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The fundamentals of financial services group Equiniti (EQN) remain strong, but Liberum is conscious that the timing of a recovery looks uncertain.
Analyst James Allen retained his ‘buy’ recommendation and target price of 170p on the stock, which closed up 0.6%, or 0.8p, at 130p on Thursday following results.
Full year cash earnings per share came in 1% ahead of the broker’s estimate of 9p. However, despite ‘a resilient customer base’, Liberum reduced its 2021 cash earnings per share estimate by 10% given ‘the uncertainty over the timing of the recovery’.
‘The shares are trading on a revised current year 2021 price/earnings [ratio] of 14.1x, which we see as an attractive entry point given the positive extension of the MyCSP contract (a joint venture between Equiniti’s pension business and the Minister for the Cabinet Office), the strength of the non-cyclical revenue base, and the potential for a rebound in client demand post-Covid-19, despite the uncertainty over the timing,’ said Allen.
A shameful performance by the BOD.
It has to be open goal to a bidder now
Simultaneous with the announcement of the company's preliminary results, is a separate announcement stating that the CFO is set to leave the company. Yet another reason for a would-be predator to pounce sooner rather than later.
A pretty uninspiring set of numbers and despite all the reassuring noises made about an anticipated recovery in its revenues, not to mention the boast about cash conversion, it seems there is to be no final dividend.
There is no reference whatsoever to any offer for the company either mooted or actual ... I just hope the BoD accepts that it can expect the same degree of loyalty if and when it is requested, as it has shown towards the company's shareholders.
Presumably, we're now expected to go back to sleep until the same time next year. Please God, let's hope this doesn't prove to be the case.
The date of results is very apt!! Lets hope they aren't fooling us any more than they have already. This share is a disgraceful parody of what it should be.
If an offer for the company is indeed to be announced with the preliminary results on Thursday, then the value of the final dividend of around 3.5p seems likely to be wrapped up in the deal, thereby,cosmetically at least, making it appear more attractive to the long-suffering shareholders.
That said, the distinctly soggy state of the share price just days before the announcement probably indicates that any such offer is distinctly unlikely.
Maybe they are finalising an agreed bid (as per Sky 176p offer) or preparing a staunch defefence proposition.
Nothing surprises me here other than the shares price stayed well above the 115p pre bid level.
No smoke without fire.
DYOR.
"The results will now be published on 1 April 2021, after Equiniti's auditor PwC advised that an additional week would assist it in completing its procedures and address timing constraints arising from the current lockdown. "
A not exactly overly convincing explanation. Is this auditorspeak meaning figures in brackets take longer to add up?
RNS this morning that results pushed back from this week to 1st April (claiming due to lockdown working).
They were already later than last year.
Perhaps genuine, but is there a bid, or a black hole ?
Good price action for another back to back session.
Maybe Sky was ahead of the game.
DYOR
the Board needs to go if they cannot extract value that outsiders are happy to pay.
In many cases, companies state the offer undevalues the company as a defence against the takeover. This boosts the share price (if it is a credible claim by the BoD) and knocks down the bid premium leverage leaving the incumbant management in position.
Markets obviously believed the offer was credible and boost to 176 on the day.
I am tucking away and adding on drops.
Some day the duck will quack.
yes. the business is a mess. If management disagreed they'd have bought more than they have in the last year. It looked expensive at £1.10
The board surely does not have the right to determine at what level a tabled offer must be disclosed to the owners of the business i.e. shareholders ?
If the SP was at 100p and a bid is put forward at 170p (we still don't know if it was or not) you might think it is opportunistic but perhaps more so it highlights the ineptitude of the BOD.
If they feel that it wasn't worth disclosing because they felt it too low, then they should issue a statement saying why they feel it is too low, not just radio silence.
Probably right but surely the Board should comment that the offer undervalues company.
There will be no communication unless the bid is north of 250p. Still undervalued and the the 170p bid was just swotted away like a fly and laughed off. Such laughable bids shouldn’t be taken seriously and not making a statement was the easiest route for the board to take.
an approach is confirmed with the results or slapped down. The Board cannot remain silemt surely?
Seems to be heading back up to 176 with support. Maybe just maybe we will hear news soon. C'mon Cheryl, John or Thera, we need answers.
C'mon Board - tell the markets why the price spiked to 176p. Silent or silenced?
My view is this is a binary bet /recovery play - so long as the present incumbents don't crash the firm or go on some buying frenzy, then either they're going to be able to make some money (unlikely given their track record) or someone else - an activist investor or a takeover, will come forward and put them out of their /our misery.
I posted in early Jan that this has to be a prime bid target for 2021, given that the SP was on the floor, the business sector is fundamentally sound and plus there is a lot of private equity /borrowed money looking to invest in these types of assets /opportunities.
Timing wise, I don't believe that EQN will be around at the end of year and if it is, I don't believe it will be priced lower than this.
Those may be famous last words, but at least with the rest of the market gone to poo, I don't (today) feel as if I'm missing out from being invested anywhere else.
Paul
"Balls deep" :). Bid better be on it's way.
To be up on a market down day like today, it suggests that something is keeping people on board (though I guess if you sold, what else would you put the money into at the moment).
Although I'm currently slightly down on my cost here, when I went balls deep a few weeks ago, I used funds released from FRES and IMB so currently am better off here than if I were still there!
Having sold out on the spike on the 9th I'm now back in. The price seems to be bubbling up as I type and with the results next month the board will be under pressure to come clean on the background events.
The annual results are scheduled for 11th March so, assuming the BOD remember to get up /turn up that day, then presumably they will have to justify their position at that stage, if not before?
If they shoot the lights out (unlikely with this lot) then great. Otherwise, this is likely to be their last chance at presenting the results as someone else will doing the job for them next year.
Looking perky today, when will the Board comment on the share spike? Is there an agreed bit about to be announced? Anyone here have any updates or views. This seems a lonely board. DYOR
Been a bit quiet and no denials from either party. Looking like an agreed bid perhaps or at least a statement with the reuilts saying bid undervalues the company. Sky is impeccable with these type of leaks. DYOR