Adept Telecom; Increased holding. Still looks good value and hopefully poised for move upwards!

10th Sep '13 by johnrosier

14 comments 8166 reads

Adept Telecomm (2.5% of JIC portfolio) I have bought a new holding in Adept Telecom.

It was brought to my attention as it showed up on the "Jim Slater Zulu Principle" screen on Stockopedia:

The following description of its activities is taken from Stockopedia " AdEPT Telecom plc, is a United Kingdom-based company providing voice and data telecommunications services to both domestic and business customers. The Company provides fixed line calls, line rental, mobile and data connectivity products to thousands of business and residential customers across the United Kingdom. The Company offers a range of business telecom products for all sizes of business. AdEPT’s Inbound Call Handling services offer a way to manage inbound calls, with online access enabling customers to implement changes instantly. AdEPT broadband products offer unlimited downloads and Internet speeds of up to 16 megabits, 50 megabits of Webspace."

The Company has grown both organically and through acquisition, in what is still a highly fragmented market, with over 300 companies providing voice and data services into the business market. It has made 18 acquisitions to date, the latest Bluebell Telecom, in August. Bluebell is a classic example; Adept paid £2m with a further performance based deferred payment of up to £0.5m. For this it has acquired 3000 business customers with annualised revenue attributed of £1.8m and should be significantly earnings and cash flow enhancing. Adept expects to sell additional services to the newly acquired customers, thus enhancing revenue per customer and customer loyalty.

Organically, Adept is gaining momentum both in the public sector & charity sector through its ESPO Network and in UK Universities and Colleges through the JANET framework.

Conclusion: I am attracted to the Company as it seems to be well managed, have a good strategy to build its market share through organic growth and sensible acquisitions, in an industry ripe for consolidation. It also seems to be undervalued by the market; the table above, from Stockopedia, demonstrates this well. The shares are valued on a PE ratio of 10.3x consensus earnings forecasts for the year ending March 2014 and 9.5x March 2015 for 9% growth; I would however expect these estimates to be increased over the next year. It increased the dividend by 200% last year and is forecast to grow it by a further 67%…

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Sully8786

16th Oct '13

I've had a look at this one and bought a small position. It could turn out to be a share to tuck away somewhere safe.

lightningtiger

17th Oct '13

Ticks all the boxes green ,over the last 5 years good wonderful growth generally upward. However the general trend from about July is downward, and I never buy on a downward trend personally. Why is it going down? Is it going to drop further? It has hit a stop loss to sell from early September, see the moving green average line cutting at 130. Having said that,,the company still looks sound, it may be profit taking that it has been dropping. On the positive side it should move up again, all the traffic lights are green, so give it go if you want to. It could easily lurch back up again like TEP has done. For me "If in doubt, leave it out" is my motto. Consider perhaps OPAY & the news awarded as top company. I have not tried the traffic light test on it yet.
Cheers from Lightningtiger.

Cheers Lightningtiger, I'll take a look :)

Ok I am in up 2.4% I think cannot get executed deal at Hargreaves currently very frustrating.
130 broken on the stop loss. Its a Go from me.
Cheers Lightningtiger. Succcess at last deal @13:33pm@130

johnrosier

As you know I'm a fan. Looks like profit takers have done their bit. Considering adding to my smallish position in what looks like a well managed, cheap company with reasonable growth

Depends what you mean by reasonable growth. Out of 12 telicom stocks which I have just entered in the folio ADT tops the list with over 100% in the year. I have done well in the past with Colt telicom, May I suggest you consider doing the same, hit the momentum button & observe whats happening. I want to see everything in blue & when it goes red look out.
In my book better profits here than the oil stocks with a 12 to 1 hit rate.
Cheers from lightningtiger

18th Oct '13

Still finding my way round this Stockopedia site. I have now only just found the sectors & there is more than 12 to choose from. In my book, a much better pond to fish in than the oil stocks. This is my 1st go with Stockopedia investing with the "traffic iights" system. You cannot convince me to buy SOCO, with all the chat that is going on, no disrespect for those looking. All I can say to you is there is more fish in the sea. Watch this space. ADT +7.8% SOCO +0.9%
Cheers from Lightningtiger.

19th Oct '13

Hi all,

I'm a complete novice on Stockopedia so I dare say that it'll be a while before I totally get it.

I have no idea as to wht Adept Telecom (LON:ADT) has jumped over the last two days, a problem I'll live with fr now. Let's see how we go with the results next month it could prove to be an interesting 4 weeks or so :)

Best

Sully.

20th Oct '13

Hi lightning tiger,

It looks like the chart has crossed the green line going the other way now. Does this mean more of an upward trend?

Had no idea it would rise so much this week but I liked the look of the company...have a look at the careers section and how the staff are treated....hopefully they can execute on the acquisitions and deliver as promised.

Best,

Sully.

Think of the runner bean, it goes up the pole round & round generally upwards. If it comes off the pole it falls down (goes below the line) or the share drops in value and crosses the line. This is dangerous because it could fall further & you can loose money if you decide to sell. Generally a good company will steadily increase with a trend. Think of a ladder sides touching the high spots and the low spots. The theory is when the stock is at the bottom of the line it should bounce back up again (good time to buy) When it gets to the top line (usually good time to sell or possibly hold on to it. Have a look at PTO , What I like about Stockoperia is all the information about the company has been done for you.
Cheers from Lightningtiger

23rd Oct '13

Cheers Lightningtiger,

I'm not a chartist but I'll keep my eyes peeled :)

Up again today, still no idea why....

Best,

Sully.

29th Oct '13

Adept Telecom (147.5p and 2.6% of JIC portfolio) Interim results for the 6 months ended 30th September, issued this morning look pretty good to me. Pre-tax profits were up 19.6% to £1.03m, post-tax profits were up 30% to £0.68m, adjusted earnings per share were up 14.2% to 7.47p and, reflecting the strong cash flow of the business, the interim dividend was doubled to 1.5P per share. Net debt was reduced by £0.55m even after it spent £2.18m on acquisitions.

Although total revenue fell by 7% to £10.2m the company increased its margins and saw good growth (33.3%), in its “cloud-based contact centre solution”. Furthermore revenue from customers taking 3 or more products increased from 42% in 2012 to 45%. Cash generated from operations after interest, increased by 8% to £1.7m enabling the directors to say “there continues to be considerable scope for a progressive future dividend policy.”

Conclusion; Adept continues to successfully do what it says on the tin and as succinctly described by the Chairman in the outlook statement “The focus of the business continues to be on securing new customers through effective marketing of the various telecom frameworks and development of organic sales channels, maintaining underlying profitability and cash flow generation, which will be used to fund dividends and earnings-enhancing acquisitions.” The shares are up some 16% since I purchased back in September but I expect to make further gains in the coming months. On a projected PE of just over 12x consensus forecasts for March 2014, with strong cash flow and a rapidly growing dividend I am a very happy holder!

Hi John,

These took me a little by surprise this morning, thought they were scheduled for WC 11/11 and I worry about results that are brought forward.
The thing that gave me confidence for further growth going forward was the new Public sector framework (Extract below.

Following the end of the interim period AdEPT has been awarded its third public sector telecom framework. The first was for university data connectivity, the second for local government telecoms and AdEPT has now been awarded a telephony services framework by Government Procurement Service, the purchasing arm of the Cabinet Office. This now gives the company access to central government bodies as well as local government.

All in all a pleasing report followed by what looks like two directors purchasing and retaing their share awards and a bit of profit taking to boot.....

Happy to hold for now....

Best,

Sully.

28th Nov '13

I have added to the holding today taking it to 3.5% of the JIC portfolio.

I am hoping it will bounce off the 21 day closing low, (the bottom of the yellow "Donchian Channel" in the chart below) and I reckon the shares look good value (see Stockopedia stock page for it) so hopefully will resume their up trend.

Adept Telecom; Increased holding. Still looks good value and hopefully poised for move upwards!

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Johnrosier

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