What you mean their core business has not shown growth. All the sectors in which adaptIT operates has shown growth except for the Manufacturing sector. Their HEPS has grown by 55% for the year. This is the 5th consective year that Adapt has managed to increase their earnings. They produced the 2nd highest return last year. More than 300%. Their current return to date for this year is over 40% so far. Aquillion has contributed to just over 70 mil to (from a total of just over 400 mil in revenue) AdaptIT revenue and it was only acquired end of last year. They will be expanding internationally. AdaptIT shares are currently oversold (Check RSI). I bought at a price of R1.97. and adaptIT has an all time high of R9.50.
well, we all have our own approach when dealing with companies that grow by acquisition. If a company has a PE of 20, and they buy a company with a PE of 20, then the net gain for you as a shareholder is 0 - unless the sum of parts is greater than the whole. Everything depends on their ability to strike a bargain. In AdaptIt's case - I guess the market didn't think they got a bargain. Me personally, I think the whole IT services space is completely overtraded, and the only growth out there is through Acquisition - and really how many companies in the SA economy can there still be left for the likes of AdaptIt to nibble on the crumbs left by EOH, BCX, etc
Hi, please excuse my ignorance. When they acquire another company that makes say 10B profit a year does that not mean that the ADI shareholders receive that profit, How can this not be a good thing? are the profits diluted by more new shares or something? I'm learning please bare with me.
@Blik - there is a documented strategy out there called Piotroski (sp?) which advocates buying companies trading at or close to TNAV. I think it has legs - but it is a lot of work. @kevin, sure, you would participate in the 10bn income stream - but how mu
But Simon, with the acquisition of acquilion, wouldnt the Profit be 40 million more if AdaptIT did not make the Acquisition. 38 Million was the cost to acquire Aquillion (cash component) plus alloted shares and 2 mil as acquisition expenses as a result of the acquisition. So the Profit would have been 71.2 mil (before the acquisition) profit instead of the 31.2 mil (after the acquisition). All this was reflected in the current financials and the true grouth we would be reflected in the 2015 FY.
After a pretty good run with ADI, today I decided to sell my entire holding. I should have taken my profits when it peaked at 950 but thought there would be more upside. The reason for selling is simple, I feel growth will be significantly subdued going forward. I got in early so have enjoyed a significant gain. I guess time will tell if I should have stuck around for the ride, but with the price on a steady decline I figure take my profits and walk away. For those still in ADI and for those who got in at current levels or higher - good luck!