gretel
08 May 2018
New forecasts from N+1 Singer N+1 Singer have today revised their forecasts downwards following the warning, and have re-set their target price to 151p.Their new forecasts are:this year (to 31 July'18) : 11.2p EPSnext year (to 31 July'19) : 14.5p EPSwith 1.5p and 1.6p dividends respectively.So we are only 3 months away from a year where the current year P/E will be just 7.4.They conclude:"Investor sentiment has been badly dented by the rapid reversal in outlook and given rise to concerns over customer retention and competitive positioning. However, there are enough indications that this weakness is temporal and the current valuation suggests significant upside if positive momentum is restored in Q4. We set a new target price of 151p."
Carefully Does It
26 Apr 2018
Volatility The order of the time is volatility.It might revisit the recent 90p low before bounce or gap up to > 160p soon.If you bought during this period, and not a trader, best to ignore and focus on the real world instead.Might see some RNS activity explaing the changes in ownership.One to buy and forget.
Carefully Does It
25 Apr 2018
Re: large buys I know I'm wrong but what if this has been encouraged to allow some deep pockets to join the show below the 165p placing price?Buying at these volumes recently would have pushed the price well over 200p.The recent reaction has been excessive and the only beneficiaries would be shorters and people looking to buy in at volume as cheap as possible.
skytrainbkk
25 Apr 2018
large buys 3 large buys @ 15.52 350,000 250,000 613,356 at 120.00 (source - morning star)
Carefully Does It
25 Apr 2018
Re: Rodney Potts 99% sure he's holding.It's in his blood given his industry background.
skytrainbkk
25 Apr 2018
Rodney Potts Be interesting to know what Mr Potts is doing , he holds about 10% off the company wonder if he's selling , buying or holding
Carefully Does It
25 Apr 2018
More colour They are pushing margin (may account for churn) and investing for the future offering and still managing to grow names. 2 of the losses were down to streamlining software suppliers at customers."In the period, the mix of revenue from new and upsell deals SHIFTED TOWARD HIGHER MARGIN direct deals offset by the revenue attributable to non-authored solutions. The Group maintained the strong levels of profitability delivered in prior periods and adjusted EBITDA increased by 180% to £8.4m (31 January 2017: £3.0m), adjusted operating profit of £6.2m (31 January 2017: £1.9m) and statutory operating profit of £2.9m (31 January 2017: £1.0m).Underlying operating cash inflow in the period since 31 July 2017 was £5.9m before a one-time cash outflow related to the Acquisition of £3.8m. The Group invested £2.7m (excluding any acquisition based activity) of which £2.3m was in capitalised development costs and £0.4m was in technical and physical infrastructure. The Group serviced its finance with bank interest payments of £0.4m and a dividend payment of £1.3m."
Carefully Does It
25 Apr 2018
Re: Paul Scott's view PROACTIS solutions are used in approximately 1,000 buying organisations around the world from the commercial, public and not-for-profit sectors.Who, in their right mind, doesn't expect some churn?Churn, but still they signed 35 new names and increased their signed customer base.Churn will happen and more especially in legacy offerings as a company like PHD becomes a larger % of the SAM. They are now about 6th, may be higher. Competition will push back, some will offer incentives, some will will drop prices.The future is new offerings, not competing on margin or a race to the bottom to keep business.2 of the main losses occurred sooner than expected but they were expected. Look forward, this bump in the road has come at a sensible time as a reminder to management.It's like having your first investment being a 10 bagger at age 21. Dangerous. Better a setback early on to shake out complacency, develop some humility, and keep you on your toes.Good luck everyone.Btw - look at where they have come from. Perpetual licence to SaaS model was volatile but they stuck to their guns under Rod Jones and proved ISIS Equity Parners wrong. The same grit applied now will see this through to > £2 and onwards. Their is still that DNA in PHD.
Carefully Does It
25 Apr 2018
Future When you buy PHD below is what you buy into as the potential, not just bolt-on acquisitions to squeeze out operational cost at increased revenue. Perfect/Hubwoo are transformational and such a transformation doesn't happen in 6-12 months.Losses of names is disappointing but the wins are noteable (Rhode Island etc - see Yorkshire Post) and the diversity of suppliers to these names is considerable, helping the future strategy."- The Business Network ("TBN"
, the networking solution acquired through the Acquisition, has been selected as the Group's principal technology and the forward roadmap for application to the Proactis customer base is under development; and- The Group intends to offer an ACCELERATED PAYMENT SERVICE to suppliers to facilitate growth or working capital benefits in return for a small discount. This opportunity has been previously deferred because of the technology transition referred to in the previous paragraph and because of capacity constraints. The Board considers that the opportunity is substantial and the Group is now in a position to PURSUE IT VIGOROUSLY and this will involve new resource capacity and a permanent re-allocation of existing capacity."Buy at < £1.15 in my book, door, go carefully.
Carefully Does It
25 Apr 2018
Re: Finncap retain 250p target today Yorkshire Post."Analyst Andrew Darley at FinnCap said: "While the expected challenges are in hand, ​20​18 revenue is now likely to be affected by the unexpectedly high churn of several single product customers, which – given the subscription nature of the new contract wins – is unlikely to be able to be offset in the current year; and also by the strengthening of the pound.However, he said the firm is on a strong footing.​"​Prospects remain undimmed and we see this as a bump in the road​," he said.He has cut his 2018 forecasts by 6 per cent for revenue and by 14 per cent for earnings. His share price target​ of 250p remains unchanged.​"
Muzzletoff
24 Apr 2018
Re: Finncap retain 250p target today GretelCouldn't reconcile your report of the Fincap's report of shareprice target with Paul Scott's claim that the house broker has reduced profit guidance for this year by 20% and next year by 16%?Any thoughts?
IOMINVESTCOM
24 Apr 2018
Paul Scott's view Proactis Holdings (LON
HD)Share price: 111p (down 41% today, at 11:19)No. shares: 92.9mMarket cap: £103.1mInterim results - for the 6 months ended 31 Jan 2018.This group calls itself;PROACTIS Holdings PLC, a global spend management solution provider...My commiserations to shareholders here - these interim results seem to have gone down like a lead balloon. It's feeling increasingly like a game of snakes and ladders at the moment, with profit warnings happening almost every day. It's very difficult to avoid them altogether. We're all stung by a profit profit warning from time to time, it's unavoidable in the small caps space - just an occupational hazard. It does make me question the generally rather high valuations though. Is risk:reward really at appropriate levels in UK small caps? Maybe not.Groups which have done lots of acquisitions tend to be rather difficult to analyse. A few key points;Underlying revenue growth of only 3% (H1 LY: 12%). I recall from a company presentation that management saw growth of about 10-12% as being the norm. So H1 this year has fallen well below that rate of growth.Total revenues up 124% to £26.4m - which reflects the acquisition spree of recent years, including one very large acquisition relative to the rest of the group."Strong balance sheet", with net debt of £29.8m. This is always a warning sign. Sure enough, the balance sheet is not strong, it is weak! It fails my two key tests, as follows;1. NTAV is negative, at -£56.7m - I don't usually invest in anything with negative NTAV. This is the simplest way to avoid potential blow-ups, for groups that have expanded too fast, with too much debt (which is how I see this share).2. The current ratio is weak, at 0.87 . This is calculated very simply, by just dividing total current assets by current liabilities. A level of 1.3 is adequate, and over 1.5 is best. So 0.87 is quite a poor score.Whilst net debt is £29.8m, gross debt (i.e. excluding cash) looks to high to me, at £42.5m . Great care is needed with software companies, as EBITDA is an inflated figure (because it ignores current, and previous development spending, which is often substantial). This leads to investors & banks taking on more risk than they realise.Cashflow statement - not very good. There doesn't seem to be much cash generation at this group.Adjusted EPS is up 20% to 5.4p, although note that this is flattered by a negligible tax charge. I think the group might be utilising tax losses, so in valuing the share on a PER basis, the tax charge should be normalised, in my view.Cost savings - annualised £4.2m has been achieved, with a £5.0m target.More acquisition activity planned. Really? Is this such a good idea? I'm worried that management might be biting off more than they can chew.Recent loss of customers - this sounds concerning, and I imagine is a large factor in having scared some holders into selling today;... latterly, a loss of a number of customers which the Board does not expect to continue.Forex - this is a very important point, as it has read-across for many other shares;However, this performance is not fully reflected by reported revenue which has been slower to build principally due to a strengthening Sterling which is reducing the impact of the Group's performance in the United States and in Europe...It's been a long time since I can remember companies complaining about the strength of sterling! In recent years it's very much been the opposite - that weak sterling has hurt importers, but boosted exporters and companies with overseas subsidiaries.So it's very important to realise that this previously positive effect is now turning negative. We need to factor that into valuations, and growth rates may sharply slow at companies which previously gained from weak sterling. So we all need to have a proper think about how this reversal of forex impact could affect companies in our portfolios.I menti
gretel
24 Apr 2018
Finncap retain 250p target today As well as retaining their 250p target, Finncap's revised estimates are now 10.2p EPS for the year ending in 3 months' time, and 11.8p EPS for the year starting 1st August - with 1.5p and 1.6p dividends.Net debt "is expected to be comfortably below 1x EBITDA at FY19".So, given the potential, the cost savings coming through etc, the fundamentals remain pretty good.There was obviously going to be an initial reaction to the comments re strengthening sterling and, more seriously, a "temporary" loss of customers.However, I think the current reaction is overdone given the overall outlook, high recurring income etc. So this could well be an opportunity once things settle down.This is likely just a "bump in the road", as Finncap put it. Especially if the pound weakens again against the dollar as it has been over recent days (and is expected to by most people).
Carefully Does It
24 Apr 2018
Re: TechMarketView's view I think we have witnessed an avalanche effect as support on the way down wasn't noticeable and it has taken out a fair few stops. Some of the sales would have been smaller holders with protection in place, not just 20k, 50k blocks. The selling then feeds on itself imho.Will take a while to settle but this looks a good entry point for new holders and old timers to add.There was volatility and upset when they started to move to SaaS model. This is not related but may rhyme as they encounter growing pains. A calm head is needed in charge, with a plan/strategy and sensible execution.
pendil
24 Apr 2018
TechMarketView's view In August last year, AIM-listed PROACTIS acquired US-based Perfect Commerce, significantly increasing the organisation’s scale and promoting PROACTIS into the top division of the global Spend Control and eProcurement market. With this market sector rapidly consolidating, there are currently six providers whose annual revenues exceed £50m according to the PROACTIS team.Results for the six months to January 2018 showed the initial impact of this move. Total revenue was up 124%, EBITDA grew 180% to £8.4m. Management say that they are on track to reach their £5m cost savings target.During the half-year, the acquisition of new logos exceeded management expectations, with the US operation winning 2 large public-sector deals in a total of 35 new customers signing up across the Group. Management are also pleased with progress in cross-selling with PROACTIS e-invoicing solutions being delivered alongside Perfect Commerce procurement solutions in the US. The integration of the group will continue with the launch of the unified brand, combined portfolio and new website scheduled for June.Not everything is going well though, as four large customers are ending their contracts (two of them being oil industry majors) and Q3 organic growth is at the bottom end of normal trading levels. This follows on from the low 3% organic growth in the first half and these factors obviously contributed to the sharp sell-off of the shares after the announcement (down 33% in early trading). In H2, the company will also have to contend with stronger sterling (55% of revenue is in US$ and Euros) and profit estimates are being shaded.The PROACTIS strategy looks sound, but management will have to show that in can execute well, deliver new customers and drive extra share of wallet in order to rebound from the current setback.
