1Spatial – Mega Contract win – shares have doubled in 3 weeks ( will double again)

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Today comes news from AIM listed tech stock 1Spatial (LSE:SPA) that it has secured a major new contract win and the shares have raced ahead to 4p on the news. But the gains are not over yet and here is why.

© Image copyright n0ssc

As it happens I wrote that shares in this company were a “compelling buy” HERE just three weeks ago at 2p after a chat with CEO Marcus Hanke.  At the time my BB tormentor Bob (still licking his wounds after going long of JJB when I said it was going bust as it duly did) noted:

Tom you have consistently called this wrong in terms of profits and net cash. Is this time likely to be any different?

Having tipped the shares at 3.625p in August 2010 on a site whose name we do not mention and here at 2p three weeks ago I would suggest to Bob that a) consistently wrong is not quite accurate and that b) let’s hope folks followed my call not his on both 1Sparial and JJB and that c) he is a still a deranged and obsessive old coot with an addiction to factual inaccuracy. I digress…

Today’s brief statement reads:

The board of 1Spatial plc the AIM quoted business technology and profit improvement specialist, is pleased to announce a five year contract has been entered into to provide a US Government Bureau with software and related services. The board believes the contract is likely to have a positive material impact on the group’s results to January 2013 and beyond.

Marcus Hanke, CEO of 1Spatial plc, commented:

“We are delighted with this latest contract win. Not only does it enhance our presence and credentials in the US, but the length of the contract provides strong visibility as the Group focuses on organic growth and operating cash flow generation.”

I am not altering my forecasts on the back of this. I am still looking for EBITDA of c£2 million this year and closer to £3 million next. The company has net cash of c£4 million but if it sold Storage Fusion (the noncore unit which makes a trivial contribution of sod all to EBITDA) then I reckon net cash would be anything between £7 million and £14 million.

And so at 4p the market cap is £12 million. At the bottom end of the SF sale valuation the EV is £5 million – a one year out multiple of less than 2. At the top end of the SF range the EV is MINUS £2 million.

So what is my target price? I will go for a mid range SF valuation of £7 million. And valuing core 1 Spatial on 5 times next years’ EBITDA I get a s-o-p valuation of £24 million or 8p a share and with upside risk. The shares have doubled in 3 weeks. They can double again. Still a very strong buy.

 

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Comments

  1. Bob says:

    TW

    You have ramped SPA numerous times at much higher prices on t1ps.com and on several occassions made profit forcasts and net cash forcasts that were woefully inaccurate.They have recovered on the back of today’s news but that doesn’t alter your poor history in this stock. I hope for your ex-subscribers sake the shares recover to previous levels.As for your immature personal attacks my best advice is ‘get a wife,sorry life’

  2. don shuter says:

    to be fair to Bob you have called this wrong numerous times, let’s hope its different this time. Re your comments the other day on IFM, does that constitute a ‘tip’ also?

  3. gordon says:

    Spot on Bob. Tom’s technique is to repeatedly tip a stock as the price declines. Then , when the price inevitable rebounds a bit (but to nowhere near the original tip level) , to claim it as a great tip !

  4. Bob says:

    The shares are now 7.25p but we still buy. The shares just have to be worth 12p and under some scenarios more – our 1 year target remains 15p plus.

    Tom Winnifrith

    Quote from TW in March 2011 set the scene

  5. Bob/Gordon/Don

    All I need now is Jen and I get my 4 biggest fans and most frequent commentators all one 1 thread. :)

    Now just to separate fact from abuse.

    Fact – average gain per tip over 12 years – c 230 tips just under 40% on an average holding period of 36 months.

    And so the idea that I repeatedly “tip all the way down” is odd when most tips have actually gone up.

    SPA is now up on the original tip price. Yes I repeated the buy advice at higher levels. So far that has not been a good call. I am sorry about that. But you know if you bought at 7.5p but bought an equal amount at 2p the other day you would actually be ahead.

    To be fair, although I am not sure that you Gents really want to be fair on me, when I look at my Perf table and see I tipped NIS at 81p and it shows a 14% gain at its takeout price. But that does not tell the whole story as it slumped to 15p and I tipped it at much lower levels (including 15p). For some folks that was a 5 bagger.

    IFM, not a formal tip but I do reckon the shares are very cheap. I comment on a stack of shares and give my call on them all. If I launch a new service which makes formal calls I am sure that you three will be among the first to subscribe. Not.

    Bob & Don – check out my offer to Gordon on the NGL article thread. I am happy to make exactly the same offer to you two so that you can get everything off your chest in person. I promise that you will not be poisoned.

    Best wishes to you all & hope to see you face to face in Clerkenwell soon for a friendly chat.

    The offer is there

    Tom

  6. don shuter says:

    Sounds fair to me, will be in touch, thanks.

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