Waterlogic Share Discussion Threads

[mikey_b] 09/3/2007 11:20

keep it in your mind then hawky ;-)

[diogenesj] 09/3/2007 11:09

OK, Liars, me too please. :-)

[cockneyrebel] 09/3/2007 11:06

email it to me Liarspoker but I bet I know it already :-)

CR

[liarspoker] 09/3/2007 11:05

CR - I have one. ;o)

[cockneyrebel] 09/3/2007 11:01

Yep, if every acquisition was so easy life would be a doddle!

When you buy a company you do due diligence on the books and see how it is performing but you cannot see every nook and cranny as far as problems in their IT or logistics till you own the company surely?

Dan Stewart have reduced the eps forercast to 10.3p to 12.3p going forward which is prudent as you don't want a slight miss next year - heaven forbid they only do 10p and the growth is only 40% over this year and the PE is above the 8 it is currently sat on lolololol! What would the shares do then?

I reckon there's every chance they still meet the 12p+ eps for next year as these are issues in this year. Without these problems they would have done £1.3m+ pretax in H2 alone - the forecast for next year is now £2.3m from Dan Stewart - if they just repeat H2 profit this year in the next two halves they do £2.6m witrh no further organic growth!

Yep, we have the Pugugly's here that were not here and so clever before the trading update, that foresaw the technical issues and won't be buying - good. He's done a 'quick and dirty' review in 30 mins after the results so he knows better than everyone else lol.

The only difference here today is that forecasts are lower but the shareprice never reflected forecasts in the first place imo.

WTL did 5p eps last year, will do 7p+ this year (they have already said basically today with £1.8m pre-tax) and are forecast to do 10p+ next year. That is 40% compound earnings growth on a fwd PE of 8 + a 3.5% yield. And they have whether a major setback.

Show me 40% growth on a PE of 8 anywhere else and I'll probably buy it or already own it.

CR

[grahamburn] 09/3/2007 10:05

May be a one off, but surely a truly competent management (as CR says they have been in place for 10 years and have, to date, a good record etc) should have foreseen a logistical problem coming up on the wings. Or were (are) they too keen to expand at any price?

I fear the jury may well have to stay out on that one - especially as the RNS says that they are ready to expand again. Are they? Will they make a similar basic mistake again? Or are they becoming too large for the in-house management who may have been good at running a small company, but may - just may - be getting a little out of their depth.

Too much optimism on here this morning, I fear. Not uncommon with AIM shares!

[its the oxman] 09/3/2007 09:44

Was a bit cautious on this one and not so sure i want to buy anymore given other market options, or at least not at this price - admittedly still cheap but not as compelling a valuation as before - guess my concern now is whatt happens on those big down days in the market without the buying support we've seen up to now - reckon on a bad day it could come close to testing old support sub 70p which is when I'll consider buying if it does get that low. gl all

[doubleorquits] 09/3/2007 09:36

Yes - not sure about 10.3p though. I think if I read the RNS correctly they will beat as I reckon that the problems are a one-off and according to my interpretation of the RNS steps have been taken already to rectify this. DS have only lowered their target by 10p (from 120p) and on a forward PE of only just over 10 with their new numbers, WTL still look good value - just not as good as yesterday. However, if things have been rectified the EPS could be nearer the original figure - perhaps they are being over-cautious now.

[pugugly] 09/3/2007 09:31

What else do you expect from the house broker. just done a quick and dirty review. Do not like gearing - Too high imo if there is a downturn in the economy and consequential decline in stock turn and hence operating profit.

[tole] 09/3/2007 09:25

Spot on with revised FY07 @ 7.3p and FY08 @ 10.3p

[liarspoker] 09/3/2007 09:20

DAN have slapped a target price of 110p on this.

[mongrels1] 09/3/2007 08:51

However news such as this is announced, it is always going to be a shock to the market.

Reading the update with care, the comments are extremely upbeat about the future.

[hattori_hanzo] 09/3/2007 08:44

I've had the odd duck now and again, but in my defence I was very drunk at the time.

[cockneyrebel] 09/3/2007 08:36

I disagree Measureguy.

They may have known of a problem but couldn't quantify the cost till nearing H1 end. So what is best - guess at the cost or make a proper assesment and annouce it properly once quantifiable? Someone knew they had a prob and was selling but there were not selling below this level so they might have had a reasonable ideait was a measued amount but not known the exact fig too.

Anyway, this management has been running this co for about 10 years or more and have grown profits constantly. Geoff Boycott had the odd duck now and again.

CR

[masurenguy] 09/3/2007 08:24

I think that you are right CR but Buffin also has a very valid point. I'm always uncomfortable with management credibility when this kind of situation arises. They have obviously known about this for quite a while and yet not indicated anything. This is completely different from losing a large customer, incurring a significant bad debt etc which can come out of the blue.

This has been on my Watchlist and I was looking for the right time to move in. The recent seller made me hesitate and it now seems that they knew what was in the pipeline before almost everyone else.

[cockneyrebel] 09/3/2007 08:04

In reality these should be marked up now we know sales are in-line.

I guess there will be a few Really Horrible Penny Share readers that can't work out value and need to be told what to do but these are cheap imo.

The management here have been in place for over a decade or ttwo with increasing profits for years - it will be righted imo

CR

[buffin] 09/3/2007 08:01

The problem is the light this casts on management. Spending this amount, they must have known for some time that market expectations were unrealistic.

There will be some who will be less ready to trust them in future.

(No position)

[doubleorquits] 09/3/2007 07:52

Yep a 22% downgrade to profits is not a good start to the day but looking deeper it does appear to be a one-off which will hit this year but not next due to problems with the integration of Coolectric. The share price will fall (down 9.5p as I write) but should be underpinned by the fact that the forecasts for next year should remain unchanged. So at 80p we would still be on a PE of around 6.5 - the beauty of finding lowly rated shares IMO. We have been told:

"The Board believes that as a result of various steps taken to correct these
issues Waterline is in a stronger position to pursue further growth"

Short term pain for long term gain I reckon. And the markdown has probably made it such that only the desperate will be want to sell!

EDIT: HH - yes instincts are sometimes an excellent indicator. So, sadly, is hindsight!