Vipers Ox
12 Jan 2016
Re: Congrats. That's very big of you freedom - a clear gentle- man/womanI'm sure your house purchase has proved a good investment as well and if cash flow allows take a look at CHT. Good 2-3 year investment in a fairly bullet proof stock.
freedom-thirty5
12 Jan 2016
Congrats. Well, I had to sell my holding in KBC 2 years ago to finance a property purchase, and although I made a profit, i certainly didn't get the price the shares are sitting at today after this all cash offer.A sincere and slightly envious "well done" to everyone who was holding these shares at close of business yesterday! The shares are up almost 50% on yesterday's close!
r21442
23 Sep 2015
IC still buying Aim-traded KBC Advanced Technologies (KBC:112p), a consultancy and leading software provider to the global hydrocarbon processing industry, continues to buck the downturn in the energy sector and is set to continue to do so.In the first half of this year, the company's pre-tax profits edged up 3 per cent to £4.2m on a 5 per cent rise in revenues to £36.2m, a rare performance indeed for a business operating in an industry that has seen a savage downturn in the past 12 months. True, cost cutting has played its part as KBC's board took the decision to take overheads out of the business to align the cost base given the challenging market environment. Headcount was cut by 10 per cent in the half-year, including the closure of the company's New Jersey office, at a cost of £800,000. These measures are expected to generate annual cost savings of £3.5m, the full benefit of which will be seen in the second half.But this is far more than a cost-cutting story as 85 per cent of KBC's revenues are derived from oil refiners, the part of the industry that has been doing remarkably well, whereas it has been the upstream segment that has seen the savage cost-cutting and project deferrals. Indeed, the combination of a plunging oil price and rising output has sent US Gulf Coast crack spreads to five-year highs, a sign of refiners' profitability, which has enabled KBC to increase its own pricing on some contracts. Moreover, given that KBC's smart software and consultancy activities optimise performance and profitability for cost-conscious clients, demand is well underpinned. In fact, the order book was up 17 per cent to £74m in the six-month period and since then KBC has won two important contracts, a three-year award worth $8.5m (£5.5m) with a Middle Eastern client for margin improvement and workforce capability development across three refineries, and its largest award ever in the Former Soviet Union.It's worth noting that half the order book results from a four-year contract worth $100m (£64.5m) with Ecuador national oil company EP Petroecuador. This alone accounted for £13m of KBC's first-half revenue of £36m and offers solid visibility on future revenues. It also explains why trade receivables spiked from £30m to £43m year on year. However, I understand that all the December receivables from EP Petroecuador and other clients have been collected, in addition to a further £6m of receivables since the June half-year-end. As a result, KBC's net funds of £10.6m are set to rise to somewhere between £13.2m and £14.7m by the year-end, according to finance director Eric Dodd. That's important as running a strong balance sheet is enabling KBC to tender for further multi-million-dollar contracts without stretching its finances.The bottom line is that KBC is bang on track to deliver the 10 per cent rise in pre-tax profits to £10.5m as predicted by analysts and reward shareholders with a 9 per cent hike in the dividend per share to 1.2p. So after stripping out net funds from its market value of £91m, in effect the equity is being valued on around seven times underlying operating profit estimates. That's hardly a punchy valuation for a company with a high-margin technology business that makes around £7.4m of operating profit on turnover of £21m and could be easily worth £60m on a standalone basis. So having advised buying KBC's shares at 69p ('Fuelled for growth', 5 May 2013), reiterated the investment case at 110p (‘Riding an earnings upgrade cycle’, 18 June 2015) and at 123p (‘Fuelled for strong growth’, 12 August 2015), I believe a return to the 142p highs dating back to June 2014 is a reasonable target. On a bid-offer spread of 111p-112p, I rate KBC's shares a buy.
II Editor
08 Sep 2015
NEW ARTICLE: Trends and Targets for 9/09/2015 " KBS ADV.TECH. PLC (LSE:KBC) continues our Oil Equipment, Services & Distribution Sector week. Running the numbers against shares often leaves us feeling a bit "same old, same old" but KBC actually raised our eyebrows a tad. It's quite ..."[link]
r21442
12 Aug 2015
Yet another IC 'buy' Shares in Aim-traded KBC Advanced Technologies (KBC:123p), a consultancy and software provider to the global hydrocarbon processing industry, appear on the cusp of taking out the May high of 126p following a positive pre-close trading update ahead of half-year results in September.Underpinned by a firm order book, and good visibility on the future pipeline of contracted work and software sales, KBC's board anticipate hitting analysts full-year pre-tax profit estimates of £10.5m, up from £9.5m in 2014. It's certainly rare for a company exposed to the oil industry to be doing so well, but KBC's strategy has been to concentrate on key regions where it believes growth will emerge while at the same time proactively keeping costs in check in light of the difficult conditions in the energy market.For instance, in the first half of the year, the company won £9m of new contracts in the Middle East and North Africa including ones with national oil and gas companies in Saudi Arabia, Kuwait, United Arab Emirates and Jordan. And because KBC's software enables businesses to reduce capital and operational spend, so producing attractive efficiencies for potential customers, there are good reasons for cost conscious clients to consider the company's offering. The focus on downstream refining in particular, a segment accounting for 90 per cent of KBC's revenues in 2014, is another reason why business is holding up so well. Indeed, US Gulf coast crack spreads, an indicator of the gross margin earned by refiners, are close to a five-year high, having recovered sharply since the final quarter of 2014. In addition, KBC's board have taken overheads out of the business to align the cost base with what is clearly a more challenging market environment. In the first half of this year head count was cut by 10 per cent, including the closure of the company’s New Jersey office, at a cost of £800,000. These measures are expected to generate annual costs savings of £3.4m. This slimmer cost base partly explains why KBC’s operating margins are predicted by analysts at research firm Equity Development to rise by 150 basis points to 14.7 per cent this year even though revenues are forecast to fall by 4 per cent to £73m.A value proposition It's also fair to say that there is clear value on offer in the company's shares and that fact alone is enough to support the current rally. That's because KBC's latest reported net cash figure of £15m is forecast by analysts to grow to £19.2m by the year end, a sum equivalent to 23p a share. That's significant in relation to a market value of £100m. Or put it another way, if you strip out net funds of £15m, then the company is being rated on 8 times current year operating profit estimates of £10.7m. To put that rating into perspective, the sector average multiple on this basis is 11.4 times operating profit, according to analysts at Equity Development.Moreover, the valuation anomaly is even more glaring once you factor in the mergers & acquisitions activity we have been seeing in recent months. Indeed, when Schneider Electric injected its Invensys software business into FTSE 250 software company Aveva at the end of July, the unit was being valued on over 15.5 times operating profit on a standalone basis. KBC's simulation software accounted for 70 per cent of its annual profits in 2014, so even applying a lower rating for the company to reflect the contribution from less valuable consultancy activities, and the fact that KBC is a small-cap company, too, the ratings discount is simply too deep.So having advised buying KBC’s shares a couple of years ago at 69p ('Fuelled for growth', 5 May 2013) and last reiterated the investment case when the price was 110p (‘Riding an earnings upgrade cycle’, 18 June 2015), I firmly believe a return to the 142p highs dating back to June 2014, and ultimately to my 165p a share medium-term valuation, are still very sensible targets. On a bid-offer spread of 1
r21442
18 Jun 2015
Re: Another IC comment Featured again today...A key feature of many of the companies I follow is the scope for repeat buying opportunities. For instance, shares in Aim-traded KBC Advanced Technologies (KBC:110p), a consultancy and software provider to the global hydrocarbon processing industry, rallied hard from 109p to 126p after I highlighted the price was on the cusp of taking out last autumn's highs at 110p (‘Three value plays’, 19 May 2015). I originally advised buying a couple of years ago at 69p ('Fuelled for growth', 5 May 2013) and still believe a return to the 142p highs dating back to June 2014 is a realistic target. Furthermore, with a decent operational performance, then a fair value target price of 165p is a sensible medium-term valuation.It was therefore comforting to read the trading update at the annual meeting yesterday when chairman Ian Godden disclosed that his company has won £9m of new contracts in the Middle East and North Africa in the first five months of the fiscal year, including major contracts with national oil and gas companies in Saudi Arabia, Kuwait, United Arab Emirates and Jordan. KBC’s strategy has been to concentrate on key regions where the company believes growth will emerge while at the same time proactively keeping costs in check in light of the difficult conditions in the energy market. It’s hardly surprising that demand is holding up as KBC’s software enables companies to reduce capital and operational spend, so offers attractive efficiencies for customers no matter the operating environment. I also understand that the two acquisitions the company made last year have both been performing well. Of course, KBC’s board has acted sensibly and cut costs in the current environment, taking £3.4m out of the cost base at a one-off cost of £800,000. So although revenues are expected to fall by 4 per cent to £73m this year, operating margins are predicted by analysts at research firm Equity Development to rise by 150 basis points to 14.7 per cent. This explains why underlying pre-tax profits are forecast to rise by 10 per cent to £10.5m in fiscal 2015. It’s also worth flagging up that KBC's latest net cash figure of £15m is forecast by analysts to grow to around £19.2m by the year-end, a sum equivalent to 23p a share. That’s significant in relation to the company's market capitalisation of £90m. Or put it another way, if you strip out net funds of £15m for the current market capitalisation of £90m, then the company is currently being rated on only 7 times current year cash adjusted operating profit estimates of £10.7m. To put that rating into perspective, the sector average multiple on this basis is 12 times operating profit.So with KBC’s shares pulling back to their chart break-out point (110p), and tracing back to the 50-day exponential moving average (110p, then from my lens at least this looks like yet another repeat buying opportunity with the 14-day relative strength indicator now showing an oversold reading of 40. Priced on a bid-offer spread of 109p to 110p, and offering 50 per cent share price upside to my year-end target of 165p, I continue to rate KBC’s shares a buy.
Vipers Ox
20 May 2015
Re: Another IC comment Thanks for posting. My target price is £2.50 by year end 2016, if it hasnt been taken out by then.
r21442
19 May 2015
Another IC comment KBC break-out imminentI have been following with interest developments at Aim-traded KBC Advanced Technologies (KBC:109.5p), a consultancy and software provider to the global hydrocarbon processing industry.I last updated the investment case at the time of the company's fiscal 2014 results in March when the price was 87p ('Blow-out results', 18 March 2015), having initiated coverage at 69p ('Fuelled for growth', 5 May 2013). Since my last article KBC's share price has moved up 23 per cent to 109.5p and is now on the cusp of taking out last autumn's highs at 110p. This price action should be noted because a close above 110p would signal a major share price break-out and one which, in my view, paves the way for a return to the 142p highs dating back to June last year. Moreover, with a decent operational tailwind, I expect my fair value target price of 165p to be challenged in due course.It's easy to see the company is gathering investor interest. Firstly, at the end of last month, KBC Advanced Technologies entered into an agreement with Kongsberg Oil & Gas Technologies to develop stronger simulation software integration and more effective engineering and operations workflows for the oil and gas industry. At the same time the parties have signed a reseller agreement to enable them to cross-sell their leading software technology products together as a complete suite for simulation, optimisation and operator training across the breadth of hydrocarbon production and facilities. This can do no harm at all to earnings expectations for the year ahead.Secondly, KBC has recently appointed a new finance director, Eric Dodds, formerly finance chief at software company Morse prior to its takeover five years ago. His appointment is a good addition as he brings in a wealth of experience in financial management of both consulting and technology companies.Thirdly, there is an active buyer in the market, Kestrel Partners, the investment manager to Kestrel Opportunities, a Guernsey-based cell acting on behalf of wealthy private clients. In fact, in the past couple of months Kestrel has purchased more than 750,000 shares in KBC to lift its stake to 12.25m shares, or 14.89 per cent of the issued share capital. Oliver Scott, non-executive director of KBC, is a partner of, and holds a beneficial interest in, Kestrel Partners and is also a shareholder in Kestrel Opportunities. In other words, there has been indirect share buying by an insider.Fourthly, the valuation is still attractive. That's because analysts at brokerage Cenkos Securities and research firm Equity Development predict that KBC should be able to increase underlying pre-tax profits by 10 per cent to £10.5m this year. This means that once you strip out KBC's latest net cash figure of £15m, worth around 18p a share, from the company's market capitalisation of £90m, then the shares are being rated on less than 10 times post tax earnings, a near 40 per cent discount to the small cap software average for sub-£100m market cap companies.In the circumstances, I feel that KBC's shares are still worth buying on a bid-offer spread of 107p to 109.5p. My year-end target is 165p. Buy.
noble3r
18 May 2015
Re: More Director buying Kestrel the investment fund have been topping up their HOLDING for some time. It doesn't show any sign of stopping either. The recent announced alliance with Kongsberg is very exciting. Fundamentals due soon are we are all expecting positive growth arcoss the accounts. I have studied other CPY's financials in this sector relative to their MCAP and for me KBC stands out as being undervalued. To quote Kestrel's fund fact sheet for March 2015 ' we continue to be optimistic about KBC which remains on an undemanding rating'
Panofscouse
18 May 2015
Re: More Director buying KBC non-exec director Oliver Scott's Kestrel investment company bought 100,000 on May 8 at just over 100p, then dived in for a similar tranche on 13 May at nearly 106p. There seems to be a pleasing growing confidence in this company.
r21442
18 Mar 2015
Latest IC comment The oil price may have slumped last year, but there is no stopping Aim-traded KBC Advanced Technologies (KBC: 87p), a consultancy and software provider to the global hydrocarbon processing industry, which reported a blow out second half of 2014. The headline numbers made for a pleasant read: underlying full-year pre-tax profits increased 13 per cent to £9.5m (above analysts' expectations) on revenues ahead 17 per cent to £76m; the company's higher-margin technology business had a record year; and the pipeline of new work is at an all-time high of £88m, up almost £10m year on year. In turn, shareholders were rewarded with a 10 per cent hike in the dividend to 1.1p a share. So, how did the company manage to turn in such a strong operational performance in the face of a savage downturn in the oil and gas industry? An operational efficiency and profit improvement service The explanation lies in the fact that KBC is not being impacted directly by the US domestic oil exploration downturn since a large proportion of its business is in the downstream part of that market which is less adversely affected. In fact, around 90 per cent of its revenues are generated from downstream petrochemical plants, which has insulated the company from the widespread industry belt-tightening in the upstream sector. So, although chairman Ian Godden predicts "a scenario of low oil prices for at least 18 months and some further belt-tightening by our clients", there are definite positives underpinning the business case.For example, more of KBC's clients need to optimise their existing assets in this pricing environment; the company's technology solutions are helping clients optimise production rates at lower energy costs; as oil companies reduce their work forces, they will need consultants to fill the gaps; downstream refining profitability is returning to higher margins than have been seen for several years; and upstream operators are looking to drive more efficient production. Indeed, included in the year-end order book is a $48.6m (£33m) two-year contract extension with an existing South American client, the third-largest contract in the history of the company. The agreement involves KBC expanding the licence of its refinery-wide simulation software suite, Petro-SIM™ and the associated SIM-suite™ reactor models, to the client's refinery business. The company also won a notable upstream software deal worth £3.3m. Smart acquisitions In addition, KBC has been expanding aggressively through acquisition and successfully too. Last summer, the company acquired FEESA, a global leader in upstream hydraulics, for £11.2m. As a result, the enlarged operation is able to offer clients profit improvement programmes across the full hydrocarbon value chain. The business has been targeting larger, more capital-intensive, higher-margin projects, having raised £23m in a placing at 115p a share last May to strengthen its balance sheet. Net funds ended the year at £11m, but working capital requirements have peaked and net cash has since increased to £15m in the past couple of months. That's a significant sum in relation to KBC's market capitalisation of £70m, and its net asset value of £66m. It also means that the company has the firepower to seek out further complementary acquisitions, and seek out more contracts, while comfortably meeting its working capital needs. In fact, I understand that the company's technology business won a major European contract from a rival in the final quarter of last year, highlighting the value in this higher-margin proprietary software business and one accounting for 70 per cent of full-year profits. A positive earnings outlook Following the earnings beat yesterday, and factoring in the robust order pipeline, analysts at broker Cenkos Securities and research firm Equity Development predict that KBC should be able to increase underlying pre-tax profits by 10 per cent to £10.5m this year. On
Welsheagle
08 Jan 2015
More Director buying Ian Godden, Chairman, bought 50,000 shares in the company on the 7th January 2015 at a price of 90.00p. The Director now holds 276,000 shares.
Welsheagle
18 Dec 2014
Director buying Oliver Scott, Non Executive Director, bought 50,000 shares in the company on the 17th December 2014 at a price of 84.00p. ...
equity_dev
03 Dec 2014
New Equity Development note Hi,We have published a new note on KBC today.To access it please visit www.equitydevelopment.co.uk Registration is free.Thanks,The Equity Development Team
