Newmark Security (NWT:LN) (2.4% of current portfolio):
Share Price: GBP 1.45p
Market Cap: GBP 6.8 Million
A special situation which actually obscures an underlying growth story. While these trading updates (here & here) have crucified the share price, Newmarks electronic division still looks like the real problem here. For almost a decade now, revenues unchanged, while divisional margins declined relentlessly from 20-23%, to a £(0.5) million loss today. Poor return on capital was bad enough, but losses kill any argument for keeping the division. And after 4 years as CEO, shareholders presumably have little confidence Marie-Claire Dwek can still deliver a turnaround and her hands are now full dealing with the larger asset protection division. Noting Chairman Maurice Dwek always ran a tight ship here, the situation appears untenable somethings gotta give
Presuming an eventual sale, a larger competitor could easily wring 10-15%+ margins from this division achieving a 0.5 Price/Sales multiple (i.e. £3.8 million) seems reasonable. [And noting net assets of £5.1 million, it also looks salvageable in a wind-down/piece-meal sale]. Who knows what the FY-2017 result will be, but lets assume 50% of said consideration ends up incinerated, in terms of a once-off net loss (in reality, I suspect a working capital reversal will mitigate cash losses).
Such a scenario would imply £6.2 million of cash, close to the current market cap tagging NWT as a possible target. It also implies a negligible 0.04 Price/Sales multiple for an asset protection division thats averaged £13.3 million revenue pa in the past 4 years & boasts average (pre-impairment) margins of 22%+ (nearer 14%, inc. un-allocated corporate expense). It also grew revenue 17% pa & 10% pa in the last 5 & 10 years, presenting a ridiculously cheap growth opportunity. [Plus, I believe this growth trajectory confirms managements assertion a poor FY-2017 result will prove nothing more than a timing issue, in terms of an eventual sales payoff]. As for Newmarks cash, using it to fund share buybacks & bolt-on acquisitions would also add substantial shareholder value. [It also justifies maintaining the dividend a 6.9% yield offers compelling support]. Meanwhile, my marked-down position size looks about right til we finally see some kind of sensible/decisive capital allocation here from the CEO/board.
For this & other top picks, check/Google my latest 'Top Trumps For 2017...' post on the Wexboy investment blog.
I went in 2012 Stan and I've just checked my diary and I'm free. I might very well attend. In 2012 I held 3.5m shares but I only own 1m now. Very keen to question around the overseas operations and understand how the closure of banking branches might impact. Finally, is there a grand plan for a £50m valuation or is it about supporting the family stake? One last throw away would be perhaps a 25:1 consolidation to give the share price some respectability, I know it is only window dressing but it would be good to lose the penny share status.
Hopefully the results will be out this week then we can see just how good/bad the second half was and get a forecast for next year. If and it's a big if the second half was anywhere near as good as the first then these are a strong buy IMO as with £5m net cash and a market cap of just £8.5m the business is valued at just £3.5m yet made first half earnings of 0.15p.
Having follow this stock for 13 years I am happy to give it a strong buy at this price. I could list a very long list of reasons to buy at this price but I'm just happy to be adding at this price it would have been nice not to have purchased250,000 shares just before the fall but I have since added another 250,000 shares at this lower price and will be adding again in the next week. I cannot beleive this price is where it is but that is the market for you.
But the company is stuffed full of cash, maintaining the divi won't make any difference, it isn't large anyway. I bought some today as I think they are cheap after this news, the EV is only £3.5m and they are still profitable albeit at a lower level. Last year was an exceptional year anyway so I'm not too worried about today's news.
I really wish companies wouldn't try to prop up the share price by maintaining the divi in these situations.It doesn't work.They have admitted that operating profits will be lower than expected,so a cut in the divi would be prudent.
3.5+ the divi. I'd like more obviously but the near touching 5p to drop to 2.7p in the last 12 months is never nice for those that got in near the top. Steady buy and hold up to 3.5p to create a new floor there would do investors nicely and leave plenty of room in the price for future growth.
I agree, this is solid progress although growth tends to be lumpy based on the timing of larger contracts. But why only 3.5p? Cash is already over £4m on market cap of £15m. As soon as SATEON starts to fly so will the share price!
Continued progress, revenue whilst down is way up in terms of the longer term trend and if this continues we'll see the price rise by 20% or so to 3.5p by the end of the year. I'd expect another divi increase perhaps to 0.11 (10% up on 2015) whilst continuing to add cash to the balance sheet. Growth prospects, profit, divis, low borrowing, cash generative, secuity products in an increasing unsecure world, what more can you want from a business? I'll be adding whilst below 3p.
The current share price of 2.88p per share suggests that the market is predicting that net profit for the current year will be 15% lower than the prior year, Now, the Chairman stated in the Annual Report that profits would be down, but did not say by how much. This is the key to establishing a valuation. The Chairman did say that the following year would be better thanks to new contracts coming on stream. So, unless profits for the current year are 20% or worse lower than the prior year, then 2.88p would be a reasonable price at which to buy. Pity we didn't get more informed guidance from the Chairmsn.
Read pretty well to me with the exception that revenues and profits are unlikely to be as high as the 12 months. The price had probably got a little way ahead of itself but having sold a good number at 4p and above i'm in the fortunate position to buy back in or bank my profits. It would not suprise me to see an RNS around directors selling who will have been in a closed period up until today, other senior staff on the insider list may also have sold a few. We should remember that it was only a month ago that 3.5p was breaking new highs. This is still a long term growthe business that seems to be doing all the right things.
I've now also purchased 0.75% of Sopheon a tech firm that has good clients and imbedded income c.£8m with overall revenue c.£15m+. A disappointment this year but at £3m market cap like NWT only 3 years ago, a real 3x opportunity as the business drives £1m+ profits in the next 1-2 years. I've just added 15,000 shares and now hold 55,000. Excuse my ramp but I was saying this with NWT just a few years ago but nobody listened then so why not say it again.
To be expected and I cannot see why others have not seen these results coming. The company continues to impress with results and I like the fact that they will reward shareholders (even if the majority are within the family). I've now banked 2x my money and still hold 1m shares. Looking forward to the buyout for 10p+ a share that will happen in the next year or two.
The profitability of this Companyhas been held back in recent times BT heavy expenditure on upgraded products and write offs on an ill-fated cash box investment.However sales of the new products now seem to be gaining traction and cash-flow is strong which should enable investment in the sales effort.
I believe this Company is well undervalued.
Missed out on the rally but results seem to be a mixed bag. T/o has increased as have cost of sales. Increased revenue seems to be in part due to accounting changes. Not a lot of detail on future prospects beyond speculation good to see NAV increase
Hard to know where this is going or what the driver to send it to the next level will be.
Pretty positive stuff with a heathy order book, some orders moving into this year from last and margins only slightly down. The SATEON product sales really seem to be moving, this look like one of the major growth areas and one the board seem confident on. A new sales and market director and operations director in GT will have something to prove.
The asset protection business didn't do so well but if it is just timing, this should help this years numbers if the deals materialise. Enough said about the Glue Box which has been a fairly expensive development.
Whilst the price has risen I still see a business that can generate more revenue in existing and new markets, that is making money and has a new younger management team with enough options to incentivise growth. Derek must be pretty pleased with the 0.075p dividend, I know I am considering I purchased my original 3m shares at around 0.8p. I'm down to 1.5m now having taken profit along the way but I intend to hold the majority as there remains potential here.
No news I can see. It might be that the sp fired up based on some improvement in outlook which might not have, in number terms, warranted a trading update. No doubt brokers are in the loop and been advising clients accordingly.
Results should be here in the next 2 weeks. It woiuld be nice if NWT gave us a little more information. No trading statement suggests to me that things are in line. I would like to hear more about next year and new orders. I'd like a update on the US operations too! Good luck. 2p+ on the results please plus a healthy dividend given the cash they are building.
NWT is usually so quiet that the trading activity as seen recently looks interesting. There doesn't seem to have been a pre-close trading update this year as there was last year, nor any news for a few months. Anyone found anything?
Stock analysts at Cantor Fitzgerald Europe lifted their target price on shares of Newmark Security (LON:NWT) from GBX 2 ($0.03) to GBX 2.50 ($0.04) in a report issued on Monday, ARN reports. The firm currently has a buy rating on the stock. Cantor Fitzgerald Europes target price indicates a potential upside of 56.25% from the companys current price.
Newmark Security (LON:NWT) opened at 1.60 on Monday. Newmark Security has a 1-year low of GBX 1.25 and a 1-year high of GBX 1.71. The stocks 50-day moving average is GBX 1.57 and its 200-day moving average is GBX 1.52.
Newmark Security PLC is a United Kingdom-based investment holding company. The Company is engaged in the design, manufacture and supply of products and services for the security of assets and personnel.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.