Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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https://twitter.com/surprised_trade/status/1414867660010139649
another iii takes a 10% stake
https://www.lse.co.uk/rns/holdings-in-company-14olzv5wg6ndffm.html
https://twitter.com/surprised_trade/status/1412689219047276544
the opening up of foreign travel will add substantially to profits
'...there is huge untapped demand to holiday abroad when the UK government’s green list of countries is expanded, and Ramsdens is primed to gain market share and increase gross margin when that happens given there is far less competition following the demise of Thomas Cook (acquirer Hays Travel doesn’t offer currency exchange) and less well funded independents.'
While I never like it when facts get in the way of a decent story, my only caution with Downing having taken a hefty chunk of shares is that the IT was suspended in November last year just at the point when a recovery in their fortunes began.
Strikes me therefore that the managers (of that trust) are pretty binary - either right or wrong - their fund returned 38.7% between January and May.
Looks like Downing LLP would tend to agree - the business is largely unscathed by the pandemic
Jewelry sales save the day. Pawn broking and Forex should deliver in time
K
Bodes well for all of us.
Gl all.
Investors Chronicle atricle released tonight- extracts below....
Middlesbrough-based Ramsdens (RFX: 155p), a financial services group whose main activities encompass foreign-currency exchange, retail jewellery, pawnbroking and a precious metals buying and selling service, delivered a resilient first half trading performance in the face of two national lockdowns and restrictions on foreign travel.
Ramdens is well set for a strong profit recovery when the economy is finally free from restrictions and international travel restrictions are lifted. The investment case has not changed. House broker Liberum Capital expects a surge in pre-tax profit from £1m to £6.5m on 30 per cent higher revenue of £57.4m in the 2021/22 financial year, a realistic assumption given that a high proportion of incremental gross margin earned falls through to operating profit.
Moreover, with net cash of £15m (48p a share) on the balance sheet, the directors have ample firepower to make opportunistic earnings enhancing acquisitions ...Buy.
https://www.investorschronicle.co.uk/ideas/2021/06/22/upgrading-target-prices/
I have added a few more shares on the back of the news that was published following the decision that Downing Strategic Micro-Cap Investment Trust have bought a chunky stake. A niche company, but as disclosed in previous contributions, my timing was flawed. Don't you just love hindsight?
Downing Strategic Micro-Cap Investment Trust seeks to provide investors with long-term capital growth through a concentrated portfolio of UK listed companies, typically with a market capitalisation below £150 million. The company intends to take influential positions in businesses believed to be undervalued and that could benefit from strategic and operational initiatives to drive performance and unlock shareholder value.
https://twitter.com/surprised_trade/status/1407260722359418880
other's see a recovery too ....Downing Strategic Micro-Cap Investment Trust just took 14%
https://www.lse.co.uk/rns/RFX/holdings-in-company-muf1tau2eynz7wf.html
IC notes.....''although the Covid-19 disruption to business this year has sent the share price well below the 165p entry point in my market-beating 2019 Bargain Share portfolio, I fully expect to recoup the paper losses in due course. Bargain basement buy.''
Cash rich balance sheet to fund rebuilding of pawnbroking book
Strong gold price supports precious metals buying and selling
Set to capture market share in foreign currency exchange from weaker rivals
The share price rallied t to a high of 260p by early January last year, before giving back all those gains, and more, in the 2020 stock market crash.
The fundamental long-term drivers of the business have not changed even if the profitability of certain business division have been impacted by national lockdowns in the short-term. This is exactly the type of recovery play Ben Graham would be looking for to create a decent ‘margin of safety’ as well as offering prospects of a sharp rebound in profits when life returns to ‘normal’. That’s because Ramsdens’s market capitalisation of £42.2m is only 19 per cent higher than NAV of £35.6m even though the group has a debt free balance sheet and holds cash of £15.6m. Current assets of £38m are almost four times current liabilities of £9.8m, highlighting a strong liquid ratio and an ability to pay its bills. In fact, current assets are more than double total liabilities of £16.8m.
tealo1 - 20% gain for an individual holding is neither here nor there - Nvidia (actually it is now my largest holding) was bought in 2018 at $216 per share - is doing nicely. For that matter, so are my shares in Adyen, and Varta and a dozen or so others. All have doubled in a couple of years. My portfolio is structured for growth and I will be disappointed if, this year I do not have uplift of 17% - 18%. Sure, there are a few losers this year already - Abcam for instance and plenty of turgid ones such as AFC, SAGA, Utilico, Deutsche Bourse etc.
Ramsdens has plenty going for it - cash rich, the watches and jewellery side are providing not just turnover, but are keeping the company alive. Division for precious scrap metal and pawnbroking will do well in a down turn, (but surprisingly, we are not there yet), FX (does well when conditions allow for travel) but talk of expanding into the South East is bold and at a tangent to core competence. I don't like that from the perspective of Rent, Rates, Staff and competition.
We have news to expect the lowering of restrictions (in England) in late July so it might mean the start of FX again. Once the furlough scheme ends and employers weigh up the prospects to re-open, I would expect to see unemployment begin to rise. That won't really happen until schools return in September. That MIGHT mean the beginnings of the pawnbroking side picking up. But these little things do not mean that shareholders in Ramsdens are going to get rich all of a sudden.
It does take time and rather than adding to my holding in RFX (because I know the risk), the reward is insufficient (at this stage to press the buy button. So, for ME, these are not a buy but there is an insufficient case to sell. I like to average my holding UP. And I will do this when there is sustained evidence that momentum will continue.
And for that, I will use the basic historic information in graphical format (chart) with the 5 year one as a guide.
My decision to buy was flawed by my impatience - I underestimated the amount of money that Governments would chuck at businesses for a far longer duration than I expected. Things that I believe I got right include that RFX is a well managed company, is cash rich and has revenues from different streams.
Dividends are a bonus as far as I am concerned. While the value of my holding is slightly underwater, this is magnified when opportunity cost is taken into account.
I added another 20% to my holding a few days ago. My average is now the same as the current SP. I’m intending to hold for many years all being well, return of the divi etc and continued SP growth. Im sure we’ll be at around £2.50 this time next year if not sooner.
Absolutely, gold price due to increase to about $2500 owing to QE and therefore inflation. Plus opening of additional shops for added growth.
The problem is the market is becoming that irrational, you now think 20% is not an attractive gain...
Ramsdens offers plenty of long term potential to return and improve on existing normal trading earnings. The net cash position is healthy, leaving the actual business on sale for a good price which I see a 50% upside within 3 years on return to healthy profits.
RFX is a good company, backed by a good management team - and one which offers a hedge against inflation & has good exposure to gold prices. If you are prepared to be patient to return to normal trading, there is good money to be made here with a good margin of safety.
Outstanding recovery stock. 20% gain over the next 12months?
I had watched RFX for a year or so before I started buying as a result of last years very sharp (and IMV temporary) collapse in the SP. During the previous four years they had more than doubled revenue and quadrupled income. It looks as though this is a well-managed , conservative ,but effective company in a number of growth niches, international travel will return , sadly pawnbroking will be highly profitable for the foreseeable future and the price of gold and jewellery is trending upwards. The company is also planning a controlled expansion . On that basis, and the assumption that this will return to something like the previous revenue levels , if not the same trajectory , I am assuming that for the year to Sep 2022 they will be reporting revenues of at least £70 mill and an income(well?)in excess of £6 mill, on a reasonable low double digit PE that would generate a rise in the MC (and hence SP) of 20/30/40%. that fits my profile and I will hold/accumulate at these prices.
The results simply reflect the past. The authority in the narrative to accompany them was muted. And, as a consequence I am not sure what to do.
I don’t care about intraday movement, but the forward guidence was expansion with defined geography, London and the S East as the focus….. and, I’ve got to be honest this does it really fizz me up. South East (as far as I am concerned is Berks/Bucks/ Surrey/Hants/Sussex/Kent etc…., all living in cloud cookoo land in terms of value : worth and it is a long way out from the core roots for Ramsdens.
My hunch is to sell. I’l give it 6 weeks before I hit the sell button, but the managers are not evidencing the subtle signals that warrant support. 3 months is the timescale I have in nind. If there is no PR stream of news weighted to improvement, then pastures new with the residue.
In my 40+ years in building a portfolio, it is rare that I buy fresh shares in a company in which I have held investment unless there is a change of management.
I think this is really positive
FX will come back (not soon but it will)
Pawn/ loans have reduced as furlough has supported households. Furlough is ending and this will mean people have to return to the pawn shop. The same here for precious metal sales. Also gold price is rising so the increasing price will drive sellers
£15m of cash! Wow
Substantially added to my position today. Had to buy 3 times due to limited volume.
Fair news, happy with increase net cash position . Forward earnings should return to previous norms, resulting in gradual uplift of SP as time goes on. A good solid company, with a good management that is currently priced well.
Buy
You are right,but that is why this has huge potential going forward.A vitual break even in a covid year with all the turmoil is a great result.Cash at hand and expansion planned.Well undervalued.I Have doubled my holding today.
Sigh this has to be one of the worst covid recovery stocks out there.
It's gained about 20% since V day, could name others that have seen 200%!
yup, very decent results against a covid back drop, six new sites in London and south east in pipeline and nice cash position. A four week delay in opening up will pass quickly and foreign travel opening up shortly too will hugely boost figures. All set for growth, increased profitability and increasing business ...a lot to like :-)
Market Cap £49m cash in bank £15m undervalued if you ask me. Nice long term hold. Costs under control, things can only improve from here
As there remains uncertainty with travel, (I still feel that autumn is going to be the beginning of the return of discretionary travel), I doubt that the FX element is going to have a significant effect.
The pawnbroking side should begin to pick up now, and I am sorry to say this, that bailiff enforcement of evictions can re-commence. Many companies remain shuttered and those that have re-opened face either feast or famine. There seems no middle ground.
Short term will likely see unemployment rising, but more consequential on those businesses feasting not wishing to commit to expansion and the drip, drip loss of staff as those in famine try their best to stay alive.
PE will only be able to look once it is certain the FX revenue will be there (which we all know it will but when is not certain)
PE are awash with cash and could someone take this private, pump with extra cash for a full roll out of the website and forward fund more stores? yeah
You could look to take this model overseas also especially the watchfinder element?