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(Correction. the fwd pe is 3.7. But that's still low)
@Yuri: You could be right, but I don't think it's that grim. It's difficult to argue that a forward pe of 2.9x is super expensive. I do share your concerns about the debt situation though. But the CEO has a history of making major purchases here. I'm sitting on the sideline with a tiny position, but will dip my toe in if/when I see any evidence of the freefall slowing down.
Equally this can go down to 40p or even below that without much of an effort simply on fundamental justification.
I haven't seen sufficient profits to support current m-cap,
but if you take into account amount of intangibles (roughly the same as total paper equity)
it instantly shows the incredible risk levels here.
All these years it had valuation based on overly optimistic growth expectations which in reality I haven't seen materializing much and in a new economic realities over next years unfortunately the outlook might not necessarily be that bright anymore.
If there's so much buying, why is the price continuing to drop? Perhaps it's shorters, but I expect it's more likely an institutional seller. I'm watching for a bounce around the vicinity of 68-70p.
Seems like you've done your research Dartron and you believe there are some differentiators here. I don't share that view personally, and from the reports on RollonFriday etc they seem to have a pretty rotten culture generally which won't help, but if we all thought the same the world would be a dull place! Hope this works out for you.
Interesting chat guys. "I don’t see the business case for an amalgam of these practices succeeding in an unbelievably competitive market." Look at the purchase of the last one -
In its unaudited accounts for the year ended 30 April 2022, Meade King reported revenue of £2.7m and a corporatised PBT margin of circa 5%. Following full integration and realisation of synergies, the Board expects it to contribute a PBT margin of circa 17%, which, combined with a typical level of revenue churn post-acquisition, means the acquisition is expected to be immediately earnings enhancing.
The purchase cost was for a total consideration of £2.1m. Looking on companies house, the revenue for 2020 and 2019 were both 2.5M. (Cant see any later income statements).
I have been burnt with a couple of amalgamators, and I agree in many cases it isnt a good business. However the difference here is the focus is much tighter. E.g Shearwater group is a collection of cyber companies, but they are all different. TPX has just spectacularly dropped due to poor integration of random 'digital' companies. But these guys all do the same thing. It is why if you walk in to Bristol office and ask for a specialist in aviation law, they can help as they have a guy somewhere else. This seems more expansion than amalgamation. Regarding Mr Beech, he certainly has money to buy more stock, being worth about £60 Million.
Just so long as it’s a micro holding!
@HumpyDumpy: One key difference is that DB seems to have some focus on the market and actively buys/sells large chunks of the stock. I can't see any fundamental reason why (in the right market) this could not return to the April 22 level. My interest is in a micro holding as it would be with any listed law firm...
Hi CaneToad - it’s an amalgamator like Ince was, but Ince could try and shine their t*rd by constantly harking back to their glory days as a big international shipping practice - which at one point had some real, top end pedigree. Knights has none on that. So far as I can see, its just bought up a load of practices with retiring partners who clearly could see no other way out, and either hadn’t structured a succession plan or shafted those who thought they were going to step in. I don’t see the business case for an amalgam of these practices succeeding in an unbelievably competitive market. We’ll see.
@HumpyDumpy: "CaneToad, what are you thinking?!"
I think it's a similar company to INCE. I don't like the debt level, but on the basis that DB bought at 83.9p and the current valuation, I'm interested around that level.
Fair enough Plutus - good luck to you.
Reckon this was shorted, If CEO has taken all the stock, that is going to be a headache for the shorters.
Good time to buy as you can qualify for the dividend of 1.53p, ExD 16th Feb.
I look forwards and not backwards. I see a growing and profitable company at rock bottom valuation.
Personally know 2 people who work for KGH
And I have done my research, and it's massively undervalued. At just 4x earnings currently Lol average earnings ratio on the FTSE is 16-17.
A lot of distressed funds out there, like Jupiter, creating unbelievable buying opportunities as they are selling at any cost, once they start going and people cotton onto the massive disconnect like YU, Specs, very quickly multibags. Buy when others are fearful.
£1m and £720k buys ain't nothing!
Like I said let's see where it is at the end of 2023, IMHO materially higher.
Plutus - I really hope you properly researched the history of this outfit before you invested. Most of it is on this board. If the fact the CEO bought back in for a paltry £1m gives you comfort, you may want to do a bit more reading - and have a Google generally about what people think about this firm.
This is sky rocketing, just keep and watching through 2023
CEO bought £1m worth in Nov
Someone just topped up £720k today!
~£140m+ revenue
~£18m+ profits
On a multiple of 4.3x profits and 0.5x revenues, absolute peanuts
Pays dividends, and increasing
EPS increasing
All tells me it's massively undervalued and a big rerate is coming.
CaneToad, what are you thinking?! From memory, you got out of Ince around 20p and didn’t completely lose your investment. Why are you considering this? Ince was/is a real basket case, but they did at least have a little bit of quality/heritage on the international shipping side at one point. This has none of that. They’re in horrendously competitive, cost sensitive markets with massive and growing debt. What’s the attraction?
Did you mean implode?
This is going to explode over the coming days/weeks.
Should never be down here in the place, someone just gobbled up 1% of the shares in issue in just 1 trade.
Oh well what a fantastic opportunity.
Massive buy today
Someone is gobbling up these cheap shares in one swoop. Quite staggering!
What is INCE? He he... They're a similar, UK-listed law firm with a similar business model to KGH. Long-story-short, they're currently suspended from trading due to lateness with accounts. They became unstuck when they bought their own NOMAD, who then lost their NOMAD status and everything unwound from there. CEO of INCE also had a huge holding in the company, though granted, DB might be shrewder. The debt trap is a repeat of the INCE story and I think KGH could face similar problems if there's any business hiccup.
The recent KGH price action is very similar. It could be shorting, but also could just be an institution exiting. I'll hang back until I at least see attractive technicals as such selling can take months due to the tiny daily volume.
I bought back in today (last bought at 68p and sold around £1). It’s not as undervalued as 888 but probably less risky for a longterm hold imo
A year ago today it was 386p, if the housing sector does not collapse this will rocket, it looks undervalued to me and I bought in today. It is a bit of a crazy share, it can jump 15% for no apparent reason and go down the same. I am looking to hold until 100p, which could be tomorrow!
What is ince mate?
This is being shorted no doubt about it. Actually getting attractive to buy now. Revenue is growing, profit is growing. Think this will be good dividend stock in years to come. Though I would rather they stopped buying things now.
I'm just hoping that they're not looking to buy any struggling stock brokers.
I'm guessing that an institution is reducing/selling their holding.