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Less than a week until the results come out!
Feeling very excited here. Feel there's an easy ~25% to be made in the next few weeks. And 50%-100% to be made over the next year.
DYOR & GLA : )
£176k worth (taking into account that 1 large sell too) in the past few trading hours! Looks like someone is building up a nice stake here. Very jealous because I honestly think this is a superb price to buying in at (my last top up was 132p myself)
Date Time Trade Prc Volume Buy/Sell Bid Ask Value
18-Aug-20 09:01:11 131.56 5,000 Buy* 128.00 132.00 6,578 O
18-Aug-20 08:08:12 130.02 20,000 Sell* 130.00 132.00 26.00k O
18-Aug-20 08:07:19 131.00 12,967 Buy* 128.00 132.00 16.99k O
18-Aug-20 08:06:38 130.40 10,726 Buy* 128.00 131.00 13.99k O
18-Aug-20 08:05:57 129.90 14,616 Buy* 128.00 131.00 18.99k O
17-Aug-20 16:36:11 130.00 35,000 Buy* 128.00 131.00 45.50k O
17-Aug-20 16:13:29 129.90 4,926 Buy* 128.00 131.00 6,399 O
17-Aug-20 16:12:37 130.00 18,000 Buy* 128.00 131.00 23.40k O
17-Aug-20 16:11:55 130.00 19,000 Buy* 128.00 131.00 24.70k O
17-Aug-20 16:10:06 130.00 35,000 Buy* 128.00 131.00 45.50k O
Basically says to diversify into FRP or Begbies but then provides a good comparison between the two to explain why FRP is the better pick.
It's a bit simplistic the analysis but it does back up what I was thinking already!
https://uk.finance.yahoo.com/news/think-two-best-uk-shares-081907828.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAANkCElBMBapZHjX7x0GP_sth2aMJrbrL5bBoYV8bXQP6llqCaxAf0PWkJELD-d8lqui_RtwEXTpiDznqpLQH3VolmFgMmGa79_7wwYtXvrCQvcYJnCskbDMDXQJm2HvECZWt_6vJec9GVMn-9Du7lndVoCTFep1MW7LEU0JzsSXJ&_guc_consent_skip=1597678644
Have decided to buy a 2nd tranche, averaging up quite significantly.
DYOR & GLA
: )
They’ve got a track record of scalable profitable growth, even during the years where there were yoy declines in number of insolvences, from 24k companies going insolvent in 2019 to 14k companies last year.
With both the effects of Covid and what is likely to be a disastrously hard Brexit, the number of insolvencies is likely to increase 70-100% over the next couple of years, providing them with ample opportunity to grow.
At the same, the group should grow in terms of market share from (1) the increased regulatory & political scruinty of the “Big Four” and also (2) Due to the fact the “Big Four” miss out on restructuring opportunities due to the fact they were the ones who audited the companies in the first place!
The company is heavily reliant upon the Partners within the company, especially the top 10 Partners who account for collectively account for 50% of revenues.
However, as long as they retain the Partners, and continue to grow their workforce, they will continue to make more and more money. Because the more staff they have, the more hours they can bill, the more revenue they generate, and the EBITDA margin has consistently been about 50%!
What’s very encouraging is that the number of employees has increased from 360 in February (50 Partners + 310 other staff) to ~460 today (consisting of 56 Partners + 400 staff) = ~28% growth
If they’re also picking up engagements on larger clients with more complexity, they can also charge more money. Looking online, looking at Patisserie Valerie, Laura Ashley, Comet, etc, this also appears to the case.
All of this points to revenues being £70-80m in the 30 April 2020 to 30 April 2021 year.
EBITDA would be roughly £35-40m as a result.
On this basis and using this price level / MC:
- EV/EBITDA should end up being 8 ish (maybe a tad lower or higher), which is v good.
- Yield should be 7%-8%. Also v good.
All of which suggests this is undervalued and on course for superb growth in the next few years.
Obviously I've missed out on most of the rise since this listed on AIM but I honestly feel there's far more to the FRP story with so many businesses in financial distress and little end in sight (sadly!)
Expected there to be some profit taking, and here we go, down a little from 130p.
Wouldn't mind a sub 125p top up before the results because I expect this to rise nicely in the coming weeks!
there'll be some sort of profit taking at some point but this is looking as though it's on a strongly upward trend at the moment.
Is 150p possible BEFORE the news and the declaration of a dividend? If so, we could see 200p very v soon.
Without wishing to sound rampy, I honestly do think we could see this share reach 300p+ as the year progresses, and it becomes increasingly apparent how many businesses will need the services of the likes of FRP Advisory. This will become especially true if there is (anticipation of) a 2nd lockdown and the economic pain that'll bring.
Begbies Traynor are trading on a trailing P/E ratio of 130+ at the moment, whereas FRP are trading on a trailing P/E ratio of 12, and I can't understand the justification for that when FRP are growing so fast yoy, they're currently picking up so many clients, seem incredibly well respected in their field, and enjoy much better profit margins.
The only reason I can think of is that FRP Advisory was a private company for so long that many people don't realise that it is now publicly listed. The results on their own will not change that but the introduction of a dividend might do wonders when you consider how many companies have cut, suspended, or completely scrapped their dividends this year and so income-seeking funds/trusts/investors are still desperately on the hunt for a decent yield which looks secure.
... to make a further top up but it doesn't look like it's happening with buys at the 125p ask now coming through, and buys comfortably exceeding sells today, so may just bite the bullet this afternoon.
Expect buying pressure to increase over the next 2.5 weeks in anticipation of the results on 27 August, to send the share price to 130p+ before the results, and hopefully send the shares above 160p after the results.
Looking through the recent news articles that mention the company, it's incredible how much work they're picking up.
In July alone, they were appointed to work with the following companies.
- The Govt's Pension Protection Fund called FRP Advisory to scrutinise the job PwC had done previously before Laura Ashley's collapse.
- Appointed to help Debenhams restructure their business ('light-touch administation' they called it)
- Appointed as the administratiors for Prezzo.
- Appointed as administrators for:
a Balfour-owned waste JV company in Essex,
Rileys Snooker (chain of clubs),
a sports bar company with 20+ sites,
a wire manufacturing company,
2 companies who sold car parking spaces near airports,
'Heritage Cashmere' who sold luxury cashmere products.
Additionally they have been appointed for Carluccio's restaurant chain and the gym chain called Energie Fitness.
Previously they've worked for BHS, Maplin, Monsoon, Comet, Bonmarche, etc.
Investors Chronicle rate the shares as a buy @ 12p in June, because they know it's a great hedge against an economic downturn, and they're impressed by the 15% YOY revenue growth the company has enjoyed from 2010-2019. Nothing will have changed their view since then.
If anything, with the number of insolvencies now increasing, and due to increase much more over the next 6-12 months, they would be even more bullish.
Short term target = 160p+
12 month target = 200p+
Interesting that its PBT pretty much equals its PAT. With a dividend policy of paying out 70% of net profits in dividends, it suggests we could be looking at a healthy 6-7% yield at this price level, which the market doesn't seem to have cottoned onto due to a lack of research!
Presumably this is something they will announce alongside their Results which are being published on 27 August.
So, to summarise, this appears to be:
1. A profitable company which is seeing their revenues & profits grow by double digit %s year-on-year.
2. Has great prospects because it will thrive off the economic downturn that's slowly becoming more and more apparent.
3. Looks good value on P/E and EV/EBIT ratio metrics...
4. ... especially if this was to be considered a growth stock given the above.
AND
5. It will soon declare a healthy dividend that should get the market excited after all the cuts/suspensions of dividends elsewhere.
On this basis, I reckon we could see the share price re-rate to 160p+ very soon after they announce their results on 27 August. So I've decided to buy a few shares @ 117.6p with a view to adding more if there's any dips in share price.
Looks as though this is trading on roughly PE of 10 - based on 2019/20 figures due to be announced later this month.
Looking further ahead to the 2020/21 Year
March & April 2020 Revenue was £11.5m - a clear increase presumably as they picked up more business due to covid-related insolvencies. All things being equal this suggests revenues of £69m and profits of £30-31m.
However I expect there to be a sharp increase in the number of businesses in financial distress. So I reckon we could realistically expect 2020/21 figures to be approx £80m in revenue and £36m in profits. This is represent a further 27% increase vs the 2019/20 revenue and my crude profit calculation.
This makes it look undervalued.
Why do I think it's undervalued? because no one knows of FRP yet I suspect since the timing of its IPO was unfortunately a week or so before the world turned upside down.
Need to do more research here but honestly feel there might be a v exciting opportunity here. Especially having seen how much banks are setting aside for bad loans and what the Bank of England are now saying.
https://www.thisismoney.co.uk/money/news/article-8601307/Britain-faces-tsunami-insolvencies-amid-50bn-cash-flow-crisis.html
That's what caught my eye in the first place.
Having done some research, it's a profitable company, which has grown year on year, and is continuing to do so.
It looks as though revenue and profits will rise by 16% ish, meaning the EV/EVIT is currently standing about 9.5
Good dividend policy too.
They could benefit from the break-up of the "Big Four" and pick up more customers off the back of the failures of the "Big Four" to spot what was going on at WireCard etc.
All looks v positive. Watching with interest. (and wishing I had more money!)
"FRP Advisory Group PLC - London-based professional services - Hires Gavin Jones as CFO, joining the FRP board on Monday. Jones was CFO of Bowring Marsh, part of MMC Group."
Wholesale insurance broking is a very different business but having such senior positions at both of the juggernaut insurance brokers (Aon and Marsh) is very impressive!
The Times-
It is probably easier to list the casual dining chains that have not hired restructuring advisers than those that have. Pizza Express, Prezzo and Gourmet Burger Kitchen are among the household names to have appointed firms to help them consider "options" as they battle to survive - and more are likely to follow. Prezzo, an Italian concept with about 180 restaurants, has taken on FRP Advisory to help it navigate the Covid-19 minefield,
and today has managed to get back to the best once again and that was on the last minute 134p +3.50p, on a very poor market FTSE 100
Las Friday GAP up with a good rise, but today is rising in a very nice way and breaking the last Intraday high on May 18
Chart
http://uk.advfn.com/p.php?pid=staticchart&s=L%5EFRP&width=600&height=360&p=2&t=1&dm=2&vol=0&cb=
A very good start of the week, as yesterday started to move higher as is today 123.50p +2p
Just moved higher
it looks like another company to add to the list ....
" Jon Moulton to put his double-glazing firm Everest through a pre-pack administration with FRP Advisory "
Monsoon Accessorize teeters on brink putting 3,500 jobs at risk
By Luke Tugby 28 May 2020
Monsoon Accessorize is on the brink of becoming the latest retailer to tumble into administration amid the coronavirus crisis, putting 3,500 jobs at risk.
The fashion retailer has lined up FRP Advisory to handle the process and plans to file a notice of intention to appoint administrators in the coming days, Sky News reported.
https://www.retail-week.com/fashion/monsoon-accessorize-teeters-on-brink-putting-3500-jobs-at-risk/7034943.article?authent=1
mee too today
By 10:45am the retracement from 133p was done, after all it was more than the maximum Fibonacci retracement of 76.8% at the lowest this morning 117.50p when the bounce back started.
5 day chart
http://uk.advfn.com/p.php?pid=legacyintra&epic=FRP&type=3%3Cbr%20/%3E&size=2&period=d&freq=1&ind_type1=0&ind1_1=&ind2_1=&olx_1=&scheme=&delay_indices=1
“MIDAS SHARE TIPS: Economic woe as a result of coronavirus spells good news for one corner of the economy – insolvency practices”
https://www.thisismoney.co.uk/money/investing/article-8326155/MIDAS-SHARE-TIPS-Insolvency-practices-boosted-coronavirus.html
He's been buying shares:
https://soundcloud.com/thenakedtrader/radio-show-4 (from 1:18:54)
Picked up by Naked Trader:
"FRP Advisory (FRP) we discussed at the last two online seminars and this one
is also discussed on the podcast
I discuss FRP in depth roughly half way through my new podcast so have a listen!
FRP could be in a sweet spot viruswise as it helps companies that need
to turn around and deals in insolvencies.
Since I recorded the podcast, FRP has come up with a very decent trading statement with revenues and profits ahead of expectations.
More background on the podcast."
https://www.nakedtrader.co.uk/?id=521
"The Pension Protection Fund reportedly wants Laura Ashley to have another administrator installed to oversee the investigation regarding the retailer’s collapse.
According to Sky News, the UK’s pensions lifeboat authority is pushing for restructuring firm FRP Advisory to be installed as a joint administrator alongside PwC."
"Sky News indicated that FRP Advisory’s appointment as a joint administrator could be confirmed later this month."
https://www.retailgazette.co.uk/blog/2020/05/pensions-authority-wants-another-laura-ashley-administrator-appointed
I have just bought in. Right kind of business for these times and their PER is far lower than Begbies. I am sure the market will correct in due course as FRP numbers are outstanding from what i can. GLA