"I dont want to make too much of their reco for Conviviality last week ..."
The Conviv blunder was signed "HR". Can anyone say if the Tip Update had a named or initialed author?
XLM is in the "COMPANY RESULTS" section of the latest IC, with a "Buy" rec. Under the more factual stuff, there's a positive paragraph of comment, signed "MB". Paraphrasing and summarizing, the valuation is low considering the opportunities for growth.
That said, though, I don't think the opinions in IC matter all that much. Anyone can read the results and check valuation metrics.
Sorry for the confusion. There was something beyond the 'however'! It was the additional information that 2018 isnt going to be too exciting in figure terms - unless there are some really significant 'quickly earnings accretive' acquisitions in the not too distant future.
Mmm. Havent always found the IC to be the best predictor of a company's future SP. No doubt they can turn to their 'winners' but I would be interested to know their winner/loser ratio!
I dont want to make too much of their reco for Conviviality last week (though after today's suspension of shares, in some perverse way it might turn out to be a good bet for the wrong reasons). However they wont be able to claim even that because they had changed their mins the following day to a sell if I remember correctly.
I wasnt querying your quote, Gretel. It is just that I followed the link you gave and it wouldnt give me anything unless I joined several rubbish web sites. Within minutes I had 3 emails before I was able to unsubscribe, and I still wasnt able to see the material you were pointing me towards.
Yes, I know they have quoted 290p before, and I would have been very interested into the basis for their calculations. Quite often one learns a lot from say a sum of the parts valuation. However, when there is a gap of ginormous proportions between the valuation in the form of present SP and the target by effectively the house broker, it is hard not to query the soundness of the background behind the valuation, and also be intrigued by it.
PS Secret for you. XLM is my largest single share investment so I am rightly concerned, dont you think to try to understand why it is languishing now and what will be happening to turn that around and move towards the promised land?
They say that in the age of Facebook and Google, digital advertising is becoming an increasingly difficult market to crack. XLMedias (XLM) results have proved there is still money to be made in the marketing industry. Revenue at its media business where it buys and develops ad campaigns for social media, mobile and pop-ups rose 39 per cent to $66.4m (£47.8m) as the acquisition of ClicksMob complemented organic progress.
But that pace of growth isnt expected to be maintained in 2018 as management plans to prune its contract base and focus on higher-quality customers. Berenberg also thinks adjusted cash profit margins will fall back to around 33 per cent as the group invests in its technology. The broker has forecast pre-tax profit and EPS of £43m and 15.9p in the year to December 2018 (from £39m and 15p in 2017).
Gambling and gaming are still a large chunk of the groups 2,300 websites, but chief executive Ory Weihs aims to make personal finance the second-largest division. In 2017, most of XLs acquisitions were in the personal finance market and since the year-end, management has spent a further $5.2m on similar websites. Mr Weihs thinks there are a great deal more expansion opportunities in the US and, having raised $43.6m on the stock market in January, the group has plenty of cash to fund its expansion plans there.
Momentum may have tempered in recent months but we think there are still expansion opportunities for XLMedia, which an enterprise value to adjusted cash profit ratio of 7.5 times fails to account for. Buy."
Claude, the Berenberg reiteration of Buy and 290p is included in the link I gave.
As it happens I do now have a copy of their current and prior notes, but can't reveal details given tight regulations. At some point I might give a summary, but I can assure you that there are solid calculations behind their 290p target involving WACC, DCF etc.
Panmure Gordon have also reiterated their own Buy and 268p target today.
I like the tech section, which includes "We recently completed the migration of GreedyRates onto Palcon which has led to a 6% increase in returning visitors, while time spent on the site increased by over 25% overall, and by over 70% on mobile devices. The Palcon infrastructure improved the loading time of the site by 43% as well as added features to further improve experience for users.". Execs always promise synergies from acquisitions, and they don't always appear. I think it's good that XLM can get synergies by migrating acquired stuff onto their own systems. It seems like a fairly repeatable and reliable way to get synergies, though I'm not expert on the tech.
Gretel how did you get the Berenberg analysis without going through the associated rubbish extra websites process? In the light of the market reaction to the results, I would like to kow how B get to their pie in the sky - at first sight - target? Then, and only, then would I regard this as a buying opportunity to add. At this stage, since Xmas I have seen only disappointment in terms of my current holdings. Currently, jam tomorrow is very much the name of the game and the company has in effect 'stolen' a lot of my SP gains as a result of their cash raising.
Yes, it would have been nice to see a slightly more progressive dividend. The results are good and the cash for acquisitions in a very good place. I am disappointed by the muted rate of growth in North America - Ory stated after the last set of results that he saw this as being a huge opportunity for XLM. Good to see Berenberg re-iterate their TP at 290, however.
Very good results as you say. Growth rates impressive. 2017 vs 2016 in brachets. Growth in Revenue 33% (16%); Gross Profit 37% (30%); Adj EBEtc 36% (22%); PBT 27% (28%) Cash etc 43.3m (35.2m); EPS 25% (20%).
Divi a bit mean up only 1% and a bit. PBT growth same as last year.
Of course, reports in $US so £ conversion affected by fluctuations in exchange rates. Very good last year; less good this year.
Cash pile hopefully used soon and in worthwhile fashion - emphasis on worthwhile. Some purchases made since year end.
Hopefully this will push the SP forward a bit. Languishing versus the halcyon days of 210+ prior to the cash raising in January. My holding is currently profitable versus very profitable at thta time. Need to get above 200p and stay there asap, so that w e as shareholders and the employees recently granted options at around that price can start to earn our/their just rewards!
IMO too. 290 - the brokers target - would be good. Would also be good if instead of a SP reducer by raising capital at the beginning of the year the Prelims were also marked by an immediately earnings enhancing acquisition or two!
Hadnt realised what a civil bb I was joining!
Thanks for that.
The market cannot be blamed for everything. The placing was at 198p, a small discount on the price at the time which had already fallen from 215p a few days/weeks earlier if my memory serves me right. The SP then fell to 170ish when the CEO bought back in, which always gives some confidence as well as a bargain to him, to some extent possibly caused by the raising of more money 'to take the company forward'.
If OW can take the company forward as well as he was able to do in the last couple of years, especially 2017, then I will be as satisfied as you will be, no doubt.
Well it should be time for Mr Weihs to buy in some more. The SP has fallen, partly as a result of his Board's actions I guess, almost to the 171p when he bought in last time. The Board took the opportunity to raise some more capital at 198p - so the period of the SP in the 210s was short lived, and we now await the moment when we see more acquisitions to strengthen the company even further. It has worked in the past.
The divi growth is not looking that enticing; the PER is not too demanding but the PEG could be better - and the future acquisitions should help to bolster that. In the absence of that, then perhaps some of the cash should be returned to shareholders to be invested elsewhere, as would be their choice.
In the meantime, I live in hope, and am even thinking of adding to my shareholding if the SP drifts down further.
Re increased shares in issue: the company simply pays out more of its net profit in dividend payments.
Re dollar exchange rate: technically, if there's a 10% drop in the value of £ vs $, then the dividend would need to increase by 10% to maintain the same amount when converted to Sterling. But then this is part and parcel of owning a share that pays dividends in another currency. Most investors in XLM are here for the SP growth potential, I would think.
Recently the company issued shares that invariably increased the number of shares in issue by 7.8%. Does this mean that dividends will have to increase by at least 7.8% to stay the same as last years.
Secondly if the pound has risen by 10% since last year ( dividends are paid in dollars, high dollar equates to more pounds ) does this mean that in total dividends would have to increase by 17.8% just to stand still? Maybe someone can put me right on my calculations.
Mind you, 290p, the latest broker forecast, is probably a tad optimistic too - though it depends on when it is expected that target price will be met. I cant remember seeing the detail of the broker forecast.
Thanks for that. He has been into Bioventix for yonks! I was at Mello Derby in 2014 and he was making a big song and dance about it then. PS He was also privately promoting Benchmark with whom he seemed to have some sort of relationship, but they have failed to take off in SP terms. World leaders but always seems to be something going wrong to affect profitability and SP.
As for XLM, I am waiting for Mr Weihs to take it a step further with some more great acquisitions. He has the money for it after the money raising event in January. Maybe, the announcement of somet5hign bigger and better will come with the finals.
I believe share selectors should consider snapping up XLMedia before next trading details are released on Tuesday, March 13th.
Back in November the digital marketing specialist advised that it has continued to trade strongly since the half year end and that, as a consequence, it predicted that adjusted EBITDA for the full year would be materially ahead of expectations.
XLMedia noted that this strength has been broad based, with strong organic growth being reported across the company. And the group is in great shape to enjoy booming sales in the years ahead as it bulks up its presence in the lucrative territory of North America, a region the firm considers a major opportunity... to grow in various verticals, such as financial services, cyber security, mobile apps and, as markets increasingly regulate, online gambling.
Accordingly City analysts expect XLMedia to record earnings rises of 7% and 2% in 2018 and 2019 respectively, figures which result in a forward P/E ratio of 14.6 times, inside the widely-accepted value benchmark terrain of 15 times or below.
On top of this, juicy dividend yields of 3.4% and 3.8% for this year and next provide an extra reason to check XLMedia out."
("XLMedia" or "the Group" or "the Company")
Strong growth continues with trading ahead of expectations
XLMedia (AIM: XLM) is pleased to report that the Group has continued to trade strongly since the half year end and therefore expects adjusted EBITDA1 for the year ending 31 December 2017 to be materially ahead of expectations. The Board further expects profit before tax to be ahead of expectations, albeit not to the same degree as adjusted EBITDA as a result of the effect of adverse currency exchange differences.
Since the half year end we have continued to see strong organic growth across the Group, particularly in the publishing division, which has led to us achieving better than expected direct margins in both segments. As well as the number of visitors to our websites increasing we have seen improved conversion rates and increased revenues from revenue share arrangements from users we referred to customers both this year and before.
During the year we have completed several strategic acquisitions targeted at North America. These include Clicksmob, a mobile performance marketing platform and two financial services informational websites, Greedyrates.ca ("Greedyrates") and Moneyunder30.com. Integration of all acquisitions made this year is progressing according to plan and they are all performing at least in line with management expectations at the time of acquisition. We are particularly pleased to report that that Greedyrates, which we acquired in January, has exceeded our growth expectations. This is primarily a result of traffic to Greedyrates increasing as we continue to optimise the site for improved performance as well as investing in customer relations and sales. This, we believe, is a strong endorsement of the team's technical know-how and marketing understandings.
We have been very pleased with the acquisitions that we have made in 2017 and see North America as a major opportunity for the Group to grow in various verticals, such as financial services, cyber security, mobile apps and, as markets increasingly regulate, online gambling. Accordingly, the Board remains confident in the continued performance of the business.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 ("MAR").
1 Earnings before interest, taxes, depreciation and amortization adjusted to exclude share based payments.
Always useful to go over old but recent ground. I trust that you will be going to the meeting this March. I would love to be there but I live in the middlr of the Irish Sea and I would rather buy some more XLM shares at budget prices than spend the money on getting there and back and staying overnight!
I would just like to add to your summary with some more recent history which reflects well on the company IMHO, and the senior management.
At the beginning of the year, at a time when share prices were close to their highest, he raised a big slug of money in a placement at a very small discount at the time. That will fit very nicely into the M&A bag. (Taptica did the same, but they had a much bigger discount). Then he buys 100k shares at a bottom price - 171p? Good value for him and to prove a point to small investors? Then he introduced a 3 year management share programme at approx 202p so they need to make a big increase to make their share allocation work (not some crazy free share issue which lots of AIM companies have been guilty of introducing!). It would be nice if their management - and we - could reach the 290p share forecast target in the latest broker announcement and quite soon!
Looking forward to your next report - March 13th, 4pm isnt it? Enjoy the canapes - I hope they provide some!
Ory stressed that more and more companies are moving to performance based 'Revenue Share Models' in relation to their spend on online advertising budgets. This way said company gets a risk free guaranteed return on advertising spend. They only pay when XLM generates a paying customer for them or that customer takes a certain credit card for example or other milestone. It makes sense and I can see mass adoption in future. Companies don't want to throw millions away anymore on marketing with no guarantee of a return. This way they only pay when XLM get them results.
Cash generation just keeps on improving. As of end of June $43million back in the bank ready to be spent on further earnings enhancing aquisitions. When you take off the subsequent int dividend $8mil & acquisitions since then $19.25mil that leaves $23.75mil plus the cash generated since July 1st. Nice.
Ory mentioned in the presentation that he knows the guys at Catena Media to 'go have a beer with'. Catena has tried to replicate XLM by acquiring expensive assets in established markets taking on a lot of debt in the process. They trade on the Stockholm Nasdaq at a PER of over 20. There current market cap is £392 million which is where XLM's will be shortly IMO and thats just for starters. Whilst discussing their merits Ory said that he wanted to see more organic growth from them and proof that they could grow the business in that way. After all XLM has been leaving them standing in terms of organic growth. Afterwards this got my mind thinking why would Ory like to see organic growth from them? One can only wonder about the potential of a merged XLM/Catena Media online performance marketing behemoth. Food for thought I suppose but personally I think they need Ory far more than he needs them. Ory's got the Aces. Onwards we march.
Was interesting to note that XLM are still well under the radar. In March there were 13 attendees. On Tuesday there were 18. The herd will arrive in due course, all the better for us.
On acquisitions Ory stated they have a constant pipeline of potential. It could be anything from $200k up to $100 million. He is very selective and only adds those assets where he sees real value and return on investment for shareholders. For the first time they are now lining up potential debt financing to increase the growth trajectory if they see appropriate targets. I expect the market would look very favourably on this if it happens.
Inbal went on to explain that when they aquire a website they are able to strip away most of the cost base (staff, old tech) and bring the asset in-house using their proprietary tech which then greatly increases productivity, margins and ultimately profit. I see it as XLM (in Publishing) now having a 'Website money tree.' They can feed in any half decent money making website with traffic into their 'machine' and out the other end pops a leaner, smarter, busier, interlinked, higher margin, tech driven growth asset. And their tech capabilities are growing all the time. Is there a limit on growth such as this? I don't think so IMO.
Cyber Security they see as a future growth engine so Securethoughts.com is a foothold in the space and one they can test the water with.
Chatted to Ory and Inbal in the lift on the way out. They had been all over the City non stop for two days 8am till 6pm. And the following day was more of the same. I assume they were meeting II's and I get the feeling more tier one institutional investors will be coming onboard in due course.
They have an uber conservative approach to broker forecasts so I expect EPS and PBT to be comfortably ahead of forecasts this year and way ahead next year. The dividend was unusually high last year at 57% of profits. This year back at the 50% level. Ory stated they are 100% committed to maintaining their minimum 50% of profits pay out ratio so expect a juicy jump in the dividend next year and onwards.
Uber conservative approach also applies to the accounts. Measures like EPS are not adjusted or massaged in any way which is refreshing. Any potential costs are over provisioned for. I can see their focus is always on being careful, under promise and over deliver which bodes well. I asked Inbal personally about the Income Tax dispute with the Israeli Tax Office relating to 2012 - 2015 period. She said it has been over provisioned for in the accounts 'just in case' and will have no material impact.
Compliance is a constant focus for them. This year in the Partner Network they cut 25% of their affiliates who didn't meet their standards. This is a legacy division now. It's profitable but it is not a growth engine. However it can throw up small profitable acquisition opportunities. The focus for growth is the Publishing & Media divisions.
Furthermore they have nothing to do with spreadbetting companies and will avoid any regulatory issues that may affect the spreadbetting industry. Ory stated they only operate in fully regulated markets but they are 'ready and waiting to go' in those markets like Sweden and the US where regulation is in the post.
With 1 month to go till the next XLM Investor Presentation I thought I would repost these, particularly for the benefit of new investors..
Here's my thoughts n takeaways from the chat on Tuesday. Ory & Inbal Lavi (CEO Israel) both came across very well face to face. Words I would use to describe them would be authentic, humble, driven, honest, careful, hungry, relaxed, confident, visionary, prudent and excited about the future. Inbal runs around 370 staff from HQ in Israel on a daily basis whereas Ory is based in Prague with his focus on M&A and further organic and strategic growth.
Now have 90 in-house tech developers comprising 25% of staff. Their own tech and IP is a considerable moat preventing new entrants in the space and allowing XLM to cement their market leading edge in online performance marketing.
The combined Clicks-Mob Dau-up group now showing synergy benefits on the Media side with organic growth set to continue. Asia represents 5% of revenue and targeting double digits here through mobile apps growth in India & South Korea.
Remain heavily focussed on growth in Financial services in US and Canada where the margins are high coming close to those achieved in the Gambling vertical. Price comparison mkt in North America is still growing whereas its saturated and expensive in the UK. XLM will be running their price comparison sites in a lean value oriented way with online the sole focus. There will be no Meerkats or the like.
British Bulls uses candlesticks charting as a guide to buying/selling shares. They show their 'success' record in the right hand column of each share page. Some they get right, some they get wrong! If they get more right than wrong, that's good going....
They're inevitably caught out by co. news/announcements.
They have a habit of retrospectively claiming 'success'-ie the price at which they say 'buy' or 'sell' has already gone-so seems to be biased in their favour.
So-imho they're a useful guide if you follow candlesticks charts-but, as always, DYOR(do your own research).
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