get flushed out first, though I often regret this over-caution. The only risk I see relates to the global supply chain bottlenecks and whether this could affect their recent delivery period. If so, it's likely only a temporary phenomenon and we should look through

[mrnumpty] 28/9/2021 08:52

I had wondered whether the current fuel crisis might encourage drivers to consider buying electric cars , and thus suspicion is confirmed by a half-page article on
page 5 of the Business section of today’s Daily Telegraph . It states “ According tu Auto Trader , views of new electric cars on its website rose 28% compared with the prior weekend , and views of used ones rose by 61% . While typically around one in seven adverts viewed on the site are for battery-powered cars , over the weekend it was one in four . Somebody contacted a retailer about an electric car around every 1.8 minutes . Over weekends in August , thus figure was one enquiry every 3.4 minutes “ . Nonetheless , these figures are only for Britain , whereas Volex is an international company . Also , we investors tend to concentrate excessively on battery vehicles whereas Volex has many other irons in the fire .

[disneydonald] 22/9/2021 10:56

Its only natural that some will choose to take their profits after such a strong run. Once, if, the market settles then I would expect the share price to push to new highs.

[cboney] 21/9/2021 17:34

don't forget this is an aim stock

[sweetunicorn] 21/9/2021 16:55

I built more positions in VLX yesterday ~433p

At MC $940m, #VLX is trading at ~30x FCF FY21 and ~22x fwd FCF FY22.

However, a lot of positive things have happened with #VLX since April, the end of FY21.

Management says #VLX has started the current FY22 strongly and #VLX acquired Irvine Electronics in August of the current FY22.

Irvine is currently delivering annual adjusted EBITDA of $3 million to $4 million. Management also states that organic growth is expected to increase in the current FY22 due to investments in Batam.

Production capacity at Batam has been doubled due to strong OEM demand.

VLX also announced that the acquisition of DE-KA has been completed.

VLX said the DE-KA business is doing well, with production running at full capacity.
VLX are investing in two additional automated production lines, which will be
H2 to be commissioned and the acquisition has given VLX a significant new customer that will provide additional revenue. The integration programme is underway and progressing well and the management team is an excellent fit with the Volex culture.

In FY2021, DE-KA contributed $9.2m to VLX's revenue.

The unaudited DE-KA pro forma financial results for the full year to 4 April 2021 is $60.7m Revenue and $13.0m EBITDA.

Now that the completion of the DE-KA acquisition has been reported, instead of the $9.2m in FY21, DE-KA will have a full ~$61m impact on the current FY22 revenue and FCF increase.

In the current FY22, the tailwinds from the strong trend towards electrification, digitisation and mechanisation continue.

In FY21, FCF was negatively impacted by one-off items in working capital movements due to outflows to expense for increases in inventories due to delay in supply chains (ASIA).

Due to normalisation in freight rates and freight prices and increasing normalisation in material prices (falling copper prices), I think in the current FY22 working CApital movements will recover to the regular normal level for VLX of outflows of ~$3m (FY21 $12.2m).

Together with the acquisition of Irvine in 8/2021 which could deliver a positive impact of ~$2.5m FCF in FY22 and organic growth resulting from the strong investments in Batam, I arrive at a fwd FCF factor in FY22 of ~$42.5m for the current FY.

A further moderate increase in operating margin should also have a positive impact on cash conversion.

I have not included further acquisitions in FY22 in my fwd FCF calculation, although I personally expect another acquisition in FY22 as VLX has plenty of firepower for M&A with an expected FCF of ~$42.5m and Debt facilities of $70m with $30m accordion feature and VLX management emphasises a good M&A pipeline.

At a fwd FCF valuation of ~22x, VLX trades at a steep discount to peers.

Growth factors (earnings, revenue, FCF), operating margin and profitability (ROCE/ROIC) are in expansion.

From a long-term FCF growth factor of ~20% together with the strong potential of further multiple expansion, I see a strong long-term investment case, which is why I used the pull back yesterday to add more positions.

Summary:
-Strong start to the current FY22 with continued positive operational developments.
-organic growth - Batam capacity +50%.
-Full impact DE-KA in FY22
-Irvine ~$2.5m FCF impact FY22
-Normalisation of working capital -> positive impact on FCF FY22
- Strong balance sheet+strong FCF+strong M&A pipeline = 1-2 M&A RNS FY22 expected.

To me, the strong emotionally driven sell-off in VLX yesterday reminds me very much of the sell-off in SDI Group PLC 2 weeks ago when shaky hands with emotionally driven selling without limit drove the price down and strong hands used the prices to buy.

Annual Results Presentation Volex :




No investment recommendation. Check the data and information yourself for accuracy.

[rainmaker] 21/9/2021 13:17

"Folks are just sheep who panic sell anything, just because others do..." Buy sheep, sell deer.Very true Igoe. Investors need to need to jettison their "herd mentality" instinct handicap and start thinking and acting independently. In the Stockmarket there is no safely in numbers. Copying others is not going to give you market beating return so you need to do things differently. My firm advice is to let the company's underlying operating performance, fundamentals and prospects be your guiding light and not fluctuations in the share price.

regards

[igoe104] 21/9/2021 08:12

With more and more money heading towards the climate change budget and the copper price starting to fall you would think its good news for VLX, so why were so many holders selling up yesterday.

Folks are just sheep who panic sell anything, just because others do...

[mrnumpty] 18/9/2021 18:41

Owenski . Actually it’s a new ( mew ? ) competitor company to Uber , which is going to employ cats to drive battery vehicles ( perhaps the vehicles will be called “ topo “ , like the Fiat Topolino cars of yore ( check out the Italian meaning of “ topo “ , although that might encourage the cats to eat their cars ! ). Anyway , as I suggested earlier , I can’t divulge anything more from the update comment in today’s edition of Momentum Investor ( the sister / brother magazine to Small Company Share Watch ) , as it is a subscription-only . On the other hand , anyone taking out a subscription to the Momentum Investor would probably receive today’s copy for free . Good luck all .

[owenski] 18/9/2021 17:43

I thought you meant 'Cattery vehicles', and I thought, oh that's nice, they're making little cars for pets, a new vertical ;-)

[mrnumpty] 18/9/2021 14:11

I hope that you realise that that should have been BATTERY vehicles , not CATTERY vehicles !!!!

[mrnumpty] 18/9/2021 14:09

Positive comment about Volex in Momentum Investor today . However , in a comment on another share , the magazine points to the global shortage of microchips slowing the sales of cattery vehicles but , fortunately , Volex is involved in several other sectors . If you take out a subscription to Momentum Investor , they send a previous copy of the magazine for free . Good luck all .

[whittler100] 17/9/2021 07:56

Yes but at least credit to the person for bringing it together for people not that conversant with the company; so much more refreshing than some of the ramp merchants on Twitter or indeed on bulletin boards

[disneydonald] 16/9/2021 23:37

Hmmm, not sure that there is anything new or independently researched in that link. All slides and quotes are taken verbatim from the company itself.

[whittler100] 16/9/2021 17:37

An excellent informative Twitter thread on VLX by a person who did some very thorough background work on SDI over a fair time; all well worth a read IMO:

[igoe104] 14/9/2021 08:35

VLX needs to pull its finger out, otherwise my 2nd biggest holding Kape will overtake it...

[whittler100] 13/9/2021 20:30

Sorry, yes 5% and as you say expected after such a rapid rise.

[wanttowin] 13/9/2021 19:32

The fall was only just over 5% whittler, I expected it to give some back after such a run.