Member Info for Avalueinvestor

I bought some more shares today in PLUS, at around £24.40. Each share is worth about one 73.73 millionth of the company's value to me. (There were 73,731,747 shares in issue at close of business yesterday)

My first purchase 20 months ago (6 Feb '23) was at £18.61 when there were 93,026,874 shares in issue.

To buy one 73.73 millionth of the business 20 months ago ie [(93,026,874 * £18.61)/73,731,747] would have cost me £23.48

So in those 20 months, the value of one 73.37 millionth of the company has advanced from £23.48 per share to £24.66 ie just 5.0%. (Admittedly, I would have benefitted by dividends net of US tax of £2.36 in the interim [source: https://www.dividenddata.co.uk/dividend-calculator.py?epic=PLUS] but I am ignoring that as my capital has earned larger dividends elsewhere in that period).

During the same time, owners' cash on hand has increased from circa $930M to $950M (both figures from RNS) and

the metrics reported by management as KPIs have (in my view) become less volatile and been consolidated.

The dividend looks likely to be trend higher to me. The dollar and dollar reserves value in sterling are strengthening.

It continues to look like an attractive purchase to me, even though the apparent share price increase is on face value gaining momentum. In other words, I feel there is still significant upward value to be reflected in the share price.

I cannot spot another listed company with a more aggressive share buyback programme in terms of eating its own shares up. The approach, now covering 24 consecutive quarters, has resulted in 36% of the company's shares being repurchased. It's methodical and measured.

I see JP Morgan and Blackrock have each taken 5% each recently. That's a commitment of £90M each.

I think that in these situations the acquirer actually puts more emphasis on answering 'could we work with these guys or would we have to fire them all' than people imagine - and that whilst the numbers are clearly highly important, even good numbers but with a team you have to fire causes an acquirer to hesitate. When the numbers have stalled, that makes the proposition even harder. I've no special insight, but I put it down to personal chemistry or lack of it.

Yes ggplyr interesting point re margin and return on equity. I've spent about a year trying to find any company with margin and RoE metrics as good as PLUS. It's hard to find one that can match either margin or RoE. I haven't been able to find even one that comes close to matching both. Think I have looked at at least 300 companies.

Ditto Sea-Tank.

Actually, it's equal with HWG in my portfolio. But PLUS generates more cash.

This looks like an interesting value play. I'd be glad to know from existing shareholders if division are received net of 20% withholding tax ? ie 2p per share quarterly or net 1.6p per share quarterly ? Thanks

Hi Conger2, interesting point re 40% gearing limitation. Is it clear what governance processes might allow the company to amend the gearing limit to allow for greater appetite to grow in what is a wholly new government environment to embrace wind and solar ? One would think that demand will be there so if the arrangements were there to increase gearing, the board would be contemplating doing so ? Views welcome.

I wholly agree. There's not a lot missing from the news flow or financials which suggest that this is not a company that will con tin to deliver growth and value in the medium term. The new government's policies on planning and building may add to the company's prospects too, in ways which the share price does not reflect.

I agree. If we assume cautiously that 'more than $1Bn' means at least $1005M, and taking into account the shares outstanding this morning, and todays £1/$1 exchange rate of £1-$1.2818, each outstanding share is backed up by at least £10.27 or approximately 46% of the share price is covered by cash.

But even as we type the company is buying back its own stock at a rate of at least 3,000 shares per trading hour, thereby concentrating cash and value further amongst the outstanding shares.

In my view, it's a very good company to invest in.

You did well there Me12345. There is so little interest in HWG other than the 6/7 institutions which hold the bulk of shares. This is in my view such a good company to be invested in for value. What a fab RNS today. What they are achieving with only 120 staff seems very effective.

The RNS today provides a helpful tailwind towards the company meeting its strategic goal of a £1Bn net disposal value threshold (a new planning permission in Selby granted for 1.9M sq ft of industrial and logistics space). There continues to be just 3 shareholders, including Peel, accounting for 70% of these tightly held shares. I think attractively priced. And all this being achieved with just 120 staff at the end of the last reporting period.

The RNS today confirms that in all probability, there is no value left....

AGM today passed a resolution enabling the company to buy back 10% of outstanding shares equivalent to about 7.8 million shares during the next 12 months. In my view, this suggests that the Board believes that doing so would be earnings enhancing; that cash flow remains very strong and that the current share price in early £20s represents good value.

Disappointing update I felt. My take on it was that the Board miss priced risk in the past and made a distinct mess forcing Accredited sale (we knew this). But yesterday's RNS told us that the Board have had to sacrifice a further $100M in value over and above what was expected, to sort it out. I view as the lenders are now the people with significant control, not the Board. I suspect there will be further downside, not upside.

And in addition, as time continues, an ever increasing proportion of the intrinsic value of each share is backed up with cash. Not client cash...but owners' cash. With £1.23 = £1 yesterday, the cash pile must be currently worth a solid £10 per share.

Calculations:

Approx 77.78M shares outstanding at close of business today, assuming about 30,000 purchased today. (see RNS tomorrow)

Approx $1Bn cash held (it was $985M at 31 March). See RNS of first quarter trading update.

Assume £1=$1.25 and the $1Bn translates into £800M today.

That's more than £10 per share as a margin of safety when buying Plus.

I am a holder.

That's a fair challenge gglvr. I thi k we are on the same page. My aim is not to precisely value the business but to fotm a firm view as to whether buying at today's price offers a margin of safety. I think so.

I calculate that share owners cash per share as at 31.3.24 is £9.68 using £1=$1.30 as an approximation. So the business, in my view, is valued by the market at £10.50 a share if you put the cash to one side. What terrific value. Only employs 565 people at the end of Dec 23, so turnover is more than $1M per employee. I never worked for a company that could achieve that leverage from its employees.

Sorry, the column headings are:

Date (yymmdd)

Shares outstanding in M

Cash in bank $M (that's owners cash, not client cash)

Cash at $1.30 = £1 in £M

Cash per share on balance sheet (owners cash) in £

Happy to be led to believe I am not right but as far as I read the announcements and RNS, doing some maths with cash on the balance sheet (that's owners' cash, not clients cash I think), and the buy backs this is a larger set of calls which I think shows a lot of value here:

Date Shares Cash in Cash a Cash per share

yymmdd O/S (M) in bank $M $1.30=£1 on bal sheet

190701 113.310 $327 251.5 £2.22

191001 111.650 $297 £228.5 £2.05

200101 108.973 $292 £224.6 £2.06

200401 107.045 $515 £396.2 £3.70

200701 105.975 $587 £451.5 £4.26

201001 105.050 $723 £556.2 £5.29

210101 103.416 $593 £456.2 £4.41

210401 101.901 $675 £519.2 £5.10

210701 101.331 $721 £554.6 £5.47

211001 100.926 $767 £590.0 £5.85

220101 100.212 $749 £576.2 £5.75

220401 99.435 $866 £666.2 £6.70

220701 97.568 $995 £765.4 £7.84

221001 95.382 $950 £730.8 £7.66

230101 93.296 $930 £715.4 £7.67

230401 91.510 $950 £730.8 £7.99

230701 82.303 $849 £653.1 £7.94

231001 80.664 $875 £673.1 £8.34

240101 78.932 $906 £696.9 £8.83

240401 78.266 ?? £9.42 TBC

The only bit of poetic licence above is just using £1=$1.30 all the time, which is an approximation.

Anyone concur that cash value per share is ramping up and that therefore the true value of the underlying business is not only not recognised, but the degree to which is it not recognised is accelerating ? Hence, I think there is value, even though the share price is currently at highest ever as I write (I think).

I did some calculations about how much cash on the balance sheet was attributable to outstanding shares (which are diminishing) quarter by quarter to

£2.22

£2.05

£2.06

£3.70

£4.26

£5.29

£4.41

£5.10

£5.47

£5.85

£5.75

£6.70

£7.84

£7.66

£7.67

£7.99

£7.94

£8.34

£8.83 (31 Dec 2023)

With fewer shares than has been the habit having been bought back during calendar Q1 (about 666,000 rather than 1.5-2M per quarter in past 2 years), I think the cash per share at 30 March could be at least £9.24.

For me that means that this highly cash generative business (after setting the cash aside) is worth just about £10 a share based on Mr Market's efficient market hypothesis.

I think it's worth more myself. The cash on the balance sheet in the trading update will be very interesting - hoping to see above £9.24.

All my calls are based on RNS statements.