Zytronic Share Discussion Threads

[cerrito] 28/1/2024 18:44

Had a quick look at the AR and are first glance seems professional and addressing the issues, but need to read more carefully.
Note that non tangible assets are roughly equal to marcap and the majority of this is development expenditure and let us hope they have been ruthless in their valuation.

[illiswilgig] 25/1/2024 08:50

Thank you value hound for the useful snippet.

IMC presentation on Monday 29th at 1pm. The Q&A should be interesting?

I take the new chairmans comment of good visibility of the cost base over the next 12 months - to guide towards neutral cashflow (ex working capital changes) and at around 0.5x TNAV.

Once I managed to decouple my thoughts from what I paid in the past I bought a few more. On the basis of the value with good recovery potential.

Currently looking down the back of the sofa for more cash, but not in a hurry, these turnaround always take longer than I hope.

Not sure that the sales director leaving is a bad thing? I have thought for some time that either the new products are not competitive or the sales team is not particularly good (I don't see their job as easy with the products so low in the supply chain and the level of competition). I have seen more evidence of the product being highly rated than I do of the sales team being highly rated. But its never an easy question to answer and I remain open minded - probably my largest concern - on the refresh of the sales and business development strategy.

cheers

[value viper] 24/1/2024 20:24

Thanks VH for this - it is good to read anything remotely positive here right now.Walking dog tonight I was thinking a 100p potential knock out bid from the right suitor would probably do it unbelievably.It is likely wishful thinking but the lack of director buying MIGHT be indicative of chatter in the background - otherwise it shows little conviction of improvement internally

[value hound] 24/1/2024 19:10

I bought some of these nine days ago at 58.75p. The trouble is, I also bought at 86p in August. Anyway - we'll see what transpires, but FWIW, here's a snippet from Mark Watson Mitchell on Master Investor tonight... (though my own longer-term target is more like 160p)

-----------------------------------

Zytronic (LON:ZYT) – Setting A ‘Gamblers̵7; Target Price

A reversal of corporate fortunes often brings out the stock watchers and spurs them into action.

On Tuesday 9th January, the Blaydon-upon-Tyne-based touch sensor manufacturer announced its final results for the year to end September 2023.

They showed a 30% drop in sales to £8.6m and a £2.0m pre-tax loss (£0.7m profit).

The shares fell back from 80p overnight, crashing to 55p in subsequent reaction.

The company is a world-renowned developer and manufacturer of a unique range of internationally award-winning optically transparent interactive touch sensor overlay products, which are used with electronic displays in industrial, self-service and public access equipment.

Chairman Dr Chris Potts stated that:

“The Group benefits from a strong balance sheet and has good visibility over its cost base over the next twelve-month period.

"With reinvigoration of the Group’s business development function and differentiated technology and products, there are grounds for cautious optimism over the medium term.”

I have followed this group for years, in 2017 its shares peaked at over 605p.

Way back in January 2021, when they were 122.5p, I set a Target of 155p on the shares, ten months later they hit 190p.

But nothing goes in the same direction for ever!

Admittedly to see its shares now at just 59p does give them a certain appeal.

Analyst Caroline de la Soujeole, at Singer Capital Markets, has concluded that:

“We think it is reasonable to envisage broadly stable YoY sales trends in FY24e overall (2H weighted) and good progress being made in returning the business to an EBITDA break-even position.

"We await the presentation of the strategy review before reinstating formal forecasts and recommendation.̶1;

The broker notes that, given evolving industry dynamics, the group’s management have committed to set out a clear strategy for recovery and perspectives on its future direction in due course.

The company ended its 2023 year with £4.7m cash in its balance sheet, which compares to the current £6.12m market valuation.

As I stated above, poor corporate results often bring out buyers.

And so too with Zytronic – as shown by the addition of some 131,000 more shares to the joint holding of Gavin and Sian Smith – taking their position up to 444,493 shares, representing 4.37% of the ZYT equity.

I know that it is only a ‘tiddler’; but I actually fancy that little holding as being a potential winner, especially if the group’s Management gets its act together and wins a great deal more orders from its pipeline of opportunities.

I now set a gambler’s Target Price of 70p on the group’s shares, which could so easily be achieved with the announcement of some good corporate news within the next few months.

[hornets89] 23/1/2024 11:11

IMO any return to profit gets us an easy 100%+ from here, with potential for much higher if things really kick on.

And the downside is capped by the net asset value in the cash & property.

The only way to lose is multiple years of large losses eating into the cash balance. I'd hope they wouldn't be allowed to do this.

I think they call this an 'asymmetric risk/reward profile" ;)

But may require patience.

Bought in yesterday just sub-60p.

Would very much like to see director buys, the relatively low director ownership is the missing part for me.

[value viper] 23/1/2024 07:08

Same Pug about being under water.

[value viper] 23/1/2024 07:06

The squire - accept your points re ex staff and the apparent internal mess - it all lends itself for the need for upheaval in my view and this goes beyond the apparent strategic review that is underway - ZYT should have concluded their strategic review by / before now - things need stirring up and I wonder whether Henry Spain and possibly this newly announced couple (latest RNS) are commencing something.

[the squire at oakley hall] 22/1/2024 22:27

Value Viper
Densitron was (is?) a customer of Zyt and Martin Salter (ex Sales Manager of Zyt) decamped to Quixant, not sure if he is still there but they must be aware of each other
On the question of Shareholding of Directors it tells you a lot that their holding is so small
Loss of Sales Director is telling and how much is being a quoted Plc costing with what apparent benefit

[pugugly] 22/1/2024 22:05

VV= Thanks for starting new thread - Currently well under water -

[value viper] 22/1/2024 21:42

Hi Cerrito - I have started a new 2024 thread for ZYT - let's post there - hoping it will assist the share price - gulp

[cerrito] 22/1/2024 21:29

Value Viper
Thanks for pointing me in the direction of Nexteq and as a ZYT shareholder of a few years it is remiss of me that I have never heard of them.
Be interested on the read across you folk see between them and ZYT both in the Quixant division for gaming and Densitron.I have never heard of broadcast technology in this context and do not know if this is on the radar screen of ZYT.
A quick reading suggests to me that because of their size they have far more control of their destiny than poor old ZYT.

[value viper] 22/1/2024 21:04

Well I thought a new thread was due - 8 years since the last and with the company on its knees. Maybe the new thread can bring a new lease of life. Good luck all.

[value viper] 22/1/2024 21:03

A new thread to mark a new low for the share price.
At 60p, the market value is just £6 million.
£4 million in cash today / no debt.
Tangible assets in the factory mean the operating business and IP are in for free.
Revenues are under pressure but a strategic review is under way.
Current shareholders have a right to be upset in truth - something needs to give.
Watch this space - good luck to investors new and existing.

[value viper] 22/1/2024 20:20

I wonder whether Henry Spain are asking questions - I note since the recent further price slump, no further TR1.
They are down a big % on their investment right now.
I am not clear re. options the management may have but was me who mentioned the need for director buys - for example does the new Chair own 1 share yet - he and the CEO are the key persons in any strategic review I would think.
Whilst they have possibly been unlucky in some areas, how convinced are we that they are really looking to get the share price higher ? I am not convinced myself.
The simplest was out is for it to be bid for and taken off the market.
Of interest also is the comment in the above header from when the thread was set up back in 2016.
The co has sat on a very big cash balance for years - why ? Should they not have acquired more or paid a special dividend ? How long have they relied on this cash as the core to their investment case - hhmm.
The more I ponder this, the more I think it requires new owners. NRI

[nickcarr1] 22/1/2024 15:10

Bought in today. The discount to cash + property value is too much for me to ignore, especially with sentiment through the floor and a real possibility of a 'bottom' in profitability (though I'm not expecting a miraculous turnaround in the short term).

Interested in their strategic review... could be a catalyst but it's very open-ended for now.

Totally agree with the post above saying we need to see some director buys.

Also agree with the person who said somewhere that there's little need for this to be a public company at this scale. So that could end up being another catalyst one day.

[value viper] 19/1/2024 16:38

I wonder who Mr & Mrs Smith are now at 4.37%

[value viper] 17/1/2024 12:06

No noises from Henry Spain yetNo director buying yet which I would like to seeSolid update from Nexteq / NXQ this morningI believe ZYT shares too low but wtfdik

[asagi] 12/1/2024 12:53

Good post rickjmason.

I think that Zytronic claimed very early on that mobile touchscreen was going to be a very low margin market. Not sure that was every incorrect but it doesn't mean the strategy was to avoid it was right.

Now they seem to be avoiding the 'flat rectangle' touchscreen market but serving a smaller market brings volatility.

Asagi (long ZYT)

[rickjmason] 10/1/2024 14:27

I bought shares in ZYT in the 2000 IPO at 110p per share.They peaked around 350p and fell as low as circa 20p during the time I held them and I eventually got out with a modest profit. At the time of the IPO, the then chairman (whose name I can't remember) was talking about capturing "just" 20% of the touchscreen market which I think was worth about $1billion back then. I presume the market is now worth several times that figure but, adjusting for inflation, the company's turnover is no greater now than it was back in 2000. I think 23 years is long enough to come to the conclusion that there isn't anything like the demand for their products that they have always seemed to believe. I emailed the chairman back in the early 2000s to enquire if their screens could be scaled down to supply the then nascent touchscreen phone market. I never got a reply (I had received responses from the chairman for other enquiries) so either they couldn't or they missed the opportunity of a lifetime. It's probably about time they gave up, sold off the IP and physical assets and returned the money to shareholders.

[deanowls] 10/1/2024 10:37

Is it something that Amscreen would be bothered with?

[cerrito] 10/1/2024 09:46

I have never heard of ZYT having license income nor does it get income from servicing its equipment.

[kiwihope] 10/1/2024 08:56

As an investment for me this is in the balance. On the upside there is no chance of going bust in the short term, so importantly they have time to turn things around. If they can then the share price could easily double or triple. It won't take much improvement for this to happen.
On the downside this could be a classic value trap which is always undervalued because there is never any sign of growth. It's value slowly declines over the years.
I need to do some research so I can try and assess the chances of future growth. Is the company caught in a cyclical downturn made worse by the pandemic or are it's growth days over. Until then I will continue to hold...

[cliffpeat] 10/1/2024 08:52

Does ZYT have any licence income from from 3rd parties in respect of its patents?

[cerrito] 09/1/2024 22:08

I sold about 40pc of my holding this morning, spooked by the H2 figures and the tone of the report. While having had a closer look at the report I am not minded to buy back in, I do ask myself if it was materially worse than what was sketched out in the December 18  TU of and why I did not sell then in the 80's.

Disappointing that no IMC session. I see that Singers are in a funk and are awaiting the presentation of the strategy review before reinitiating forecasts and recommendations. I got no sense as to when this will be presented.

I can understand why there is no dividend but do ask myself how low the price has to go before they even think about doing share buybacks.
I note the overdraft facility and when the AR comes out I will check if Barclays have security.

The instis who got out in the tender offer were smarter than me. Perhaps they saw through the cash balances and freehold property and saw a business which does not seem to have much control over it's destiny. 


I was spooked by the reference to pricing pressures and in the following quote from the CEO and would have wanted to explore in an IMC
quote
However, although the volume of Open opportunities has shown an improvement to pre-pandemic levels, the recovery in CPLV of those opportunities lags somewhat behind a full recovery, due in the main to post-pandemic pricing pressures emanating from Asian-based competitors.
unquote

I did not understand what product the FD was referring to here
quote
Group revenue was down 30% year on year to £8.6m (2022: £12.3m) and has been impacted by several situations, with the biggest effect being the unexpected demise of a key end-customer in the first half of the year in the Gaming market. The circumstances surrounding this are explained in the earlier CEO's statement, but following this situation, the Group made no further sales of this product over the remainder of the year.
unquote

[asagi] 09/1/2024 13:24

However, I wonder how much of this work falls into the category of “an answer looking for a commercial question

neatly put CliffPeat. I also think that the departure of a Head of Sales is the worst possible departure given the newsflow over the last few years. Who leaves a sales job when they have confidence in the relevance, appeal and opportunity for the product? I'm guessing the salesperson just got sick of flogging a dead horse and quit to go and sell something sellable.

Asagi (long ZYT)