Volex Share Discussion Threads

[johndoe23] 18/4/2024 14:55

Downing still selling?

[z1co] 18/4/2024 14:04

$billion revenue for the current year and profits of over $100m.

Debt is not the reason , most likely background seller/s hence the muted reaction.Have bought more this afternoon.

Far too cheap.

[craftyspeculator] 18/4/2024 13:50

Honestly vikeshm1 - leverage of 1.3 is very manageable. Most companies can sustain leverage of up to 2.5x comfortably, and often up to 3.5x for cash generative companies. If you earn £100k a year then you can probably repay a £300k mortgage...it's the same principle. Volex earn £100k a year and have a £130k mortgage to clear - no stress

[ymaheru] 18/4/2024 13:45

@vikeshm1, they say cash flow was very strong, so I’d suspect over $40m off that $173m figure.

Volex’s calculation for net debt includes inventories etc (I think). I’m really only concerned about cash and that appears to have done very well, so if I’m reading it right, it’s very good news.

[johndoe23] 18/4/2024 13:19

What's wrong with that leverage?? More than comfortable.

[vikeshm1] 18/4/2024 13:15

guys the reason shares are in a downtrend and disapponting response today is the massive debt which
no 1 has mentioned including the motley fool which just wants to sell you tips

Debt over 173m dollars at half yr results & over 143m exc leases and this statement
tells us it won't come down much from 1.3 to 1.1 "leverage" - therefore the current price i think is
2 high and will keep declining till debt reduces.

i would be interested buyer if debt went under 120m

[sundance13] 18/4/2024 13:05

Depends how bad but minimum 15-20% fall probably.

[johndoe23] 18/4/2024 13:02

Disappointing reaction. Wonder what a profit warning would have done!!

[eagle eye] 18/4/2024 10:54

Well done to Nat and everyone at Volex.
Great trading update and excellent outlook too.
I would expect the shares to tick up over the next few weeks as investors gradually wake up and digest the news.

[z1co] 18/4/2024 08:54

The second half of the year saw continuing increases in organic revenue, a result of leading positions in attractive, diversified end-markets that possess structural growth characteristics. Exposure to a number of growth sectors, provides the Board with confidence in the Group's ability to make strategic progress even in volatile market conditions. The acquisition of Murat Ticaret also delivered significant incremental revenue, in a largely new end-market.

[blusteradjuster] 18/4/2024 08:49

Beat me to it, zho.

It would be in people's best interests to read the whole update AND understand it.

zho 18 Apr '24 - 09:05 - 6934 of 6937

[74tom] 18/4/2024 08:28

I mean it's very simple really, a business with 10% operating margins can beat top line by $40m and *only* add $4m to the bottom line...

Looks at the past results, underlying operating margins are as follows;

2019 $21.6m on $372.1m revenue = 5.8%
2020 $31.6m on $391.4m revenue = 8%
2021 $42.9 on $443.3m revenue = 9.7%
2022 $56.2m on $614.6m revenue = 9.1%
2023 $67.3m on $722.8m revenue = 9.3%

So if 2024 was $88.4 on revenue of say $905m, it would imply margins of 9.8% and be entirely consistent with the 5 year trend...

[z1co] 18/4/2024 08:06

74tom

That post is suggesting the poor chap was and is still SHORT

[pcok] 18/4/2024 08:06

Reason the profit not such a big increase clearly explained by the stated investment to prepare for future increases in demand. Continuing to lay the foundations for a successful and growing company into the future shows a well run outfit planning for bigger things. This will rerate.

[zho] 18/4/2024 08:05

>>the problem is that the bigger profit beat was only a small ebit beat>>

Perhaps because "In response to increasing customer demand, the Group invested in the further expansion of its global manufacturing base" which I took to mean that Operating Profit would have been higher without additional investment to create "additional capacity to facilitate growth"

[74tom] 18/4/2024 08:03

I take it you haven't done the maths on that Aublune...

First half revenue was $397.5m, on which they reported an underlying operating profit of $37.4m, so margin was 9.41%

At $900m on the nose for full year (it'll be higher), H2 revenue = $502.5m, and if they are slightly ahead of the $84.2m consensus (I'd take that to mean ~5%), then full year underlying operating profit would be $88.4m

That would mean H2 delivered $51.1m on $502.5m revenue at a margin of 10.15%

They even say in the RNS "Operating profit margins improved in the second half of the year"

So no, you need to do more work before coming to incorrect conclusions!

[z1co] 18/4/2024 08:02

Never the less consensus underlying operating profit of $84.2m will also be slightly ahead of expectations.

The market likes company's that beat profits in the current environment.

Share price will rise strongly after the slight pull back at the opening.

Brokers upgrades will also help in the uplift.

[ali47fish] 18/4/2024 07:59

so aublune what is your conclusion

[aublune] 18/4/2024 07:53

the problem is that the bigger profit beat was only a small ebit beat

beat by revenues b $40m+ and maybe on ebit by like $1-2m

ordinarily you would expect operating leverage and a BIGGER percent profit beat on ebit not way smaller

Margin pressure

This is why I dont think it will kick higher than 305p by the close and may drift

read between the narrative spiel from the company

good performance but thats a lot of extra revenue lifting for only a slight profit beat. imagine if they hadnt beaten on revenue

[kadvfn1] 18/4/2024 07:52

Liking the key word "at least 900" Should rerate quickly from here

[z1co] 18/4/2024 07:49

The 5 five analysts covering VLX have a revenue forecast in the range of $849.8 million to $873.0 so there will be massive upgrades to come.

[z1co] 18/4/2024 07:44

Bought this morning after the slight pull back.

Revenue of at least $900m is significantly ahead of the consensus which is $859.5m.

[johndoe23] 18/4/2024 07:31

Exactly that 5-10% profits lol