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Seems a lot of effort, to get case law changed when it will seemingly have little material impact on earnings gong forward. Seems more of a vanity thing. Maybe lots of Anexo's clients are non-English speaking (or they can say they are) and it's another way they can make money on every case.
What a waste of time that was.
Looks like there was a big block trade yesterday afternoon - £600k + worth. Hopefully see a bounce here soon.
Https://www.investorschronicle.co.uk/ideas/2023/06/13/anexo-is-now-oversold-and-undervalued/
So a p/e of 5.4 but when you factor in the undisclosed WV profit ( at least £7m) the p/e drops to 3.5.
Company's brokers *
Must be close - ludicrous state of affairs. RSI in the toilet. forward 1yr p/e of 3-4. Could double in a week this. Just need some clarity from the company.
Someone has dumped a million or so shares over the past week or so. Down 40% on the year seems unwarranted. Forward p/e of 3.5. Debt now reducing, as per broker forecast and recent VW settlement. Good free cash flow. Change of strategy. RSI of 8!!! Share price steadied. Should see a slow rerate to £1 IMO
Should investors "unwillingly ro bite the bullet" as You_Willing believes....
Or should they consider the FY2022 actuals, the FY2023 and FY2024 forecasts, the recent VW win, the potential future Mercedes win - and crunch the numbers for all of these. What would the numbers tell them based on today's 65p share price?
VW's net positive payout of £7.7m was net of expenses. Accrued expenses relating to VW were £5.8m H1 FY2022 and £3.1m H2 FY2022. So I believe the move in debt is actually £16.6m. On a forecast net debt of £73m for 2023 that reduces forecast 2023 net debt to just £56.4m.
Meanwhile the forecast FY2023 earnings are £18.1m so adding net £7.7m brings PBT to circa £25.8m on a market cap of £75m the FY2023 adjusted PE is below 3x. VERY CHEAP!
EV/EBITDA is 2023 forecast EV is £75m+£56.3m = £131.3m. Then forecast PBT £25.8m adding back interest, depreciation, amortization adds back about £8m (based on prior accounts) to arrive at a forecast EBITDA of £33.8m. So this is on a FY2023 forecast EV/EBITDA of 3.9. CHEAP! CHEAP! CHEAP!
Free Cash Flow was forecast at £11.7m for FY2023 so that's now £28.3m for FY2023 - that's great!
Let's imagine something (it's easy if you try). Let's imagine for a moment that ANX wins the Mercedes case in FY2024. And otherwise everything pans out based on WH Ireland's FY2024 forecast. So let's assume the Mercedes win is only worth the same net of expenses as VW. PBT FY2024 grows from £25.8m to £31.5m, putting this on a P/E 2024 of less than 2.5x. So EBITDA is something like £39.5m, adding back £8m depn and amortisation. EV is today's share price of £75m.
FCF rises anyway but assuming a Mercedes £7.7m net plus accrued expenses of say £5m that leaves debt at £40.6m (i.e. in 18 months debt is nearly half of where it was a few weeks ago)
And EV/EBITDA drops to below 3X!
Given that housing disrepair achieved 87% growth year on year, is substantially more profitable than other legal services work 50.2% PBT margin vs about 17%-20% and a shorter case-to-cash cycle I actually think WH Ireland's growth numbers are a bit pessimistic. It's not hard to see upside to the numbers. The courts are back to normal and working through backlogs.
Also the potential to grow dividends is there too. The forecast FY2024 15p EPS (or ~20p assuming a Mercedes win) at some point can switch from reducing leverage to increasing dividends. If they began using just 30%-40% of profits for dividends in FY2025 that equates to a 10% yield at today's share price. That statistic probably illustrates how CHEAP ANX is.
Risks:
Buy out or taken private? yes, possible. £1 would be 50% premium today.
Economic cycle? No - this is not cycical/sensitive
Covid re-emerges? Would slow down case-to-cash cycle
Competitive forces? Nothing particular
GLA
What a load of rubbish. This is a solid company with year on year revenue growth and high future prospects.
I take it your not in business yourself........
In a case like this the debt holders will need to be satisfied first and I cant see any way the shareholders will get a look in for at least a year. The debt of the company you hold might reduce but that's not likely to show up in the sp by any worthwhile amount.
A long term hold for those unwillingly ro bite the bullet and move on to better pastures.
GLA.
The revenue to ANX is underwhelming and it's clear why DBAY didn't take this private. Avoid, even as a bounce scenario in my opinion. Not worth the risk and the debt situation is a real concern that's not going away and they will be working to pay that down for ages. Whatever the final sum from the case to ANX it ain't heading to the investors but the debt holders.
Have some of yesterday's threads been removed? Wasn't there some supposed correspondence with ANX about the share price drop?
I think £1 is too low. There could be an element of selling down to try and make any offer look better on paper. There have been some positive developments since 2021 and concentrating on cash collection and paying down debt may not be a bad thing (I'd say it was overdue). The judicial backlog is not helping us.
Yep - I have a gut feeling they could pinch this for £1. The post results profit guidance for this year was £18. The VW £7m drops through to the bottom line, meaning £25m profit. Don't forget the lowered £18m guidance was on the basis of a focus on cash generation and paying down debt with free cash flow... No idea what is going on here but the market is pricing Anexo like its about to go bust! No director buys (and no material shareholder buys) smacks of a cheap takeover by DBAY. Ludicrous market cap of £80m
Auctioned off to Dbay perhaps?!
Remember Dbay's £1.50/share bid was ultimately rejected in 2021. Back in 2021 - when housing disrepair was just beginning, no emissions cases had been won, competition in impercunious hire was stronger than now and prospects for ANX didn't look as rosy as they do now.
It's true the market was a tad more optimistic back then.
GLA
I think a cheap premium takeover is on the cards now - £1 could probably maybe just about do it.
The RSI is 9! Not sure I’ve ever seen that before except for companies that are going bust!
Ok guys, I'll leave you to your excellent investment - good luck.
I agree with Agricore. Expect new broker notes in the next week or so, which will confirm. Expecting a rerate to at least £1 after
Shear, I think you've got it wrong. Or at least I'm reading it very differently. A net positive of £7.7m is net of expenses surely? Otherwise what it is "net" of?! (I admit it is a badly worded RNS).
Accrued expenses relating to VW were £5.8m H1 FY2022 and £3.1m H2 FY2022. So I believe the move in debt is actually £16.6m. On a forecast net debt of £73m for 2023 that reduces forecast 2023 net debt to just £56.4m.
Meanwhile the forecast FY2023 earnings are £18.1m so adding net £7.7m brings PBT to circa £25.8m on a market cap of £87.3m the adjusted PE is 3.4x ..... not 11.2x.
When speaking of PE I think you are getting rather confused with EV/EBITDA (which does include debt). So 2023 forecast EV is £87.3m+£56.3m = £143.6m. Then forecast PBT £25.8m adding back interest, depreciation, amortization adds back about £8m (based on prior accounts) to arrive at a forecast EBITDA of £33.8m. So this is on a FY2023 forecast EV/EBITDA of 4.2.
A forecast FY2023 EV/EBITDA of 4.2 is CHEAP! CHEAP! CHEAP!
FCF was forecast at £11.7m for FY2023 so that's now £19.4m for FY2023 - that's great!
Moreover the 1st emission case win is the hardest. The Mercedes case will be less risky (proven capability), and less expensive (because of the learning curve), so the very fact there's a win is a positive. For the share price to not move one iota on the simple fact of this is in itself reflective of a general pessimism hanging over ANX.
Why? Losing their CFO in April seems to have caused the drop in market price. I didn't really understand this. I appreciate there were lots of comment about "no smoke without fire" but the guy was in post for just 9 months! The new CFO has been with the business a longer time and has a much more relevant past track record so who knows what the truth of Fryer's departure was? Jumped? Or pushed! Anyway for me the real brains in the business is Alan Sellers and listening to him present on a number of occasions I think he's a very pragmatic, realistic leader who's got his head screwed on. So I find the change of CFO making this somehow 30% cheaper quite baffling.
I conclude by asking: Did a badly worded RNS cause a rerate not to happen today?
Trendz, at 31/12 they had net debt of £70m, you can't calculate a P/E ratio and ignore debt like that. Add that to the current £87m market cap and you have an enterprise value of £157m, which would be equivalent to a £1.33 share price. Forecast earnings in 2023 are 11.8p, so it's currently trading at an 'adjusted' PE of 11.2x. Given their balance sheet & inability to collect receivables I'd say that's very generous.
The other way to look at it is that we can pay down the debt sooner and get an immediate saving on legal costs and interest payments. By my estimates, we’re now looking at 25-30m profit this year, meaning ANX is trading at 3-4 p/e. Another settlement with Mercedes and the focus on cash generation from receivables makes this a potentially great turnaround play. Good price to buy in IMO
Agree - pretty underwhelming! May as well have taken it to court and got a much higher payout, given it was basically a guaranteed win with the precedents set elsewhere. That's about half what I was expecting and like you say doesn't help the debt situation a great deal. Market not particularly impressed.
VW case settlement nothing to write home about;
"The terms of the agreement are subject to confidentiality restrictions, however the Group can announce that it will have a net positive cash position to Anexo of £7.175 million."
Doesn't even cover half of the extortionate Blazehill capital principal debt...
Forward p/e of 5, excluding VW case. Must be one of the cheapest profit making stocks on the London market…