Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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VLE has been bought by the Naked Trader (Robbie Burns) per his update late yesterday!
That should bring VLE on to a few new radars:
"Volvere (VLE) is a small one - the smallest I could ever go to because of liquidity. Bought some a while ago for the high risk sipp (those that get the email know about that one) but have added a few to the isa as well.
It's a turnaround and investment company so it should be doing well. It has swung into a profit and has cash - potential under the radar decent future!"
I agree that if they can sell any property that are not needed... then this would be value accretive, raising uninvested cash without impacting profitability in the food business. In reality though - £1m here or there doesn't hurt... but increases value by 50p or so...
For me, another deal would be interesting, pushing forecasts for 2021 and 2022 north of £2m .. and therefore VLE becomes an EV story rather than NAV. So you add cash to your valuation of food to determine vale.
Mytton's comment about VLE management's fabulous track record and the potential for more acquisitions being worth an additional premium is a good one.
Obviously Shire's tangible assets and liabilities are already included in VLE's NAV, i.e the net of the freehold property, the borrowings against it, the stock, debtors/creditors, leasing liabilities etc etc.
An acquiror will pay an amount for the business as a whole, which would comprise its valuation of the ongoing core profitable business plus an amount covering the surplus property, debtors etc which it will take over.
It's impossible to separate the two as beauty is in the eye of the beholder! My thinking is that a buyer must pay up a multiple for the future/ongoing profitability of the business, as well as something realistic for the excess tangible assets.
So the ongoing business is not included in my valuation, only the tangible assets already in the NAV.
Another thought - there may be hidden upside in the freehold property, which hasn't been revalued since December 2017.
It's not just £NAV - if it were, then most AIM stocks would be in negative territory!
I am also investing on the track record of management and the chances of doing further profitable deals
I think you need to adjust for value captured in NAV already:
As per results :
Cash = £19.3m = £10.72
NAV (excl min int) £13.85
In the NAV = £3.11 for Food excl Indulgence. Which is the difference between net assets of £26.99m and £19.3m adjusted for the minority interest. So you have £7.6m of value for the food business captured in the NAV.
Taking your £1.7m at 8x etc gives £11.2... deduct the £7.6...80% to VLE....gives £2.9m which is £1.6 a share ie £15.45. Of course you also have indulgence, but if you reduce cash and add it a book value its asset value neutral. Potentially this fails to capture potential for 2021 to deliver more profit on a higher revenue base... although your profit forecast is higher than I would go for.
Technically the NAV will not rise until you see asset sales which I am not expecting... so you have c£20m cash.... and therefore mkt cap less cash for Food... which is £8m.... which is as you state it below. So the shares seem up with events here, unless we see further deals. Im a happy holder.
I thought it was worth rechecking the current NAV after the latest results, so here's my attempt.....
The NAV is 1385p per share, incorporating almost nothing for the value of Shire's business (and Indulgence) other than the tangible assets.
Shire made £1.4m pre-tax profit last year. I'd hope for say £1.7m this year given the good start, or say £1.4m PAT.
Shire could imo now achieve an improved exit multiple of say 8 given (1) the vegan growth/desirability (2) the heavy investment into the business and (3) immediate access into all the fastest growing supermarket chains for the acquiror.
So that would make Shire worth £11.2m. Times that by 80% equals £9m, less Lander bonus is say £8.1m.
On the current shares in issue that's around 450p per share - plus any further value re Indulgence - which gives us a total NAV of say 1850p per share.
NAV of 1850p per share still gives quite some upside from here.
Happy to be corrected on any errors/misapprehensions!
This puts me up 31%. Bought autumn/winter 2018. I think at the time you were calling it "The safest share on AIM", Rivaldo.
That's not bad in 18 months for the safest share on AIM. :))
Nice rise to new highs on almost no trades - I assume there's a delayed Buy trade which we'll see later.
Great to see the bid price up to 1500p, and the spread down nicely too.
The relevant part.
No change to my view here (what did you expect?!)
The share price is now at a small (5%) premium to NAV, but I don't think that's unfair. Remember that this vehicle has compounded wealth at an extraordinary rate for nearly 20 years now. A small premium for this sparkling track record hardly seems unreasonable.
If we deduct year-end cash from Volvere's market cap, we are left with an enterprise value of just £6.4 million.
With Shire earning (pre-tax) £1.1 million for Shire in 2019, the implied pre-tax earnings multiple is a mere 6x.
Some cash has been used to buy Indulgence, but I note that Volvere did not even pay a premium over book value in that deal. And there is clearly some potential for it to benefit from the association with Shire, as they are both in the business of manufacturing frozen food.
Happy to continue holding, then.
I see Graham Neary covered VLE in his Friday update after the results. VLE are of course the largest holding in his portfolio - anyone got access to his comments?
Https://www.stockopedia.com/content/small-cap-value-report-fri-29-may-2020-riots-jdg-jsg-vle-shi-613843/
1500p must be the highest ever with quite a bit of two way trade. Certainly a long way from my first introduction to the eventual company being a disastrous punt in NMT,
Now my biggest holding and happy to hold to await further developments.
Good to see the full 1500p offer price now being paid.
The 2019 results are out. 1385p of NAV, including £19.3m cash - plus of course the hidden value of Shire Foods, which made £1.38m PBT, and Indulgence Patisserie.
As regards current trading there's the usual downplaying and caution against hype from the Landers.
Q1 has seen "an uplift in sales", but (1) the Landers would never give more detail or extrapolate further as it's "too early", and (2) the COVID-affected foodservice operations, which represent only 12.5% of Shire's sales and more re Indulgence, gets far more detailed coverage than the 87.5% of non foodservice sales which are thriving and get just a line or two :o))
The "increased levels of distressed deal flow" bode well for a company like VLE with such financial strength - and it does seem that food sector consolidation is now a definite aim, which makes sense.
A couple of interesting points hidden away...
- per Note 24, Indulgence Patisserie's assets cost £1.25m - but against this VLE received £1m of property (one leasehold and three freehold) and £0.34m of plant and equipment. Not bad value at all!
- per Note 15, included within the cash pile is £2.63m held in escrow against warranties/claims from the Impetus and Sira disposals. But since the year end £2.39m of this relating to Impetus has been released from escrow - perhaps another validation of how well the Landers run their companies.
Around £30,000 of net buying so far today.
Results are not long now - around the 29th May, so just over two weeks away.
now im on twice...!!! apologies
Ill try again, think I got removed for mentioning someones blog, anyway buybacks are extremely unlikely I would say. The last move set the business for the longer term and I cant see Landers wanting to take more out at present. Disposals also unlikely given the recent acquisition of Indulgence and synergy potential with Shire. The shares trade at about last reported NAV 1380 and whilst you can justify a franchise value to the business and perhaps more value to Shire its hard to see much more from here. Unless of course they have picked up something else and spent some cash. Next results are not until the end of May.
I think you can rule out buybacks and sales at the moment. They have just bought Indulgence and so if something is a foot it will be potentially a further acquisition. However I suspect equally likely are just small volumes pushing strong shares higher..... results are not due until 29 May but the NAV of 1382 at 31 Dec has been announced. Whilst you can argue for a premium since Shire is doing quite well and likely worth more together with Indulgence than implied by the NAV, it wouldn't justify a significant move from here. The shares have been pushed by share profits and Graeme Neary at Cube which probably explains the move in a frothy market.
I would personally think that is unlikely, given previous disposal announcements haven't been preceded by any noticeable price movement. Would be nice if it was the case though!
For our little company a huge number of deals and at one stage a very tight spread. Not normally a leaky ship but I wonder if something is afoot— another acquisition, more buy backs or an outright sale of the company? Too soon for the next figures.
Looking very strong.
1441 paid
And thar she blows upwards, after a £6k buy at 1399p - with the spread reduced to an unusually low 50p.
...and another £30,000 of buys so far today, the last buy being at 1395p. Unusual to be able to buy this much stock, but perhaps the rising Buy price indicates there's not much if any left.
Almost £15,000 of buys today, with the buy price now rising to 1382p.
Gailes5, there does seem to have been alot of background buying, and the sells appear to have now been fully soaked up. I wonder if VLE are accumulating shares in another large buyback?
There has been, for this share, quite a lot of sales in the last 2/3 weeks . Mainly lots of 1000 but sometimes more but no substantial buys recorded. With the sp holding up well I wonder where they have all gone, certainly not on the Mm’s books? Any ideas?