Hey mate, seems similar to what I'm aware of. $1.10 target. Courtesy of Simon Dumaresque of Eureka, he was on the money with VTG...
UXC Limited (UXC) – Maintain BUY
UXC provided guidance towards the end of June, which projected earnings in the second half to be approximately double that of the first half. Management then came back to the market at the end of July with further news that debt had reduced to $4.4 million against the previous guidance of $34 million. The debt reduction was due to strong cash collection and the delivery of milestones on key projects. The final result is due to be announced on August 28.
The first half was impacted by disappointing project execution in the infrastructure division, with project overruns costing at least $4 million. Management claimed to have learned critical lessons and have concluded that extra care will be taken to ensure more accurate tender pricing and the breaking up of large projects into smaller deliverables. The strong second half provides evidence that the situation is under control.
After slightly downgrading my prior forecasts, the valuation and price target is reduced from $1.20 to $1.10. Both my forecasts and consensus earnings forecasts don’t assume the company achieves its medium-term earnings margin targets. For the consulting division the earnings before interest, tax, depreciation and amortisation (EBITDA) target is 9-10%, for applications it’s 11-12%, and for infrastructure it’s 4.5-5.5%.
UXC has the opportunity to benefit from an eventual sector uptick and to leverage its strong relationship with each of the four key application vendors – Oracle, SAP, Microsoft Dynamics and ServiceNow. Management has done an excellent job integrating acquisitions, and is well placed to benefit from an increase in cloud-based applications.
I maintain my Buy recommendation, noting the discounted FY15 PE of 10, and I see upside risk to my earnings forecasts and $1.10 valuation when the sector eventually picks up.
To see UXC's Forecasts and Financial Summary,
click here.
You can get a trial to see his forecasts, I won't be putting them up.
