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LEADCOM, a real growth company (LEAD)
PapalPower
- 07 Dec 2005 07:57
18th October 2007 : Leadcom voted "AIM International Company of the Year for 2007"
Main Web Site : http://www.leadcom-is.com/
Investor Relations Email : investorsinfo@leadcom-is.com
PapalPower
- 23 Feb 2006 10:33
- 121 of 955
coeliac1 after the "expected" results morning sells we are back level and might finish blue now.
I would expect the price to rise in the coming weeks and months as inti's climb on board and also, with the potential growth it has and with the equivalent of total 2005 revenue in the bag 7 weeks into 2006, this will be one that media tips will soon be looking over to cover.
I would expect the price to rise in the coming weeks and months as inti's climb on board and also, with the potential growth it has and with the equivalent of total 2005 revenue in the bag 7 weeks into 2006, this will be one that media tips will soon be looking over to cover.
PapalPower
- 23 Feb 2006 10:34
- 122 of 955
Rathbones Special Sits also has LEAD in the top ten holdings as of end Jan 06, hopefully they will make it top 3 soon :)
http://www.rathboneunittrusts.com/rutm/ourfunds/factsheets/2006/february06/special_sits_feb06.pdf
http://www.rathboneunittrusts.com/rutm/ourfunds/factsheets/2006/february06/special_sits_feb06.pdf
coeliac1 - 23 Feb 2006 11:11 - 123 of 955
Rathbones are right. This definately is a promising special situation and its good to see an institution thinking along the same positive lines.
PapalPower
- 23 Feb 2006 11:25
- 124 of 955
I think in the coming weeks and months there will be a lot of smart money moving into LEAD, which will result in a nice uptrend, with spikes up on contract news.
There are two new broker reports to look forward to now, an updated CS one and an initial Altium one.
There are two new broker reports to look forward to now, an updated CS one and an initial Altium one.
PapalPower
- 23 Feb 2006 11:59
- 125 of 955
Altium today issued a buy note for Leadcom, initial target 90p it seems.
http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=80357&MenuKey=News.Home
Following what it describes as an impressive set of interim results, Altium Securities has put out an add recommendation on Sportingbet. It says the announcement of the maiden dividend was a milestone for the company and the start of much more to come.
While Gondola Holdings has attractions in terms of scale, brand awareness and, arguably, the efficiency of its balance sheet, Altium has put out a reduce recommendation. It recommends selling Games Workshop and starts coverage of Alba with a buy recommendation.
It is a buyer of IBS Open Systems, Entertainment Rights and Leadcom, but downgrades Close Brothers from hold to sell and says add Spring Group
http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=80357&MenuKey=News.Home
Following what it describes as an impressive set of interim results, Altium Securities has put out an add recommendation on Sportingbet. It says the announcement of the maiden dividend was a milestone for the company and the start of much more to come.
While Gondola Holdings has attractions in terms of scale, brand awareness and, arguably, the efficiency of its balance sheet, Altium has put out a reduce recommendation. It recommends selling Games Workshop and starts coverage of Alba with a buy recommendation.
It is a buyer of IBS Open Systems, Entertainment Rights and Leadcom, but downgrades Close Brothers from hold to sell and says add Spring Group
coeliac1 - 23 Feb 2006 12:04 - 126 of 955
Thanks for spotting that PP. Its good to see we are not the only ones who think this is a decent business with excellent prospects.
PapalPower
- 23 Feb 2006 14:13
- 127 of 955
L2 is now 4 v 1 very strong, and we could be back to the days earlier high soon.
Very bullish to do this on results day after a large rise into results, but then, the results were in fact, very very good and highly bullish going forward.
90p target, soon will be upgraded when the first new larger contracts come in and are announced.
Very bullish to do this on results day after a large rise into results, but then, the results were in fact, very very good and highly bullish going forward.
90p target, soon will be upgraded when the first new larger contracts come in and are announced.
PapalPower
- 23 Feb 2006 16:15
- 128 of 955
274K X trade.
Someone/insti snapped up a load of shares this morning, this is what cause the turnaround into blue :)
Hope they and their friends are back for more soon !! :)
Someone/insti snapped up a load of shares this morning, this is what cause the turnaround into blue :)
Hope they and their friends are back for more soon !! :)
coeliac1 - 24 Feb 2006 15:27 - 129 of 955
Surprisingly quiet considering the excellent results
PapalPower
- 24 Feb 2006 16:32
- 130 of 955
But LEAD still strong, thats the bullish sign after good results, people not selling, and new people paying full price to join or top up.
PapalPower
- 25 Feb 2006 16:59
- 131 of 955
Altium has a buy rating on LEAD and so does CS, with upgrades and new contracts to come, it will not be so quiet all this year ;)
coeliac1 - 27 Feb 2006 08:07 - 132 of 955
Good to see the buy ratings- especially those of us who are long on this stock!
PapalPower
- 28 Feb 2006 08:23
- 133 of 955
LEAD stilll going strong coeliac1 :)
coeliac1 - 28 Feb 2006 09:24 - 134 of 955
Yes even in this morning's weak market too.
PapalPower
- 28 Feb 2006 09:26
- 135 of 955
No real visible volume too, good signs.
coeliac1 - 28 Feb 2006 10:05 - 136 of 955
I see the order book for this year is 70% of the 2005 actual so there is quite a lot of potential for yet further upgrades on any sort of new order announcements. I also like the look of prospects for increasing orders for service management from existing sources which will give a firm base for the future.
PapalPower
- 01 Mar 2006 03:33
- 137 of 955
Yes coelic1, a very good chance of a few decent upgrades to come.
PapalPower
- 02 Mar 2006 03:28
- 138 of 955
Still looking strong, we should be in the high 70's soon.
coeliac1 - 02 Mar 2006 08:20 - 139 of 955
True PP, but you really should get some sleep at nights my friend!
PapalPower
- 07 Mar 2006 13:16
- 140 of 955
coeliac1 I am out of the country now, so time zone for me is fine, but I hate dial up internet... !!
Thanks to macansy at AFN :
Excerpts and highlights from that 45 page Altium note ;-)
Investment Case
"A number of demand-driven factors... suggest that the demand for telecom infrastructure services in emerging markets will continue to grow at 30%-40% for forseeable future... the short to medium term demand backdrop for Leadcom looks extremely healthy."
"Several conversations with a number of Leadcom's partners in Latin America reveal that there is no other services provider with a similar level of technical expertise, experience, flexibility and geographical reach in the region..."
"The company has established itself as default choice for its partners in Latin America and Africa and as a result is often awarded large projects without having to go through a competitive tender... a number of Leadcom's partners are already screaming out for the firm to expand into new territories where they have operations or opportunities..."
"Still significant potential for expansion of its geographical footprint... plenty of growth potential in new markets such as India, Central Asia and even the U.S... As well as expanding geographically, Leadcom has recently started working with new equipment vendors such as Siemens and Huawei..."
"The growth prospects for Leadcom in the short and medium term may be even better than over the past few years..."
"We are confident that further, possibly material, upgrades will follow in the next few months.."
"Possible outturn for the year of $161.2m, compared with our forecast of $130.6m - reinforces our view that our estimates for the year are likely to prove conservative..."
"expect trend of margin expansion to continue though due to rising option expenses expect a small decline in operating margin in 2006..."
"free cash flow is expected to expand to $9.6m by FY2008E. We forecast net cash of $13m in Dec 2008..."
"Leadcom trades at a significant discount to the wider market and to the telcoms and technology sector... we believe the discount is unwarranted... prospect of 27% earnings growth over the next few years should persuade investors that the stock should continue its upwards rerating... we expect potentially material earnings upgrades over the next few months to provide further catalysts, if required, for continued outperformance."
Potential investor concerns
Altium comment on potential investor concerns and advise that the worry about continued growth at the same historical rate is not a concern - they forecast CAGR to continue at approx 30% for the next three years compared to 50% over the last three years -however it is stressed that this is a very conservative forecast and doesn't take into account any material upgrades.
They stress that more of a concern is Leadcom's ability to manage this growth whilst maintaning margins and quality of service etc - Altium conclude that they do not see this as a problem due to the quality of management and measures/strategies being put into place to manage these issues.
Altium also stress for various reasons that they see little geographical/geo-political risk (mainly due to LEAD's non-reliance on any one particular region) although they do point out that certain countries, principally in the Middle-East and North Africa, will effectively be off-limits to Leadcom in the present political climate.
Currency risk is minimised by dealing in US$, credit risk with emerging market customers is neutralised by gaining a letter of credit from any customer deemed to have questionable creditworthiness.
It is also pointed out that, in general, new Israeli tech IPO's have disappointed but that LEAD has been the best performing of all the Israeli tech AIM entrants over the past year...
The trend for LEAD's partners to continue to outsource is set to carry on and a "return to the days of armies of employees integrating their own network equipment are long gone.."
Comment is also made on LEAD's reliance on Nokia for revenues (accounting for just under 50% of 2005) and advises that as business (partners) and market share grows, so will the reliance on Nokia lessen, however Nokia is the major player in this field, having a very close relationship with LEAD and that they are likely to remain Nokia's number one partner for some time...
LEAD's principal partners Nokia, Ericsson and Nortel etc are coming under attack from low cost Chinese providers such as Huawei and ZTE but LEAD have already executed some contracts for Huawei and are in negotiations with ZTE on others and as such this is unlikely to have an unduly adverse effect - LEAD is well placed with both established and emerging solution providers...
Valuation
"We have constructed a discounted cash flow model in order to provide a sanity check and in order to estimate the underlying value of the business on a medium term view. As usual, our assumptions are highly conservative, both in terms of revenue growth and operating margin and terminal growth rate and beta. Using a discount rate of 10.4%, our DCF model suggests a fair value of 116p"
Growth Drivers
"Although at first sight it may seem difficult for Leadcom to maintain its revenue growth of the past few years, we believe that, if anything, growth could accelerate in the short to medium term. In simplistic terms, the market for telecom services in emerging markets is also growing rapidly..."
Acquisitions
"Thus far, Leadcom's growth has been entirely organic. However, management has said that it would not be averse to looking at selective acquisitions in the future in order to gain a footprint in new territories or to deepen its knowledge base in a particular technology. We are of the opinion that there is more than enough expansion potential for Leadcom to continue to grow organically and that the company has shown itself to be highly effective at setting up operations in a new country very rapidly on its own..."
"Leadcom's $135m revenues is such a small percentage of the $800bn global telecoms services market that continuing to win market share, as it has been for the last few years, should actually not prove all that challenging..."
Competitors
Altium list Leadcom's principal competitors as Alan Dick, Bovis Land Lease, LCC International, Lemcon Networks, Lucent Worldwide Services, Mycom, Pryscom and Relacom. They then go on to say that few of them can match Leadcom's combination of wide geographical presence and extensive portfolio of technology solutions and that they expect Leadcom to continue winning market share from them...
Scenario Analysis - summary
"Leadcom has consistently demonstrated its ability to outstrip, often by a not inconsiderable margin, its own and market forecasts. Having spent some time with management on the subject of the company's interal forecasting methodolgy and also with partners discussing their plans for 2006, we are confident that our revenue estimates represent something of a worst case scenario.
In our view, therefore, Leadcom should be able to achieve our 2006E forecasts based on the current order book and pipeline with some comfort. This effectively assumes that the group wins no further new contracts of any significance for the rest of the year. Given the historical win rates and frequency of contract announcement, this is highly unlikely..."
Thanks to macansy at AFN :
Excerpts and highlights from that 45 page Altium note ;-)
Investment Case
"A number of demand-driven factors... suggest that the demand for telecom infrastructure services in emerging markets will continue to grow at 30%-40% for forseeable future... the short to medium term demand backdrop for Leadcom looks extremely healthy."
"Several conversations with a number of Leadcom's partners in Latin America reveal that there is no other services provider with a similar level of technical expertise, experience, flexibility and geographical reach in the region..."
"The company has established itself as default choice for its partners in Latin America and Africa and as a result is often awarded large projects without having to go through a competitive tender... a number of Leadcom's partners are already screaming out for the firm to expand into new territories where they have operations or opportunities..."
"Still significant potential for expansion of its geographical footprint... plenty of growth potential in new markets such as India, Central Asia and even the U.S... As well as expanding geographically, Leadcom has recently started working with new equipment vendors such as Siemens and Huawei..."
"The growth prospects for Leadcom in the short and medium term may be even better than over the past few years..."
"We are confident that further, possibly material, upgrades will follow in the next few months.."
"Possible outturn for the year of $161.2m, compared with our forecast of $130.6m - reinforces our view that our estimates for the year are likely to prove conservative..."
"expect trend of margin expansion to continue though due to rising option expenses expect a small decline in operating margin in 2006..."
"free cash flow is expected to expand to $9.6m by FY2008E. We forecast net cash of $13m in Dec 2008..."
"Leadcom trades at a significant discount to the wider market and to the telcoms and technology sector... we believe the discount is unwarranted... prospect of 27% earnings growth over the next few years should persuade investors that the stock should continue its upwards rerating... we expect potentially material earnings upgrades over the next few months to provide further catalysts, if required, for continued outperformance."
Potential investor concerns
Altium comment on potential investor concerns and advise that the worry about continued growth at the same historical rate is not a concern - they forecast CAGR to continue at approx 30% for the next three years compared to 50% over the last three years -however it is stressed that this is a very conservative forecast and doesn't take into account any material upgrades.
They stress that more of a concern is Leadcom's ability to manage this growth whilst maintaning margins and quality of service etc - Altium conclude that they do not see this as a problem due to the quality of management and measures/strategies being put into place to manage these issues.
Altium also stress for various reasons that they see little geographical/geo-political risk (mainly due to LEAD's non-reliance on any one particular region) although they do point out that certain countries, principally in the Middle-East and North Africa, will effectively be off-limits to Leadcom in the present political climate.
Currency risk is minimised by dealing in US$, credit risk with emerging market customers is neutralised by gaining a letter of credit from any customer deemed to have questionable creditworthiness.
It is also pointed out that, in general, new Israeli tech IPO's have disappointed but that LEAD has been the best performing of all the Israeli tech AIM entrants over the past year...
The trend for LEAD's partners to continue to outsource is set to carry on and a "return to the days of armies of employees integrating their own network equipment are long gone.."
Comment is also made on LEAD's reliance on Nokia for revenues (accounting for just under 50% of 2005) and advises that as business (partners) and market share grows, so will the reliance on Nokia lessen, however Nokia is the major player in this field, having a very close relationship with LEAD and that they are likely to remain Nokia's number one partner for some time...
LEAD's principal partners Nokia, Ericsson and Nortel etc are coming under attack from low cost Chinese providers such as Huawei and ZTE but LEAD have already executed some contracts for Huawei and are in negotiations with ZTE on others and as such this is unlikely to have an unduly adverse effect - LEAD is well placed with both established and emerging solution providers...
Valuation
"We have constructed a discounted cash flow model in order to provide a sanity check and in order to estimate the underlying value of the business on a medium term view. As usual, our assumptions are highly conservative, both in terms of revenue growth and operating margin and terminal growth rate and beta. Using a discount rate of 10.4%, our DCF model suggests a fair value of 116p"
Growth Drivers
"Although at first sight it may seem difficult for Leadcom to maintain its revenue growth of the past few years, we believe that, if anything, growth could accelerate in the short to medium term. In simplistic terms, the market for telecom services in emerging markets is also growing rapidly..."
Acquisitions
"Thus far, Leadcom's growth has been entirely organic. However, management has said that it would not be averse to looking at selective acquisitions in the future in order to gain a footprint in new territories or to deepen its knowledge base in a particular technology. We are of the opinion that there is more than enough expansion potential for Leadcom to continue to grow organically and that the company has shown itself to be highly effective at setting up operations in a new country very rapidly on its own..."
"Leadcom's $135m revenues is such a small percentage of the $800bn global telecoms services market that continuing to win market share, as it has been for the last few years, should actually not prove all that challenging..."
Competitors
Altium list Leadcom's principal competitors as Alan Dick, Bovis Land Lease, LCC International, Lemcon Networks, Lucent Worldwide Services, Mycom, Pryscom and Relacom. They then go on to say that few of them can match Leadcom's combination of wide geographical presence and extensive portfolio of technology solutions and that they expect Leadcom to continue winning market share from them...
Scenario Analysis - summary
"Leadcom has consistently demonstrated its ability to outstrip, often by a not inconsiderable margin, its own and market forecasts. Having spent some time with management on the subject of the company's interal forecasting methodolgy and also with partners discussing their plans for 2006, we are confident that our revenue estimates represent something of a worst case scenario.
In our view, therefore, Leadcom should be able to achieve our 2006E forecasts based on the current order book and pipeline with some comfort. This effectively assumes that the group wins no further new contracts of any significance for the rest of the year. Given the historical win rates and frequency of contract announcement, this is highly unlikely..."
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