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Lizard
18-07-2006, 09:38 PM
For any other eccentric value investors out there that like to be diversified beyond mining stocks...

KLM Group is a provider of electrical, data and communication services in the Australian market. Formed in 1980 by current MD, Peter Jinks, and his brother. Reached revenues of $22m pa by 1999. Acquired July 1999 by then-listed telecoms company, Pracom, for $6.5m. After Pracom melted down in the tech-wreck, the Jinks brothers were able to use another listed tech-victim, Eftnet Technologies as a vehicle to repurchase and list KLM Group in December 2002, paying a cash price of $2.3m.

The group made a 3 acquisitions in mid 2003 to increase geographical diversity, acquiring assets and operations in Western Australia, Victoria and Perth. So far in 2006, a further three business have been purchased, expanding into Adelaide and adding two businesses which increase the diversity of added-value services in the recently established "Technology Division".

The group has extended services in electrical service integration, audiovisual, building automation, energy management and asset maintenance. Future emphasis is on higher margin technology products such as automated lighting systems, audiovisual systems, video conferencing, security and access control and energy efficiency audits.

As a business, the company appears so far to have demonstrated steady capital management and candid shareholder communications.

In the year to June 2003, KLM Group had revenues of $35m for the full year of which $18.2m were recorded against the listed vehicle, with a net loss of $0.18m. In the June 2004 year, revenues grew 50% to $52.5m. However, substantial losses against contracts during the second quarter resulted in a final operating loss of $1.4m. An additional $2.0m write-down of goodwill and $0.2m write-down of tax benefit, resulted in a total $3.6m loss. This lead to greater focus in moving the company away from dependence upon large, low margin contracts, towards more specialist, technology solutions.

The year to June 2005 saw a further 16% increase in revenue to $61m, with a net profit of $1.92m. A maiden 1 cps final dividend was paid. At the current share price of 35cps, this is equivalent to a P/E of 10.7. Since then, the company has further expanded revenues by 39% for the half year to Dec 2005, giving revenue of $42.9m and NPAT of $1.13m for the period, despite moving from a nil-tax to full-tax paying position. A further interim dividend of 1cps has been declared, bringing the yield to 5.7% plus franking credits.

At half year, the company confirmed that it expects to exceed $80m in revenue for the full year, with second half profits in excess of the first half. This points towards a profit in the region of $2.4m, giving a forward P/E of 8.5 and a forward price/sales ratio of 0.26.

Looking forward, the company has managed to grow revenues by an average of 33%pa over the past 3 years. A continuation of high growth rates should see profits grow at a similar rate. While they will be vulnerable to any economic slowdown, I would expect them to be able to pass on raw material and labour cost increases in the current environment. Any growth in margins through the current strategic focus would be a bonus.

My current valuation is 67cps.

Lizard
28-08-2006, 01:22 PM
KLM result out. Came in slightly ahead of target at $2.5m, with final dividend of 1cps. Revenue was ahead of forecast at $87m. Predicting some slow down in the Victorian market, but still forecasting revenue of over $100m for 2007. At 39cps, current P/E is 9.1, yield is 5.1% plus full franking credits. Free cashflow was ahead of profit at $3.3m

The company had $7.4m in cash at end of June (12.7cps) although around one third of this has been spent on the recent purchase of Allied Technologies.

I am currently allowing for FY07 NPAT of $2.9m, (eps 5.0cps). Valuation 73cps.

tommy
08-09-2006, 03:31 PM
I'm surprised KLM share price hasn't increased that much since full year results announcement... yamn.

Taking a long time for market to wake up to the results, so gonna stick this one under the draw and take a look at it in six months time.

Still holding Lizard and KM?

Lizard
08-09-2006, 03:49 PM
Yes, still holding. Seems to be a big seller out there doesn't there? Keeps the offer side well stacked since the announcement.

Lizard
26-09-2006, 05:02 PM
Hunter Hall stumped up with a SSH notice for KLM yesterday. Amazing that they managed accumulate over 5% without really moving the price...[}:)]

Anyway, hope that marks the end of the big volume on the offer side. A few buyers moved in today to give the price a nudge up to 41cps.

Lizard
29-09-2006, 08:09 AM
Closed at 45cps yesterday, with sellers at 47cps. New high for KLM group I think. Helped by Microequities releasing an upgrade to "strong buy" with a price target of 60cps.

Snow Leopard
16-10-2006, 03:47 PM
Not the most heavily traded share on the ASX is it?
I may have trouble buying into this one.

Lizard
16-10-2006, 04:15 PM
Bit of a problem for many non-resource stocks under $100m market cap. Liquidity is sporadic unless they are the subject of a Hotcopper ramp or catch the attention of the institutions. If they don't provide any action for the traders, it becomes self-perpetuating. (IMD liquidity was pretty similar a little over a year ago).

Snow Leopard
16-10-2006, 04:54 PM
My enthusiamism for this stock is heightened by the discovery that it is not in fact the Dutch airline* or in anyway related to it.

*They once held an international flight up for over 30 minutes for the benefit of me and the tigress, and I hold them in awe ever since despite one of their stewardess covering me in orange juice partly:
because the turbulence over high over the Sahara can be very dramatic;
I have still not paid for the flight nearly ten years later.

Lizard
31-10-2006, 02:20 PM
First quarter results contained in AGM presentation:

Revenue up 40% to $28m

EBIT up 69% to $1.2m

NPAT up 73% to $850k

Looks on track with my recent estimate of FY07 NPAT of $3.4m, so fully diluted forward P/E of 7.6 on current sp of 42cps, (plus cash of $7.5m or 12cps if I have it correct in my records post ATA acquisition?).

Snow Leopard
01-11-2006, 12:03 PM
from 1st Qtr Profit Announcement (http://sa.iguana2.com/cache/04c531e0b6d1a1373821d07c13e360cb/ASX-KLM-264498.pdf)
"The company is very pleased with its first quarter result".

:)

Thanks to Lizard for introducing me to this one.

Snagage
01-11-2006, 01:10 PM
I'm wondering where there was such a slow reaction to the Q1 profit. They already announced it yesterday in the AGM presentation.

I was going to add more yesterday but decided against it as I'm already overweight in KLM.

Lizard
01-11-2006, 09:45 PM
I thought about trying for a quick trade yesterday too Snagage, but didn't have spare cash for trading and decided to just stick with posting the details on ST in case someone else could use it.

Nice to see it hit 50cps today. Looks like backing off to the mid 40's again though, so probably anyone looking for more could wait in the queue back there with reasonable odds.

Lizard
18-11-2006, 01:29 PM
Now 55.5cps following a good write-up by Smart Investor magazine. :)

Lizard
30-11-2006, 01:37 PM
Hit 70cps today - double when I started the thread in July. Plus divi. Nice to know there is still money to be made in something other than resource stocks!

Zephyrus
12-02-2007, 09:29 PM
Back down to 56.5cents.

Looking like a bargain again.

Lizard
16-02-2007, 05:55 PM
Might have been a good call there Zephyrus. Bit of a push up today in the jockeying for positions that goes on just prior to results. I bought a few more at 57.5cps, but I probably won't feel certain about the wisdom of that until I actually see the result. This time of year I can become a nail-biter.

Lizard
26-02-2007, 08:19 PM
Reported HY NPAT of $1.8m, up 63%. Outlook is for similar second half NPAT so working on $3.6m NPAT for FY, then at 60cps, they are on a forward P/E of 10.3. Dividend increased to 1.5cps, so rolling 12 month dividend yield of 4.2%. My current valuation is 75cps.

Lizard
20-03-2007, 09:12 AM
Being going nowhere of late, with price currently 58cps. But some reasonable size parcels bought yesterday might signal that it's getting ready to make another run. Current forward P/E a touch below 10.

Snow Leopard
17-04-2007, 06:16 PM
I find it rather strange that this one is sitting at 50c. With an expected EPS of 6cps+ this year and a probably final divvy of 1.5cps to match the HY (it went ex-div yesterday) this really is an underpriced nice little earner...
...unless you know something about the near future I don't [?]

Snow Leopard
18-04-2007, 09:51 PM
Remember that the buyers got your advice from me before they got it from you and I am sure that I got it from someone else even before that.
Anyway to all you KLM buyers out there: keep up the good work, anything under 62c is a real bargain (in my opinion).

Lizard
02-06-2007, 09:24 AM
Having taken the Paper Tiger's advice and bought more at 60cps, 56cps and 51 cps, I am relieved to see KLM share price looking like finding it's feet again!

Listened to the presentation and there is lots to like. Pleased to hear them state that the share price fall-off was groundless as far as they were concerned and that the sale of $1m shares by a director was due to an approach by an institution wanting to take a larger holding. Also, progress on integrating ATA acquisition sounded encouraging.

Lizard
27-08-2007, 10:13 AM
Result looks good on the surface, with a 54% increase in NPAT to $3.86m - slightly above my expectations. However, operating cashflows were negative as a result of a near-tripling of inventory - sometimes not so good. A final 1.5cps dividend, putting them on a yield of 4.2% at current price of 72cps and P/E of 11.4.

Outlook is positive with further strong growth expected. My current valuation is 82cps.

Lizard
18-12-2007, 12:25 PM
Selling at a historical P/E of about 9 and probably a forward P/E of below 8 today on current price of 57cps. Somewhat crazy given minimal borrowings and history of strong revenue growth.

Also an "Australian domestic economy" story that will be subject to ongoing demand for electrical services driven by likely growth in IP surveillance, video-conferencing and building energy efficiency.

Snow Leopard
18-01-2008, 07:53 PM
Could not resist when I saw it go sub-50 today :(

Snow Leopard
07-02-2008, 11:10 PM
Well so far so good on the purchase in the last post. ;)
The liquidity is currently in the 'slightly worrying' category but it appears that few are willing to sell this one in panic on down days.
Carrying very little debt and with the market unlikely to slow down in the short or mid-term I am quite willing to stick with this for the foreseeable future.

Zephyrus
08-02-2008, 12:25 PM
It's a sub 10 pe bargain & I've topped up too... The story's only got better since it was 85 cents/share... The price is market/panic driven at the moment... It's only a matter of time before it recovers...

I see RFG in the same light & have bought back in at $1.40 (and no I'm not concerned about their debt/equity ratio)... Check out the latest announcement regarding the half year profit...

David Hardman
21-02-2008, 02:56 PM
It's a sub 10 pe bargain & I've topped up too... The story's only got better since it was 85 cents/share... The price is market/panic driven at the moment... It's only a matter of time before it recovers...

I see RFG in the same light & have bought back in at $1.40 (and no I'm not concerned about their debt/equity ratio)... Check out the latest announcement regarding the half year profit...

KLM are due to report in the next few days.

For a company with a solid track record of growth and minimal debt they are trading on ridiculous cheap multiples.

EPS
2006 4.75
2007 6.42
2008f 7.96 (24% growth as per first qtr results)
2008f 8.66 (35% growth as per previous year growth )
2008f 9.63 (50%)

Trading at 52c
PE around 6.5!

Paying a 3c divi, around 5.7%

They've been sold off this year and have not recovered since. If they produce the expected numbers in the Half Year the stock could go for a bit of a run. Can't be much downside risk....

How many of you are still holding patiently? I bought some more over the last week.

lakeys
21-02-2008, 02:59 PM
yep got heaps since rights issue years ago...its just one of the many bagins out there

Snow Leopard
21-02-2008, 11:12 PM
KLM get a bit of a write up in March's Smart Investor.

Disc: Have some :)

David Hardman
22-02-2008, 05:51 PM
KLM get a bit of a write up in March's Smart Investor.

Disc: Have some :)

Heh.. You didn't have to read past the headline "KLM Group announces steady dividend after profit increase" to realise it was not a very good result.

Blow out in costs doing the damage. Not the result I was looking forward to.

Snow Leopard
23-02-2008, 12:06 AM
30% increase in revenue and it is nearly all blown on "Materials and consumables used" and "Employee benefit expenses".
They admit that the companies have outgrown their systems (bad forward planning?) and they have losses on odd contract (you never get them all right).
So we will find out how good the management is over the coming months.

Disc: have some :(/:)

moe
19-03-2008, 09:52 AM
KLM looking tempting below 50c, surely it can't continue this downtrend forever?

Its got little debt and it's revenue will continue to grow, is it just a case of low volume trading recently and a bit of panic selling by a few holders??

winner69
19-03-2008, 10:04 AM
Could not resist when I saw it go sub-50 today :(

hey PT -- you posted this Jan last year ......

.... and moe has just the same thing today

More than just the ups and downs of the market? or is there something sinister going on?

Hope you sold out over the 80 mark

soulman
19-03-2008, 01:55 PM
I was looking into KLM. Too small and too illiquid for me anyway. Pull out my buy order when the profit result came out, which is a little dissapointing compared with their 1st Qtr.

Good luck to holders but I see earnings volatility in this kind of stock.

Lizard
21-07-2008, 05:46 PM
I think the market just figured it had got a little oversold...

Lizard
29-08-2009, 05:50 PM
Well, if KLM was looking "a little oversold" in July last year at 18cps, it still managed to prove that "cheap" can always get cheaper...

The low of the year was 9cps or a market cap of just $5.5m - for a company that had previously reported $165m in revenues, net cash position and was a regular dividend payer.

Now that $5.5m market cap in March looked a bit silly to me then, but it is looking hilarious now, since they just reported a record second half of $3.5m EBIT with net cash position of $4.1m and 1cps div. Closed Friday at 30cps or $18.5m market cap. Expect a retrace, but still probably got more in it.

I'd conservatively value at 65cps.

Snow Leopard
29-10-2009, 07:59 PM
Programmed Maintenance Services (PRG.ASX) have offered 47c per share for a complete takeover of KLM (http://stocknessmonster.com/news-item?S=KLM&E=ASX&N=326932). The Board are in favour of this and will be accepting the offer.

Personally I feel that the company is worth rather more than 47c and sincerely hope that this does not succeed.

regards
Paper Tiger

Disc: I have been Jinks-ed :rolleyes:

Lizard
29-10-2009, 09:03 PM
I was disappointed by that too. I had definitely thought directors would not let it go for that price. Though I can't be too disappointed, since those shares in March were such a gift.

It bothers me as to what this implies for the Jinks bros view of the commercial construction market. Electrical tender work is fairly late-cycle and the tail-end of the pre-GFC contracts has probably only just worked it's way through the order book. Are they convinced that the hole in commercial construction work they are facing is so massive that locking in maintenance work through this takeover is the best alternative?

Lizard
19-01-2010, 10:37 AM
Bye bye KLM. Offer squeaked through in the end.

Interesting how the bid fell away once the offer became a certainty - does this suggest that those on the bid were buying, not for the arbitrage, but merely as an indirect vehicle for PRG to acquire the numbers?

Snow Leopard
19-01-2010, 03:01 PM
So, I am going to be compulsorily acquired.
Very nice profit but not what I had planned.