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Hi Silverknight
Hadn't forgot final dividend, but focused just on opportunity for this week and forthcoming divi.
FY dividend will obviously be dependant on how STM Group does over next 6 months...
For me its a no brainer to hold or buy more at today's share price, based on NAV
However STM need to start delivering, rather than making excuses for poor sales performance
Rich
Are you forgetting the final div in June (.75p this year) or assuming it wont be paid. I suspect it might be .55p again but that still doubles your stated yield.
Only a small dividend at 0.55p/share - however if you buy at 28p / share, its still 1.96% return by my calculations...
Better than any interest rate from bank / building society at present
Pays 19th Nov
Rich
Disappointing update for sure, but not really unexpected with covid.
Revenues to drop by £0.32m leaves STM target revenues at approx. £27.8m which is still an increase on 2019 from £23.3.
Profit I expect will be in the range of £1.5-£1.8m.
Next years targets will be affected too, so while we see targets reduced there is still an increase and the company is still making profits, cash in the bank and no debt.
STM has a NAV of 59p and a negative enterprise value at this price.
If another company was on the look out to buy a smaller business like STM, this would be the time to do it.
People are easily spooked in this market but the m/c is below cash again. The basics are sound but I would hope to pick up more stock in low 20s. Again we should ask- is the (reduced) divi safe going forward.?
Whilst today's announcement is disappointing, if not unexpected, the sp reduction appears grossly overstated, so creating a good entry point to top up holdings.
33.7p at the time of writing, now 40p, 19% increase. Does Master Investor normally produce the goods or was this just luck?
The recent write up provided by Master Investor was, in my view, very bullish regarding the prospects for STM.
Whilst the projections and figures provided are very helpful, for me, the most interesting point that is made is:
"It looks for other companies in its own marketplace operating with revenues of £2m to £3m for which it is prepared to pay 2x revenue. Larger companies elsewhere in the sector are paying 5x to 7x for books of larger revenues."
In effect, if STM were to become a bid target for a larger company, that company would be paying around 5x revenue of £30m in 2021or 2022. That would give STM a valuation of £150m around seven times current valuation.
So, which larger finance company might find STM a valuable addition?
Not entirely surprised by the pullback but the profitable business still valued at under £2mill. Even with a reduced divi you're still getting a decent yield. Well worth hanging on to.
Been trying to sell to be able to buy in cheaper but always in NT. The future looks bright here but the impact partly from covid has slowed progress by a year. This now looks to be a long term hold of 1-3 years. I may just add on further drops.
This statement imo explains the drop today but suggests a step change in 2021 when the fruit of their labour is delivered. Buy the dip with the intention of a long term hold.
"A key focus for the second half of the year, and into 2021, is accelerating our new business activity for new products, which for the reasons given above, is behind management's expectations. Understandably, some of this timing delay is down to the disruption caused by Covid-19. With our recent launch of additional new pension product offerings for both SIPPs and the workplace pension aimed at the Shariah market, we are confident that these will start to fill some of the shortfall. We continue to look at ways to enhance and market our products to proactively serve our target market and deliver future growth.
We expect that 2021 will see a step-change in profitability due to improved operating margins as our investment in IT initiatives start to bear fruit, and our Options workplace pension business moves from a loss making position into profitability."
Today's news is welcome, bringing well-establish and well-regarded businesses on board.
Happy that they have that as a safety net just in case.
Not really free cash as its a regulatory requirement to hang on to it.
Roll up for free cash.....
Net cash £17m (probably more since last reported), Market cap £17m - Free for the asking is a business that pulls in £4m profit per annum (6.5p per share) at a 18% margin and has strong moats and will probably grow. On top of that it pays divi of 1.5p per share or 5.5%.
So cheap that i "gave" myself a little more of this!
DYOR
NtD
Unbelievable value on offer.
I thought we may get a small ex-divi bounce today - we didnt. I would therefore assume there wont be a dip after the divi either - find out tomorrow.
Given the strong rises in larger providers today, I would hope we see a rise before the week is out.
This is a bit of a core hold for me. Looking for secure divi payers as much as quick flyers. My opinion of ST has dropped recently. A bit quick to abandon his tips if things don't go to plan. This is small enough to rise to 40p without massive buying. We shall see.
Hi Silverknight
I have stayed put in the share after the drop on profit warning and delay as like you say - its very undervalued. I do however think it may be a long road back. Too small for the II's to get too excited about and they burnt Simon Thompson (he recommended after a chat with the team and 4 weeks later they had the profit warning - i dont think he will recommend on principle of trust failure - and that means we dont have easy access to alert PI's. That all said I am happy to farm this - good fundamentals and it may be bought / buy others in the meantime as well as paying a fiar divi. All the growth drivers of the Simon T recommendation are still there - it was delay not disaster. Just not sure who will bang the drum for it.
creeping up but you've got a company here making £2.6mll and nearly 80% recurring revenue valued at around £2mill net of cash. Go figure
Even if divi is halved it still provides an acceptable yield-especially when you look at current b/s rates. Healthcare companies cover a very broad spectrum so many wont benefit from Cov19. One that might is TekCapital which owns 18% of business developing small oxygen concentrators (under patent). Check it out.
Good advice on ovb I sold when you said thanks. But now am telling you mate.. healthcare companies only ones that going to make money next 12 months
Dividend Definitely won’t be held mr silver, we are in for a long ride. Will take years for economy to recover.. sold
I've just averaged down (to 31p) but hopefully the divi will be held and I'll hang on for income/recovery
at the time of the interims was £18mll. Way above current M/c. Is this business really worth less than nothing?
The profit warning and subsequent fall in SP caught me out and as such I am still a holder despite the drop. The fundamentals for this share dont look of concern for the long term given the cash and the future growth potential if they can sort things out. In a quandary as to whether to cut losses or see if this can continue its recovery. Any progress update RNS's would be nice given the last shaky one and my fear is that absence of update indicates the progress is still slower than anticipated.
Any other holders thinking to sell or hold?
As at half-year there was cash and cash equivalents of £18m on the balance sheet so the dividend, to me, looks safe.