We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
"£15-16m by the mid-20's I think is very possible".
Devon, the recent RNS showed that turnover was up by a third already, and if they keep up this momentum, why should it not be up by a similar proportion at year end [March 31st 2020]? I see that as being entirely possible.
Additionally the turnover for 2020 needs to take into account that SG are attending a range of big international fairs and of course we also have major events in London next year that are all sales opportunities in the stamps world. That combined with the new shop, increased focusing on trading and new catalogue ranges should see a decent year for 2020 so again I think adding a third turnover increase thereafter is not unreasonable. Therefore if we allow for current annual turnover being previously £12m as at 31.3.19, I do not think it unreasonable to forecast £16m by 31.3.20, and £21m by 31.3.21 Thereafter I admit it is more akin to guesswork, but if SG does manage to pull off major turnover rises like this, the momentum alone will lead it to continue growing at a decent pace as long as management carry on keeping everything under focus. Certainly by 2023, they could then have increased turnover to £30m+.
The big issue here is what they do with the debt in the meantime. I'd hope that rather than paying dividends, they instead pay off debt, especially if margins stay good.
I would not put it past them to also pull off a big deal with a foreign auction house as well in the nearterm. The management have got their eye on the ball at last, and it is now shifting to turnover actually rising again.
Hi CarpeDiem. I think that's a very reasonable stance. I also think there's a decent buisness in there, but the levels of growth our mutual friend is suggesting, I just don't see happening.
It could be a nice private cash generative business. That's a risk in it's own right.
They may or not service the debt reduction as a priority, afterall they've got a foot in both camps. That's rather their game plan and I'm sure we can assume they have a decent idea of what they are looking to achieve....if I was being ultra conservative Id like to see what the agreement is. On a quick look I couldn't find anything, but that doesn't mean it's not there somewhere.
I still think it's a thing private shareholders should consider.
This is a company with 2 very large holding, little liquidity and owners that are used to dealing with complex difficult turn-arounds. That is in my opinion a double edged sword.
What I'm certainly confident about is it's not a get rich quick, simple, mega-growth businss where there is an easy route (and exit) over the next 3 years. £15-16m by the mid-20's I think is very possible. At what margin and where the debt is by then is the great unknown. £30m in 3 years I feel is difficult to believe.
Time to stick my oar in.
I do keep up with the stamp markets and I can tell you that the number of collectors is diminishing rapidly. Auction prices are firm for high quality material but poor for middle range stuff. GB collections that would have sold for £15k-£20 5 years ago are now £8-£10k. There are a number of dealers whom I know who are going to use the London 2020 show to sell their stocks down and retire. This is the reality of the business in Stamps. Coins maybe different, I don't know.
That said, SGI is a highly cash generative business, given their huge markups, which they are able to get for product. A profit margin of 50% these days when discounters and internet traders are racing to the bottom is quite impressive. We know SGI is saddled with debt, but this is ringfenced by Phoenix so it entirely possible for SGI to make modest amounts in years to come.
I disagree with Pearls in that I do not think a 300% improvement in turnover is possible, given market conditions. I cannot see SG Auctions holding a £20m auction every year like David Feldman or Corinphila, but I do think they can increase turnover by 50% over 5 years and looking forward to the end of next year when they might show a net profit.
"1856 is at least a mature business"
And that's my point. Mature businesses don't grow at the rates you are "assuming".
I guess that means you've made those figures up and company isn't forecasting them....
Devon, I would say any business trading since 1856 is at least a mature business!
"If somehow this company could be debt free by 2023 with turnover of £30m+ then I cannot see how the share price could be anywhere near the current low levels."
BUT, and it's a big one, I'm working on facts, your working on a guess where the turnover will be in just over 3 years.
I've asked you again, could you share the companies forecast for 2023 if you have it. I've not been able to find that figure expect form you. That's x3 growth from a mature buisness. Many start-up would like that speed of growth.
Has the company forecast that level of growth. The only thing I found is that statement that it's early days.
Devon, it is worth your while re-reading the RNS's in 2017 on this stock as the administration of Guernsey was both life saving and transformational for them. Bear in mind, their liabilities from the investment guarantees were around £55m at the time. That could have brought down the company back then. That was all ring fenced and put into administration. End of.
However, a lot of their turnover was related to those guarantees so replacing that with traditional dealing turnover is now what is taking the time. But it was their traditional trading that has allowed them to trade since 1856 in most years, profitably. We are now reversing back to that traditional trading pattern. With decent margins, the profit should be obviously coming through at a rate of knots; and hopefully the Board will use some of it to offset the debt.
If somehow this company could be debt free by 2023 with turnover of £30m+ then I cannot see how the share price could be anywhere near the current low levels.
"I also see this a steady growth stock"
I'd be happy to take the 5% on th debt and except the possible equity return. It's almost like convetable if the business doesn't perform. Except, I've never been able find the T&C's for debt, so I guess we don't really know. How like death spiral finance it is or isn't. Anyone have a link?
I also see this a steady growth stock, maybe even a small dividend by 2023, depending on debt.
Nice to see the spread narrow, even if it cant move up to the next level, 3p by new year would be nice but cannot see this.
"investment guarantees"
But you appear unwilling to recognise that ONLY ONE PARTY here has "investment guarantees"
The minority shareholders have swapped one liability for another. That's your major smoking gun risk ,the shareprice is arbitary for them .They are already getting a return, where as it takes a strong rally to lift this 2%...
Devon, I read your comments especially with interest, but I note one especial error on your part. You compare the turnover SG had years ago with the future and you comment on how they managed to get a £3m profit for example in 2015 based on £56m turnover. That is not a fair comparison. Back in 2015, SG's turnover was still being swelled by the investment guarantees that almost brought them down. Indemnifying the investment guarantees led to profits being a lot lower in 2015 than they should have been. SG is no longer involved in those guarantees, and the liabilities were all ringfenced a few years ago, and that side of the operations put into administration. Any turnover now arising is free of the guarantee turnover and based upon actual coin or stamp related sales; any area in which SG should be specialising in, but which they took their eye off of a few years ago, with well advertised results. I don't know the margin they enjoyed in 2015, but if it was 45% back then, you can imagine the affect the guarantees must have had to lead to profits only coming out at £3m that year.
As I say, it is not comparable.
"Am increasing my expectations"
You said that about Debenhams. Major rally going on, except for here. LOL
Am increasing my expectations of SG's turnover in the light of the Conservative victory last week. This should really be excellent news for shareholders. With increased future visibility, everyone can plan more, so discretionary / leisure spending should sharply increase. Added to this, SG are embarking on an increased attendance at various overseas shows and 2020 looks to be a major year for them with a lot planned.
As a result, I forecast the following turnovers [for FY ending 31st March]:
2019 - 2020: £13 -15m
2020 - 2021: £18 - 20m
2021 - 2022: £23 - 25m
2022 - 2023: £31 - 34m
Needless to say, I expect debt to start dropping sharply as the 45% profit margins lead to debt repayments and increasing NAV per share.