Event Review AIM Investor Focus ran on April 12th at the offices of Edison Investment Research. Management from Nichols, K3 Business Technology Group, Mattioli Woods and idox all presented to an audience of investors.
Nichols It was difficult for investor sentiment not to be positively influenced by the bright, almost fluorescent, colours of the free Vimto drinks supplied by the Nichols management team at AIM Investor Focus. However, there is no getting away from the fact that Vimto’s home UK market poses challenges to investors in Nichols due to intense supermarket pricing pressure. Nichols continues to enjoy growth in the Middle East, despite continuing conflict in Syria and Iraq. Nichols’ position in the UK drinks market means that the shares can piggyback on the hefty PE ratings of other listed drinks groups such as Britvic and Fevertree. This could be useful currency for potential acquisitions. The eighty years of the Vimto licensing relationship and close family ties with the Aujan Group is a solid foundation for Nichols’ overseas expansion in Africa and the Middle East. Nichols (LON:NICL) International business accounts for 50% of Nichols profits Market cap £483m from just 22% of the revenues. 1,311p:1,324p The Nichols cash pile of £35m will either be applied to a Price (p) P/E (forecast) 20.0 strategic acquisition or returned to shareholders through a special dividend or share buyback.
K3 Business Technology Group K3 sells enterprise resource planning software to multi-outlet retailers and manufacturing firms with annual turnover of £50–100m. Growth in hosting services (now centred in the recently acquired Starcom) and increasing internal IP content are driving margins higher, more than offsetting the changing structure of software revenues from lump sum to consumptionbased licensing. Whilst initial income may be lower, recurring revenues are already becoming a larger proportion, now at 50%, and could lead to enhanced customer lifetime valuations. Current H1 new business pipeline of £56.5m (2015: £56.7m) is healthy although there have been delays in closing some deals due to uncertainty arising from the imminent EU referendum. K3 is expecting to soon close a major contract with an international fashion retail group. K3 shares started to perform in line with the technology sector during the past year after a period of underperformance. The market may have already discounted the effects of K3 Business Technology Group (LON:KBT) the change in nature of K3’s licensing revenue stream. The £127m shares currently trade at a significant discount to software Market cap 345p:353p peers. Any upside appears dependent on improved investor Price (p) sentiment toward the UK retail and manufacturing sectors. P/E (forecast) 14.7 Yield (forecast)
Published on May 18, 2016
Published on May 18, 2016
Featuring *NINE* AIM companies: Cerillion, Conviviality, Epwin, K3 Business Technology Group, idox, Mattioli Woods, Mulberry, Nichols and Yo...