Tipped by the independent 2/01/2004

........."And so to our traditional "wild card". Pipex Communications, formerly known as GX Networks, is a telecoms company created by one of the entrepreneurs behind Ukbetting, Peter Dubens. It has been assembled from six smaller players. The ambitious company is generating cash for the first time but is still not widely followed in the City. It could be an undiscovered gem".

Do we think the mm are aware of what is going on with this conpany

Especially as some of their acquisitions incorporate this Wi-Max technology. It all depends really on what percentage the wireless market will be Wi-Max? Sounds exciting, and it shows that their business model is looking to new trends. Once the big US companies start offering this chip in all their computers we should see this grow more rapidly.

How long though before we see results? At least Pipex have their fingers in all the pies!

NJ

nmjnmj,

Forget the big US companies, Intel are doing the on-chip deals with the Taiwanese/Korean/chinese ODM's - it is they who actually make the notebooks - the 'brand' names don't make a single notebook/laptop/pda - they simply put a different chassis and brand name on them!

Just believe these chip deals have already been done by Sean Maloney (a Brit by the way)...when this service hits the uk, it will take it like storm and the roll-out costs are insignficant compared to 3G..

regards to all.

T..

Lemming Investor now tipping this one.......................

Pipex Communications PLC (PXC)


Elric Lloyd-Langton

September 11 2004

Pipex communications, (7.50p) a quality alternative communications company, in a growing sector; broadband internet access, web hosting, and domain name registration. Formerly known as GX networks, the enlarged group has grown from a minor player in the telecom sector through acquiring no fewer than six competitors in the last 18 months; Pipex in October 2003 and Host Europe in April this year. Pipex are sitting pretty as the UK's 5th largest broadband internet access provider, a position the company strengthened with the acquisition of AccentUK for 12.9 m best known for its Nildram brand, which brought with it 35,000 higher-margin business clients, boosting Pipex customer base to 170,000 up to August, as well as the small matter of 14m revenues Nildram adds to the coffers, there are additional benefit of greater exposure to high end broadband business. It should be noted that AccentUK is already profitable.

As the share price indicates, the city has not yet woken up to what is happening at Pipex, currently trading on a 2005 PE of 14x, which represents 40% discount to the European ISP sector. The PE is expected to fall to 9.8 by 2006 as estimated earnings to rise to 155.8m, from estimated 133.4m in 2005.

Investors may be wondering why the share price has not improved on a par with the groups progress, look no further than a prospect of a price war among sector rivals, this would have an adverse effect on the groups revenues.

Another factor could have a knock on effect, BT raising its wholesale prices for business IPStream by up to 32%. As PIPEX is a reseller it either has to absorb
these costs its self, or pass them on to clients. absorbing the costs themselves would of course hit group margins.

Services

The company's broadband business accounts for 42% of turnover, estimated to be 48% in 2005, just 10% at the same time last year, adding c2,000 broadband customers each month, even without acquisitions. There are currently 4.4m broadband users and 2.8m DSL and 1.6m cable modem users, estimates expecte broadband users to rise to 6m by 2006 and more than 9m by 2008, even so, this would still leave the UK off the pace with the rest of Europe.

Current revenue mix from these sectors are; broadband 46%; hosting 20% and domain names/security 5%. Gross margins were 46.5% for the half year to June 2004 up 7%
from the same period last year and 3% higher than for the full year 2003. This latter improvement was driven by the increase in hosting (high margin) revenues in the service mix following the acquisition of Host Europe.

Once you strip away acquisitions organic growth accounts for a healthy 14% on top of acquired revenues. The fastest growing parts of the market are broadband, shared hosting and domain name registration where we have strong market positions in the UK; broadband number 5; SME hosting number 1 and UK domain names number 1.

Voice over Internet Protocol (VoIP) technology enables users to bypass the traditional telephone exchange and make calls over the internet for next to nothing. The group is preparing to launch its first VoIP product later this year.

Pipexs most interesting development yet, WiMax; wireless internet technology to the next level. It will enable the user to access broadband internet anywhere within a 50km radius of an aerial, and 30km in built-up areas. Pipex is one of only two companies who have been granted a license to sell Wimax in the UK. They expect to start developing the product next year, once Intel has developed the necessary chip.

Finances

The pick up in demand for broadband has propelled Pipex to profitability for the first time in H1 as demand for broadband internet access continued to strengthen, with revenues soaring from just 11.1m last year, to 43.6m, earnings buzzed at 4.9m before interest, tax, depreciation and amortisation, up from a loss of 1.9m in the first half of 2003. The groups gross margins are 46.5%, which should further boost the coffers as the group increases efficiency across its business model.

Strategy

The groups strategy of bundling broadband services, along with the scope for cross selling group products to existing clients., focusing on its on two of the strongest
growth opportunities in the UK market. Broadband ISP and webhosting.


PXC

MK 172m

cheers Gf.

Better not tell anyone but Pipex has gone blue

Sean Maloney? Is that the wee dwarf that plays for Celtic, haha

MMs maybe short of stock....just been quoted 7.75p to sell 250,000

could be a BIG buyer has emerged given these bargain basement prices!

Need to sit down. the shock !

Troys,

this is only the beginning!

The beginning of what ? the end ?....
Seriously though, what can we expect over the next couple of weeks ?

skyhigh,

from a charting perspective I really would like to see a breakout above 9p within the next couple of weeks...

at this level we would have a much better platform for lift off towards Collins Stewart short term target of 14p

Lets all hope this is the move north that we all been waiting for.

I am Still tempted to top up.

I still find this a worrying stock. It was not too long ago it was 12p and since then we have had much good news................hence the 7.75 price now!!
I like most believe this is an aggressive well run business but I cant explain the share price performance which in the short term does not worry me, but it has now underperformed for quite a while.Regretably can state several poor share performances from excellent performing companies(eg CYH,ERT)At what stage do you move your money to a share that the city does like?
Not wishing to sound pessimistic but I cant see the point in waiting forever....lets face it you get 5% in the building soceities! - although not as exciting.

willfagg

Well said I totally agree.

MS

wilfagg,

you concerns are really not warranted, there was imho only once issue that the institutions were getting sligtly worried about, and I can see that they have moved to directly deal with this, i.e. integration concerns..

If you read the lastest buy recommendation from investec, you wouldn't be worried in the slightest. Bottom line is this will be 14-16p within 12 months, count on it!

regards

T..

I hope your right Wil. 10p will do me for the moment.

cheers Gf

Tradx,

do you have a link for the Investec buy note?

I've seen the Collins Stewart July note and I'd be interested to compare the other brokers forecasts for Pipex going forward...

CS were forcasting 0.69p eps for 2005, without factoring in the Accent acquisition....11x multiple on 2005 earnings does look incredibly cheap to me!

another 2,275,000 trade today. looks like a buy?

Mack1705,

there is no link that I know of, put up an email address and I will email it to you...for everyone else ----chase Mack!!

regards

T..

Tradx

u can send me a private message by clicking on the blue user name attached to this response.

thanks in advance.