WIN Plc Share Discussion Threads

[aleman] 21/3/2006 11:50

Woodcutter - your cashflow point is the most obvious one I picked up on, apart from the very healthy growth. There seemed to be a trend of increasing debtors in H1 which was understandable given the nature of the contracts with bigger businesses they were winning. Large companies like to hang on to their cash as long as possible and tend to pay late. I suspect the acceleration of this trend in H2 may be due to the new business brought by Imako, and could be a sign of success, but it must be monitored closely. Does anybody know what payment terms are like in Greece? It may be normal to pay very slowly there so scaling up the business would automatically be very demanding on cash.

[jwe] 21/3/2006 10:16

Personally i can`t see the forward eps being less than 27p.

[recruiter] 21/3/2006 09:32

I must be losing the plot.
Exceptional results, low pe, great growth & growth prospects.........& people are selling ??????????????????????????

If a broker note comes in with a BUY recommendation & a forward looking eps of about 27p or so, these will zoom up..........

[wjccghcc] 21/3/2006 08:45

Woodcutter, if you look at the notes, the increase is all in trade debtors, not accrued income which is where you usually find it if a company is booking earnings too quickly. As you say, the debtor days is not particularly big at 73 days. In fact, it's probably the trade creditors which is too small because of their interest bearing prepayments.

The other comfort is that the interest income was 292k which implies an interest rate of 10.1% on their average net funds. Clearly that's not achievable unless what they say is true. Using an interest rate of 4% implies net funds of 7.3mm vs the average of 2.9mm in the balance sheet so it's likely that most of the mismatch in working capital is interest bearing.

Confusing I know but I suppose if they get a significantly better interest rate from the prepayments than from the bank then it makes sense for them to do it.

[goonertone] 21/3/2006 07:52

woodcutter.

Very valid points and I have adjusted my post accordingly.

Only further point on this is without knowing the amounts involved at start and end of year it is difficult to work out how much is involved in these early payments to clients.

Interest for the year was 300k so at 5% say £6 million on deposit. Average cash balance for the year was £3.75 mill so a very basic way of looking at it is that the cash balance is effectively £2.25 mill short.

However you cant say whether this is good or bad without knowing how short it was at end of 2004.

Without finding out exact accounting principles used it is purely an individual play on how you see the company progressing.

GT

[woodcutter] 21/3/2006 07:21

I don't know is the short answer but i don't like the uncertainty of companies that show strong profits which are out of sync with their cash flow. I've seen it before when clients have been invoiced for products that they have only agreed to trial, i guess you'd need to look at the notes to accounts to determine how turnover is accounted. The prepayments and accrued income in the list of debtors seems big i'd be interested to know what this has been spent on.
By my cals (trade debtorsx365/turnover) the debtor days are 73 days which i guess is better than most. Just seems odd really the increase in turnover and profitability and the reduction in cash balances.
I feel these kind of mobile service providers do have great potential and hold rgo from early days. I don't hold win but have been watchng for a while, would need some convincing on the cashflow before buying in, i think rgo looks a better story.

[goonertone] 21/3/2006 06:16

Debtor days have increased but this could just be down to the change in mix of products.

Is it not more likely that the cashflow skew you refer to is due to the following:

"Interest income has grown significantly partly because of the increased cash
balances raised at the time the Company was admitted to AIM. In addition, for
some customers, the Company collects revenues from the network operators on
their behalf and makes interest bearing advance payments to these customers
earlier than they are otherwise due."

GT

Adjusted following woodcutter reply

[woodcutter] 21/3/2006 00:31

My guess is that the share price is probably depressed due to the poor cash flow performance. Look at the increase in debtors and creditors in the table.

Reconciliation of operating profit to operating cash flows

Operating profit 2,798 1,468
Depreciation and amortisation charges 305 160
Increase in debtors (5,710) (3,499)
Increase in creditors 1,831 3,472
Increase in provisions 125 50
--------------- ---------------
Cash flow from operating activities (651) 1,651

It doesn't look that good operating profit and cash flow from operating activities are out of balance compared to last year. They seem to be taking longer to get paid yet paying their suppliers more favourably??

[tole] 20/3/2006 20:49

WIN nearly doubles profits
Mon 20 Mar 2006

LONDON (SHARECAST) - Wireless data services provider WIN nearly doubled yearly pre-tax profit as it said all major sectors of the market for the mobile data services grew significantly in 2005.

Pre-tax profit rose 93% to £3m from £1.6m last year on turnover that rose 36% to £44m compared with £32m in 2004.

The group said that although it is operating in a competitive market, it has succeeded in growing overall margins by increasing the levels of business in the higher value added sectors.

"Margin pressure is expected to remain but market share appears to be continuing to migrate towards the larger mobile service providers such as WIN which will make it increasingly difficult for smaller participants to compete," added the group.

[this_is_me] 20/3/2006 18:54

The longer the share price remains stuck at these levels the greater the explosion when it does finally break upwards. At this rate it could be any time in the next 2 years.

[recruiter] 20/3/2006 16:35

if we are on a normal tax charge, then a growth of even 20% (being conservative) would put a future eps of 28p.
pe of 15 = 420p.

[wjccghcc] 20/3/2006 16:31

I hold both BTW.

[wjccghcc] 20/3/2006 16:29

jwe, they'll base it off the fully taxed diluted EPS of 21.8p so 20% growth would be 26p EPS forecast.

Historic PE for WNN is 14.6 at 320p. MOB's results next week at which point theirs will be 20. Having said that, the market pays very little attention to historic PEs - it's current year that counts together with the likelihood of meeting those forecasts.

[jwe] 20/3/2006 16:19

WJCCGHCC-As WNN acheived an eps of around 23p for 2005 at an increase of about 60% it would look cautious in the extreme for brokers to factor in an increase of less than 10% for 2006.My other point would be that WNN are trading on a historic p/e of 13 or so not a forward one.

[recruiter] 20/3/2006 15:38

strange old day, basically MM's closed the book.
I tried dummy trades, buys & sells, couldnt do either in any quantity at all.

Results were great, good news within, i.e. Vodafone, also reads as if WIN SA is ready to take off.

[Abuse team] 20/3/2006 15:29

Post removed by ADVFN

[beckaroo] 20/3/2006 15:28

If it stays at this level I have us about 4 more days before a Golden Cross on the 20 and 50 day SMA occurs.

Don't know much about charting but this is suppose to be a bullish signal.

[wjccghcc] 20/3/2006 14:59

Actually MOB is on a PE of 13 for 2006 as is WNN although I expect WNN to be upgraded to approx 25p of EPS for this year.

[milesy] 20/3/2006 14:55

Do you think the market always reflects fair value then? If so don't buy.

>M

[bernstein] 20/3/2006 14:43

Bridggar, the prob is that no one knows about this company (imho). Press comments should increase awareness.

[this_is_me] 20/3/2006 14:36

It has just approximately doubled its profits and is on a P/E of 14. MOB, which is in the same general area is on a P/E of 40. It doesn't make sense.

[bridggar] 20/3/2006 14:18

Erm, pardon my ignorance, if the results are so great, why is the market reacting so indifferently?

[yorked] 20/3/2006 10:50

Excellent 2005 results and bullish outlook for 2006, and it will be over 400p very soon.

[jwe] 20/3/2006 10:36

Looks like a gradual rerating may be taking place,anything below £3.50 is too cheap,fair value looks to be around the £4 mark on what we know(although you could easily argue for £4.60 based on a p/e of 20).I await any new forecasts for 2006.