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as per this article:
"Ramsdens’ board also came out with a trading statement and one which revealed that the company will make an additional £600,000 gross profit from scrapping some of its slower moving jewellery stock in order to take advantage of the relatively high gold price. Taking this one-off gain into account, analysts at house broker Liberum Capital now expect the business to deliver an 18 per cent increase in pre-tax profits and EPS to £7.93m and 20.6p, respectively, in the 12 months to 31 March 2019, to support a dividend per share of 7.4p.
Strip out net cash of 26p a share and Ramdens’ shares are effectively priced on a current year PE ratio of 8, a rating which fails to acknowledge that forecasts are heavily de-risked given the seasonal bias to profits (the first half accounts for typically 75 per cent of the full-year outcome), and solid organic growth prospects, too. Furthermore, with the benefit of a cash-rich balance sheet, the directors have the firepower to continue making bolt-on acquisitions, having acquired 22 Money Shop stores and 17 loan books since March. New highs beckon for the Aim-traded shares which have produced an 18 per cent total return since portfolio launch on 1 February 2019. Strong buy."
Worth noting that Liberum's forecast for the current year is now 20.6p EPS (including the gain on gold), rising to 21.3p EPS next year.
That's with 7.4p and 7.8p dividends respectively.
Liberum retain their Buy and 248p target:
Agree, all looks good at RFX. The UK macro outlook should also support the business model well
A pleasing H1 update.
Nicely in line, and in addition a bonus £600,000 profit on sale of gold jewellery. Plus the Money Shop stores are performing well, RFX should benefit from the collapse of ABM, and there's confidence in the H2 outlook.
And there's a hint of more acquisitions too:
Great to see Naked Trader buying in here. For the record, here's what he says:
"We chatted pawnbrokers and compared H and T with Ramsdens. I made a decent sum on H and T already but am out now.
Ramsdens (RFX) looks the one to be in as it has net cash whereas H and T has some net debt.
With the support of net cash Ramsdens looks to be the better value. I have made some money on this one before and it seems to be very gently rising.
If things go pear shaped this one could even rise as gold would probably go up and I suppose more people will pawn their goods."
They now have over 8%, with 2.49m shares:
Albemarle & Bond/Herbert Brown pawnbrokers have closed down 116 stores. https://www.bbc.co.uk/news/business-49690753
Bad news for employees and customers.
I would think business will increase in Ramsdens stores now. Also could be an opportunity to acquire some of these closed stores where Ramsdens are not located.
For the record, Downing said this in their quarterly newsletter covering Apr-June'19:
"In the period, Ramsdens announced a further acquisition of four The Money Shop stores, and 12 loan books. Ramsdens used Â£0.5 million of cash for the purchases which are expected to be earnings accretive by around 4%, on top of the 9% accretion from the prior acquisition of stores which we talked about last quarter.
We think that this consolidation adds a compelling growth element to the investment thesis on top of a business which has healthy organic growth and self-help margin opportunities. The business retains ample cash to continue selective bolt-ons from failing high street competitors. We note that H&T Pawnbrokers recently undertook a placing to acquire 65 stores and 29 loan books from The Money Shop. This adds credibility to the strategy, and we believe that Ramsdens had the pick of the best stores before H&T picked up the rump.
The results in June met expectations and show further progress against our thesis, with double digit organic growth and improving mix. We continue to believe that the shares are rated too cheaply on sub 6x EV/ EBIT, double digit operating margins; a net cash balance sheet and over 15% free cash flow returns on invested capital."
Downing's Fund Manager, James Lynch, outlines the attractions of investing for Income & Capital Growth, using the examples of RFX, (DSCV & ADT). (At Mello May 19).
Ramsdens have just signed up to open a branch in Durham Tees Valley airport, they will offer currency at high street prices. They will also sell new and pre-owned jewellery. The airport has recently come into public ownership and is run by Stobart group.
this lunchtime, saying "stellar performance" and Buy @177p. Here's a link:
And Liberum reiterate their 248p target.
The current year forecast is for 19p EPS, rising to 21.3p EPS next year.
The cash pile forecast to be £9.6m at the end of this year.
With the cash pile, growth potential from the Money Shop acquisition, a likely better year from fx, the rising gold price, plus solid overall prospects - and defensive qualities in a downturn - imo RFX deserve a higher rating than the present single-figure P/E. Which would justify the 248p target price.
Cant complain about these results........lets hope the share price starts to reflect the results....
A piworld video, with Peter Keynon, CEO, Ramsdens Holdings (LON:RFX) interviewed by James Lynch, Fund Manger of Downing Strategic Micro-Cap Trust.
Peter discusses the business areas, which makes the company very defensive. Their strategy for growth, both short term and long term. The cash generation, dividends and capital allocation. James summarises why Downing think it's an interesting company.
It's shot at the Middlesbrough branch, so you get a feel of a Ramsdens branch.
Enjoy! (It's about 20 mins.)
Good, solid trading update in line with expectations (and that in a poor overall environment). Importantly there's growth in each of the four divisions.
Plus the ICL acquisition is going well, and there's confidence going forward:
Confirmation that City Financial has left the building:
Without the overhang in play, the price should be free to start moving back up.
Huge volume yesterday and if that is the overhang cleared then there could be a good move up from here.
Simon Thompson certainly reckons the shares are a buy with 50% upside:
"I would also flag up that Ramsdens’ balance sheet is cash rich with proforma net funds likely to be around £9.3m post the acquisition, a sum worth 30p a share. This cash pile not only provides ample firepower for the management team to cherry pick further earnings accretive bolt-on purchases, but also means that Ramsdens’ double digit earnings growth is being valued on a cash-adjusted forward price/earnings (PE) ratio of 7.4. Add to that a prospective dividend yield of 4.6 per cent, and I see 50 per cent share price upside, having included the shares in my 2019 Bargain Share Portfolio at just below the current offer price. Buy."
The money shop.
Can't be bad adding that many shops in one go.
Bolt on earnings.
Someone is supremely confident
At sub 150. Looking very good now and a dividend payer to boot. Can see this only firming over the next few sessions.
Bought back in. Solid business model. Good results in current climate.
Shares Gone EX-Divi today 4.4p