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Video: Gresham House overview of 2019 relseased to coincide with today's trading update
Bearing in mind political considerations, this stock looks very interesting. Have held both RICA and HAST for too long losing on both alternatives and feel the time may be right to sell down all or some there and take a chunk here. Seems pretty safe with a realistic yield and O>K for a boring old boy like me!
I've updated an earlier post showing Simon Thompson's tips for Gresham House and how they've performed.
He's done another big write up in Investors Chronicle, increasing his target to 700p.
This new target reflects:
New forestry assets in Ireland
Fund raises in some of the assets they manage
Organic growth of 30% in assets under management
Increasing profit margins
6/2/17 share price 305, target 400. Target attained 18/12/17, 10 months
20/9/17 share price 335, target 432. Target attained 16/5/18, 8 months
12/2/18 share price 400, target 460. Target attained 24/8/18, 6 months
16/5/18 share price 424, target 500. Target attained 16/11/18, 6 months
19/9/18 share price 475, target 575. Target attained 28/5/19, 8 months
12/11/18 share price 470, target 650.
7/3/19 share price 460, target 650
26/3/19 share price 520, target 650
28/5/19 share price 565, target 700
"profits are set to scale up sharply as last year’s underlying operating margin of 20 per cent ratchets up towards the board's 40 per cent target rate"
"I would recommend staying fully invested in Gresham House though given that the shares offer potentially 41 per cent to my 650p target price. Buy."
I'm a fan of Simon Thompson from the Investors Chronicle. I hold GHE.
I've had a look back through his recommendations which started in early 2016 when he included GHE in his tips for the year.
5/2/16 SP 312 Buy
20/4/15 SP 300 Buy
28/7/16 SP 300 Buy
19/8/16 SP 330 Buy
6/2/17 SP 305 Buy target 400
20/9/17 SP 335 Buy target 432
12/2/18 SP 400 Buy target 460
5/3/18 SP 410 Buy target 460
16/5/18 SP 424 Buy target 500
19/9/18 SP 475 Buy target 575
12/11/18 SP 470 target 650
It's noticeable that the targets he sets here are generally achieved six to twelve months after they've been set.
Simon Thompson from the Investors Chronicle has raised his 12 month target for Gresham House to 650p from 575p.
He's very positive about the new Gresham House Energy Storage Fund, further increases in the funds already running and the protects for cash generation.
The new target is based on £38.5m cash and liquid resources and an an enterprise value of £134m.
The acquisition of Livingbridge is flagged in the RNS as being “materially earnings enhancing”.
Liberum Capital has forecasts for 2019
Pre tax profit £4.95m
If we add the Livingbridge figures of revenue £9.1m and pre tax £5m then Gresham 2019 becomes
Revenue £25.5m, pre tax £9.95m and EPS 35p (based on 28.4m shares)
On top of this, Livingbridge will make one months contribution to 2018 and raise the revenue and pre tax figures (although EPS may be lower due to the increase in shares)
It looks very good to me.
of 575p from Simon Thompson in IC online today.........still a buy for him
but no increase in share price..........?? Cannot see how they could be "priced in".......thoughts please LSE'ers
I think this one might start to move on up a good bit this year , they hope to become profitable ahead of schedule.
why the change of Directors, is it anything to do with Anthony Abel and Derek Lucie Smith overseeing the drop in Memorial Holdings from £2,568,000 to £0 (no value in 2014 interims?)
Proposals for the future of the Company
The board of directors of the Company (the "Board") is pleased to announce that it is in discussions relating to the future of the Company which, if brought to a satisfactory conclusion, would provide an attractive alternative to the current plan of liquidation and distribution as approved at the 2011 annual general meeting. The expected key features of the alternative plan (the "Proposals") include:
-- the appointment of a substantially new board of directors and a new
management team (together the "New Team") whose members would
include individuals with long-standing and successful investment track
-- a new strategic direction for the Company including the proposed
development of an asset management business and investment portfolio;
-- the issue of new ordinary shares in the Company ("Ordinary Shares")
by way of a placing ("Placing") to new investors at a discount
of 11.25 per cent. to the net asset value per Ordinary Share as at 30
June 2014 in order to raise approximately GBP20 million. Preliminary
non-binding indications of interest in subscribing for a significant
portion of this sum have already been expressed to the Company's
-- the issue of warrants ("Warrants"), to be admitted to trading
on AIM, to those holders of the Company's shares (the "Shareholders"),
other than placees, on a one Warrant per five Ordinary Shares basis;
-- the purchase of up to 850,000 supporter warrants (the "Supporter
Warrants") by members of the New Team at a price of GBP0.075 per
-- the cancellation of the Company's listing on the Main Market and the
admission of the share capital of the Company as enlarged by the
Placing (the "Enlarged Share Capital") and the Warrants to
trading on AIM ("Admission");
-- the reduction of the Company's share premium account by cancelling the
share premium arising on the issue of the new Ordinary Shares; and
-- the amendment of the Company's Investment Policy.
It should be noted that discussions are at an early stage and there is no certainty that agreement as regards the implementation of the Proposals, or any part of the Proposals, will be reached. Furthermore, if progressed, implementation of the Proposals will be subject to, amongst other things, approval by the Shareholders (including of special resolutions requiring approval of 75% of votes cast on the relevant resolutions to be cast in favour). If any of the resolutions are not approved by Shareholders, none of the Proposals will proceed.
The Board believes that, if implemented, the Proposals provide an attractive alternative to the current plan of liquidation and distribution which, as announced, will involve a significant amount of
Whilst overall short term borrowings have increased by £1m as a result of the revenue losses, bank loan repayments and property capital expenditure I am pleased to report that the loan facility with the Co-operative Bank in the sum of £9.79m has been renewed for a further 12 months to 31 May 2013 on terms not materially different to those relating to the loan that expired in May 2012 but now with additional security ranking behind the Royal Bank of Scotland (RBS). In addition the loan facility to Knowsley Industrial Property Ltd by RBS of £1,976k has been renewed until 31 December 2013 and that to Newton Estate Ltd of £3,050k, also by RBS, has been extended until 31 March 2013 both on broadly similar terms to the facilities that expired on 16 July 2012.
We continue to focus on the disposal of your Company’s assets and, providing there is no further deterioration in the commercial property market, we believe that it is practical to achieve a liquidation of the Company by the end of 2013.
30 August 2012
We continue to work the portfolio with a view to liquidating the assets by the end of 2013 whilst seeking to maximise their values.
At Newton-le-Willows we are confident that in September 2012 we will secure a valuable consent on 10 acres for a 70,000 sq. ft. (6,500m2) foodstore, petrol filling station and associated car parking. Thereafter we will commence discussions with potential operators.
At Vincent Lane, Dorking, Lidl are due to complete the purchase of 1.2 acres and commence development this autumn. Persimmon Homes have submitted an appeal against the Local Authority’s decision to refuse planning for housing and are confident of a successful outcome within 6 months.
At Deacon Park, Knowsley terms have been agreed for the sale of the Sugarich unit to the tenant.
At Southern Gateway, we have recently completed the letting of a 48,000 sq. ft. (4,400m2) standalone unit to Acumen Distribution on market terms and at Northern Gateway we are currently in detailed negotiations with a potential tenant for this 143,000 sq. ft. (13,200m2) warehouse.
The principal investments remain SpaceandPeople plc and Memorial Holdings Limited. As mentioned previously the former has produced some very good results and consequently we continue to hold this investment. With regard to the latter, which relates to an investment in a 55 acre cemetery at Kemnal Park, the company held its first interment in May 2012 when it buried some ancient bones that were disturbed by the construction of Crossrail in Southwark. The cemetery opened at the end of August 2012 for graveside burials and the chapel is expected to be completed by the end of the year. The latest independent valuation was below our expectations but it is difficult to validate a premium product where there is very little competition in the market. We however remain confident of both the proposed business plan and the excellence of the cemetery.
Our investment in Attila (BR) Limited is looking more positive following the exchange of conditional contracts for the sale of the company’s sole asset being development land in Edinburgh.
Following our normal policy no independent valuations have been undertaken at the half year end and, as a consequence, values have been maintained at the independent valuations of 31 December 2011. We have therefore provided against all capital additions to the property portfolio which amounted to £258,000 in the period to 30 June 2012 compared to £147,000 in the period to 30 June 2011. The principal provisions were against costs incurred in connection with our development sites at Newton le Willows and Vincent Lane, Dorking.
The investment portfolio showed losses of £181,000 during the half year ended 30 June 2012. The principal write down was £358,000 against our investment in Memorial Holdings Limited following a reduction in the independent valuation of the cemetery at Kemnal Park from £47.5million to £40 million, a figure that we believe to be very conservative, and the dilution of our shareholding from 15% to 10.5% as a result of the refinancing and further fundraising necessary to complete Phase 1 of the development.
This write down was augmented by a further provision of £70,000 in respect of our loan to Lancashire Tea Limited and a £50,000 reduction in value of our holding in Wheelsure Holdings plc which is traded on PLUS Markets. Against this I am pleased to report some solid results from SpaceandPeople plc where the book value increased by £247,500 at the period end to 30 June 2012.
NTERIM RESULTS 2012
CHAIRMAN’S INTERIM STATEMENT AND MANAGEMENT REPORT
I am pleased to report on the half year results for the six months ended 30 June 2012 which show an overall loss of £791,000 for both the Revenue and Capital account compared with a loss of £178,000 for the same period in 2011. This loss represents 14p per ordinary share (2011: 0.2p per share) and, as a consequence, the basic net asset value per ordinary share has fallen from 447p as at 31 December 2011 to 432p (cum dividend). Adjusting this figure for the negative balance for non-controlling interests reduces this value to 411.9p (31 December 2011: 427.6p). This reduction is further explained in note 12 to these Interim Results.
The revenue loss for the period ended 30 June 2012 was £352,000 against a loss in the corresponding period last year of £482,000. The principal reasons for the improvement in the results were an overall increase of £81,000 in investment income and a reduction in administrative overheads of £66,000 from £482,000 to £416,000. Investment income benefitted from £215,000 interest from our investment in SMU Investments Limited 12% Loan Stock which had been previously provided against as it was considered prudent to do so until such time as the loan stock was redeemed. The loan was repaid in July 2012 together with accumulated interest which represented an annual interest rate of 20.1%. This was partly offset by a decrease in bond interest of £129,000 as a result of sales since that time.
Arbuthnot upgraded its recommendation for Gresham House (GHE) from "buy" to "strong buy" with an increased target price of 500p, up from 428p. The broker notes that following the passing of a resolution at the May 2011 annual general meeting, the group's investment policy was changed to the orderly realisation of its assets over a period of approximately two years with a view to returning capital to shareholders thereafter. With that said, given management's track record on delivery, most recently the completion of the pre-let development in Aberdeen on time and within budget, Arbuthnot is confident in the group going forward
The revenue loss has decreased from £901,000 in 2009 to £701,000 in 2010. The net asset value per share has shown a slight improvement of 0.7% from 473.7p in 2009 to 476.9p in 2010.
As the revenue loss for 2010 includes a trading profit from the sale of our development site at Curtis Road, Dorking amounting to £591,000, the comparable running loss has effectively increased by £391,000 from £901,000 in 2009 to £1,292,000 in 2010. The principal reason for this increase is the sharp decline in rental income from £2,112,000 in 2009 to £1,435,000 in 2010 as a result of our policy of vacating space at Newton-le-Willows following the granting of residential planning consent and at Vincent Lane, Dorking where we anticipate obtaining residential and retail planning consent. This adverse variance was slightly offset by an increase in our dividend and interest income from £200,000 in 2009 to £446,000 in 2010 as a result of the acquisition of £5.5 million of corporate bonds following the successful sale of our Hallin Marine investment in February 2010 which was low yielding.
Net Asset Value per share
The net asset value per share increased by 3.2p to 476.9p as a result of the increase in the valuation of the property portfolio by £490,000 and gains on the securities portfolio of £813,000. These increases were offset by the revenue loss and costs of £297,000 in respect of fees payable on the Hallin Marine share disposal and the additional investment in Memorial Holdings Ltd which were required to be written off in the year.
Arbuthnot retained its "buy" recommendation for Gresham House (GHE), the property and early-stage investment trust, with a 428p target price. The broker notes that the full-year results contained few surprises in terms of financials with revenue loss reduced to 0.7 million pounds, against 0.9 million pounds, and net asset value (NAV) up from 474p to 477p. The announcement that Gresham intends to realise the groups assets over the next two years, with a view to returning capital to shareholders thereafter, should provide a catalyst for a "significant" reduction in the share price discount to NAV, Arbuthnot added. The shares advanced 27.5p to 345p.
Big rise today on back of exciting Hallin Marine news
Interesting rise here today on no apparent news. May be some on the way.