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Arden Partners have today issued a Research note detailing their "Best Ideas for 2022".
ANX is one of them, with a Buy and a 280p target price.
Here's their summary:
"Opportunity for 2022 – we believe that 2022 should be the year that Anexo’s key drivers align positively for the Group with recovery and substantial market share gains in credit hire, the expansion of housing disrepair claims (currently over 1600), accelerating cash collections from Bond Turner and a possible conclusion of the VW emissions claims. These factors will highlight an earnings profile and valuation which is mispriced by the market and should result in a substantial re-rating.
Substantial core business growth – Anexo’s credit hire business has expanded to well over 2000 vehicles on the road, taking market share from smaller fragmented players that have come under funding pressure during the restrictions of the past 2 years. We expect more of the same in 2022 as rivals retrench further. Anexo’s access to capital has allowed it to capture a high quality credit hire case load to feed the significant settlement capacity in Bond Turner to drive cash collections.
Emissions litigation increasingly positive – The recent decision against Volkswagen in emissions litigation is a positive development for Anexo which we believe is a further significant step towards a material settlement. Anexo currently has approximately 15,000 VW emissions claims being handled by Bond Turner and could be worth upwards of £30m to Anexo based on similar claims settled in other jurisdictions.
Catalysts to watch for – Key catalysts for the year include confirmation of a settlement from VW, potentially initiating emissions claims action against other auto manufacturers, demonstration of substantial credit hire market share gains and rapidly accelerating cash collections building on the ongoing investment in Bond Turner.
Investment thesis and valuation - Anexo trades on 9.2x P/E and 6.8x EBITDA. As we discussed previously, the market provides very little value for the 20,000 case backlog and the investments made in legal services to drive settlements with very little value recognised for potential emissions claims. In our view, the market does not grasp the impact of COVID, accelerating scale and the pent-up settlement potential in the Group which will ultimately release shareholder value."
Good to see the bounce here continuing steadily, with small daily price rises before the year end trading update coming soon - last year's was 25th January.
A reminder of the positive outlook from the interims:
"Trading Outlook
Current activity levels indicate a strong second half performance for the Credit Hire division. The number of vehicles on the road is consistently reaching record levels and, as of 7 September 2021, stands at 2,023. The outlook for the Legal Services division is also strongly positive, with case settlements and consequent cash collections set to increase as the courts re-open fully and the backlog of cases diminishes.
The Group's finance providers have proposed increases in our debt facilities and the Board anticipates that agreements will be concluded shortly. Current market conditions offer significant opportunities and the Board believes that reaffirming its growth strategy will benefit both the Credit Hire and Legal Services divisions and contribute to the creation of value for all our shareholders. The Board looks to the second half of 2021 and beyond with renewed optimism."
Graking - what was the news?
Great news announced post trading today. Positive effect on price anticipated
Arden today reiterate their Buy and 280p target price. They currently forecast 14.8p EPS for the year about to end, and 18p EPS for the year starting next month.
And that excludes anything received from the VW claim.
They conclude:
"Investment thesis and valuation - Anexo trades on 8.6x P/E and 6.5x EBITDA. As we discussed previously, the market provides very little value for the 20,000 case backlog and the investments made in legal services to drive settlements with very little value recognised for potential emissions claims. In our view, the market does not grasp the impact of COVID, accelerating scale and the pent-up settlement potential in the Group which will ultimately release shareholder value. Reiterate Buy"
Per IC Feb '21 - ST writes
Anexo has been actively investing in marketing to attract claimants to pursue a claim against VW, noting that VW has being settling legal actions involving emissions in multiple jurisdictions. In Germany, settlements to car owners have ranged from £1,190 to £5,540 depending on the age, model and cost of the vehicle. Last year Anexo incurred £2.9m in marketing and staff costs to drive VW claimant counts and analysts pencilled in a further £2.7m investment this year.
It’s well worth doing. That’s because based on an average claim size of £3,000 with Anexo taking a 50 per cent commission, then the 14,356 claimants Anexo has so far recruited could generate the company an operating profit of £16m after accounting for all costs. The respective potential operating profits are £23m for 20,000 claims, and £34m for 30,000 claims. These are sizeable one-off profits for a £155m market capitalisation company and are not embedded in Panmure’s forecasts.
and gratified to see today's news that the VW case continues to go well - should be extremely material if successful, and I suspect the denouement is getting closer and closer:
Https://uk.advfn.com/stock-market/london/anexo-ANX/share-news/Anexo-Group-PLC-High-Court-Judgment-re-Volkswagen/86869706
Doubt DBay will sell any shares. They opportunistically tried to buy the company on the cheap in a tough time, but it wasn’t to be. They still have a large holding in a company that they presumably think will increase in value over the next couple of years, so I think they will hold on. This could even be taken out by private equity and if the price is right DBay will accept ie proactis. Share price might dip tomorrow but note trading statement highlights that trading is slightly ahead of expectations.
Excellent. DBay still have 29%, bought at 150p, and a seat on the board. Presumably the sp will be held at that until they exit that position. Look forward to an rns confirming a reduction in the holding.
Completely agree. Looking forward to the interims on 13.9 following the positive trading update.
Just imagine how galling it would have been if a windfall were to materialize from the VW emissions claims.
Glad the takeover has fallen through. 150p too cheap and wouldn’t have been in the best interest of shareholders. The offer actually put a lid on the share price. We were at around 185p before COVID, and now at 140p. There are now more cars on the road, and there are the vw cases that weren’t priced in previously. Back to 200p by Xmas.
well its the 18th. after hours rns?
Discussions between the parties remain ongoing and in accordance with Rule 2.6(c) of the Code, the Company has requested, and the Panel on Takeovers and Mergers (the "Takeover Panel") has consented to, an extension to the deadline by which DBAY is required either to announce a firm intention to make an offer for Anexo in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Such announcement must now be made by not later than 5.00pm on 18 August 2021. This deadline can be extended by the Board of Anexo, with the consent of the Takeover Panel.
In accordance with Rule 2.6(a) of the Code, DBAY must, by no later than 5.00 p.m. on 21 July 2021, either announce a firm intention to make an offer for Anexo in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline may be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
End of play Wednesday DBay have to confirm whether they wish to proceed with a takeover or retract it. I'm hoping the directors will at least squeeze a little more out of them as 150p seems far too low.
I wondered about this too and rang the Company, who told me that this declaration was made under instruction from the Takeover Panel on technical grounds; but they made it clear that no decision has yet been taken as to whether these Directors are going to be joint offerors. Presumably any such decision will be dependent on terms, as and when these are forthcoming.
https://www.londonstockexchange.com/news-article/market-news/form-8-opd-anexo-group-plc/15046375
Joint Offerors - DBAY Advisors Limited, Samantha Moss and Alan Sellers - own between them 64.01% of the shares in issue.
This from the 23 June RNS -
"While the structure of the possible offer is not yet confirmed, the status of Alan Sellers, Executive Chairman, and Samantha Moss, Managing Director, Bond Turner, as joint offerors to DBAY's possible offer is under consideration."
So presumably the status of Alan Sellers and Samantha Moss is no longer "under consideration"?
Someone's just dumped 2 million shares. I wonder who and why?
Nd
Private equity bid approach for Anexo:
https://www.investorschronicle.co.uk/ideas/2021/06/25/bargain-shares-profit-from-a-bid-situation-and-a-repeat-buying-opportunity/
"So, having included Anexo’s shares, at 136.9p, in my 2021 Bargain Shares portfolio, I would sit tight and await developments. Hold."
No comment from ST in this week's IC. Shame.
Nd
10 comments on this board since takeover RNS released. Shows how overlooked this business is doesn't it!? There's not much margin left to play with, but there's always a chance the buyout price it could go a little higher (doubt it given NRS stated a price though).
Bought into this following ST recent recommendation in the IC. Be interesting to what his comments are following today's developments.
Nd
Yeah pigs at the trough but bought at 1.44, seems decent risk reward with the 1p div and no stamp duty
Yes, the directors sold 30% directly to DBay for 150p not so long ago, so they knew exactly what they were getting themselves in for - they will have known DBay wanted the whole company given previous history. I just thought for the remaining shares, they would hold out for a lot more than 150p, but no, the directors are just looking after themselves and obviously want a quick exit. I don't think given the shareholder register anything can be done to veto this, or try and raise the price, unless the directors want more.
The Director share sales were to DBAY and listed on LSE and RNS so there has been some relationship and might be a reason for status under consideration. It looks and sounds peculiar.