The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
That's the problem when a share declares it may be subject to a takeover/merger then everyone who owns over 1% has to declare whatever they buy or sell hence the storm of rnsssss
Whilst the SP has more than halved over the last 4 years the profits have not, in fact they have stayed in a band near £2 billion.
Fear of competition and lower prices plus the needed spend to roll out FTTH (and 5G since BT acquired EE) and that the dividend will be reduced rather than profits plunging seem to be the downward drivers to the SP.
BUT investors seem to forget that BT has a massive advantage over the competition. It already has a national infrastructure backbone for both landline and mobile that can be easily integrated to provide a seamless end product to the consumer ( see the Halo product with I million already converted ). It has developed new techniques to put thinner /stronger more flexible fibre cables down it's existing ducts. and equally important it has the trained workforce to do the job NOW.
It currently passes 26000 new premises a week with FTTH and believes it can easily reach 30,000.The avg cost is towards the bottom of its predicted range of £300 - £400 per premise (City fibre are cherry picking but expect £500 a premise). Total BT spend for 15 million premises is predicted at £5.5 billion (Cityfibre are predicting £4 billion for 8 million passes.)The government is offering £5 billion to get 1 Gig fibre to every premise to ensure national rollout. Openreach/BT will get the biggest chunk of this and the vast majority of the rural areas are already BT customers as often there are no or limited competition.
BT only needs to convert existing customers to a fibre or fibre/mobile bundle product not spend vast amounts to acquire new customers from cold.
Goldman Sachs (backers of Cityfibre) estimate an enterprise value of £85 billion for Cityfibre when it passes 8 million premises.
SP may not be at the bottom yet but I for one will be adding on the dips.
Bear
As expected - Admin costs at £9.5m (£ 9.1m 2018) (originally expected to rise to £10m)
Dividend cover in excess of 85%
Dividend held at 5 P approx 5%
Expectation 2020 Dividend cover will be 95%
2020 will be the first full year of all properties being in house under 'Hello student' had hoped that would get us to full div cover Plus a bit. Till we get there the div payout is drawing out capital not adding to it.
All moving slowly in the right direction.
Let's hope 2020 expectations are fully met and (double) hope they are exceeded.
Bear
Increased turnover - great
Strongest ever order book - great
Steady stream of new orders (but many are just replacing partly or fully competed orders) - good
Year on year growth in Adjusted profit - OK but not so great
The omission from the update of the vital word PROFIT (without adjusted in front of it) leaves much to be desired as it most likely means that there will be no profit this year thus the listed PE ratio will be negative, cash will diminish (or number of shares increase if earn outs are in shares).
Many investors will not look at a company with a negative PE.
Looks like yet another wait for TPG to make a real profit so the asset base./cash grows instead of keep diminishing.
But what the heck owned some of these either as Corac or TPG for nearly a decade whats another year!
Bearraider
No idea why REDDE shares are falling other than Market doesn't like the idea of the merger? or suspects some nasties in either NTG or Redde accounts/trading? but no red flags in either companies most recent updates.
However I have noticed that the shorts in NTG are growing ( there are no shorts above 0.5% in REDDE) one of the NTG shorters increased from 0.5 to 1.1% on the 20th Jan.
Bear
hi Jolly
hard to call this one.
Negatives, share being shorted, could be some nasties in the figures of either NTG or Redde we don't know about? Market doesn't like the merger? After merger NAV will be lower than Share price. Currently NTG NAV is well above SP around 480p I think whereas NAV for Redde shares is 20p ar SP of £1. NAV always gives a gave a good floor under the shares if it is in readily saleable assets and trading goes belly up.
Positives. hopefully the combined market value will at some point be high enough to get into the Ftse 250 where trackers have to own shares (when DIGS went into the 250 the SP moved up nicely).
Synergy should reduce costs and increase profits, maybe some scope for cross selling whilst also diversifying business.
News would be good to make a rational decision but the most recent update didn't show any red flags. Unless the market really think this merger is a very bad idea there seems no reason for the sell off.
Samson rock increased its short position from .5% to 1.1% on the 20th. When shorters start messing about with a company like Northgate that seems well run and profitable it may present a good opportunity to buy the shares for the recovery. The great difficulty is timing you don't want to catch a falling knife but often when they bounce they move up quickly
Hopefully we will see some movement upwards in the share price in next few days as the October update said "The Board intends to provide guidance on the Company's full year 2020 in late January 2020." we know from October that turnover is up, bed number up, occupancy up costs down so hopefully it continues. Bear
Matt
Today I have sold over half my Digs shares its been a good run since buying at just over 107p but feel they are now toppy, trading well above NAV, with Divi of 3%
I already own 3 x more Empiric (at 108) so not adding there as excluding divs still sitting on a capital loss, a poor investment compared to Digs but thankfully the 5% div over the years means not an overall loss/washout.
Medium term ESP may have more upside than DIGS, as trading below NAV, 5% div , new management has turned it round and bringing letting in house through Hello Student has cut costs dramatically, though they still need to improve occupation levels to nearer 100% from 92%, further improve profits and get dividend fully covered for the SP to climb much further. Bear
Carcosa61
In view of the fact the posting you have chosen to respond too is over 4 years old it would seem i you who are drawing attention to Oceanwood's current holding in Avation of 24.27% (using your figures) which had been reduced by 3% since September. Any reason for that as it seems a little strange to accuse dhlindy of spreading false rumours with a 4 year old post!
Sorry TT I meant British listed not based you are correct it is based in Singapore This is a star for me too now my biggest holding. It is still a buy even is if the takeover fails . Both Thomas Cook planes are now placed with another airline so just a few months lease payments lost will make a small dint to profits.
Max
PE ratio
the P = the current price of the share
the E = the earnings of the share
the earnings stay fixed until the next final report is issued
currently for the 2018 year the earnings are 0.02p per share
So if the share price is 6.55p the PE is 6.55 / 0.02 = 327.5
if the share price is 6.8p the PE is 6.8/0.02 = 340
So if the share price goes up the PE ratio goes up and the PE goes down if the share price goes down.
Many investors ( including myself) use a rolling PE to help value a share this uses the earnings per share from the interims when they have been declared. it is a little more complicated to work out but much more useful when you are in the period between interims and final year end results. In some countries inc for some British listed / dual listed companies earnings are provided quarterly.
Bear
Hi TT is it really over six years!
I have never been so patient with a poorly performing share as I have with Corac/TPG what strange hold does it have on us?
Agreed contract extensions are real good (and in some ways much better than one off or short term business that can be costly to acquire thus showing little or no profit) but TPG either needs new profitable additional business or be able to draw a profit out of its existing customers /contacts/extensions.
I would be happy for a decent profit that put the EPS in a sensible range even if any dividends were a little longer in coming. It would at least mean that TPG was growing its asset base providing resources for growth without burning existing capital or borrowing.
Bear
Whilst good to be confirmed as an extension by three years of previous contracts it would almost certainly have been foreseen that this would happen within normal business expectations at the time Sapienza was bought.
Of more importance to TPG are new customers, new orders or business in new areas - that are profitable!.
These increase the prospect of TPG making a real profit commiserate with turnover sometime.
Whilst I appreciate that TPG is no longer loss making, it is not profit making either!
I first bought before they were TPG when their cash pile + assets almost equaled their market valuation
I have seen their business focus change from bleeding money on R&D on 'cutting edge projects' now abandoned to spending the cash on acquisition of new 'cutting edge' businesses. BUT we still have to see all this make a profit!
Once one of my largest holdings both by number of shares(I have not sold any) and cash value TPG now languishes at the bottom of my portfolio in terms of cash value ( even though my avg buy is well below todays price).
All my other long term holdings are showing much better average annual returns as none of them have taken as many years to show good profits as TPG.
This last week as I reevaluated my portfolio I nearly sold out of TPG but decided to give them one more chance.
So my hope for TPG in 2020 can be summed up in four words WE NEED REAL PROFITS!
Till then any blip up in share price is meaningless it can as easily drop. Cash flow and profit are the only way to truly value a company and share price long term.
All the best Bearraider
Thankfully I took the opportunity to top up my holding during the recent fall into the 260's
But personally I hope that Avation remains as is, here is why?
I have been in from almost the start it has kept growing steadily, trebling my investment.
It has kept increasing it's dividend so that now it is a reasonable 3% covered 4 times
That means it is growing it's asset base by 9%
Even with the recent price hike its NAV is now roughly equal to the share price.
It reports and hold its assets and pays it dividend in $
Allowing me to hold a British based company but I can diversify from all my sterling holdings.
It sells into a global market, has a good credit rating.
It has forward orders placed for planes that are in high demand and easy to place.
Bear
Hi all
I give a buy because I bought in yesterday for my income portfolio - normally to hold longterm
My decision was made because I liked smith getting rid of plastics and the move to only environmentally friendly paper/recyclable/smart box sizing etc.. ( not because I am a greeny but because that is the way consumers will want to go).
I loved the link below to the clever machine that can size the box to content size. Look forward to seeing that being taken up by customers. I hope Smith hold the patents.
The 7 year bond at 0.875% shows the market rates the company as very financially stable if the bonds sold near face value(does anyone know what the bonds sold at). Would like to see more debt covered at such low fixed rate perhaps over a longer period.
The rationalisation of the business, the plans for synergy and vertical integration and the new plant in the USA should lead to a more stable business and higher profit.
bear
Max.
The PE ratio is Price of Share compared to the earnings (profit)of each share.
Or another way of thinking about it is how many years would it take if each years profit was the same and you used it to buy a share answer 327.5 years.
Price of share today is 6.55p
divide this by last full year earnings of 0.02p (see last full year report) 6.55 /0.02 equals 327.5
Normally you would walk away from a share with such a high PE unless you believe the company will start to make higher profits soon. When 2019 results come out the PE may go lower if they make more profit than last year or negative if they make a loss. Hopefully TP will not just build a good company with good potential but will also become profitable.
Normally for me a company with steady, consistent but not spectacular growth paying a well covered ( EPS at least twice dividend paid out) with dividend of 4% + having a PE in th 15-25 range attracts my attention . Bear
Not sure if any will find this helpful but as I await the results (and considering whether to add to my TP shares) I pulled some numbers together to see how TP may stack up. The end numbers are speculative as they are based on some unknowns. However we know at interims T/o up 13% to £9.4m - Net cash from trading £ 0.7m - with £ 0.5m added to cash balance of £7m = £7.5m ( the other £0.2m went to pay the exceptional item £0.231m termination costs) We know year end cash is £9.2m = to £1.7m more than at interim stage. (good to see as CASH is always KING). We know second half T/o last two years greater than 1st Half giving us full years @ £20.4m in 2015 and £ 21.7m in 2014. As yet we don't know where this cash is from, if there are any exceptional items either pumping up the cash (sale of an asset ? RD grant etc) or as in the first half an exceptional item has diminished the cash going to balance. nor do we know T/o. However on past two years seems to be about 30-40 % higher in second half. I have read the words 'improved margins' somewhere recently so some of the increased cash will have come from there if I wasn't imagining it.. In the first half we saw cash generated of £0.7m on t/o £ 9.4m so cash generated from trading at a rate of approx 7.5% (however this still left TPG at breakeven at EBITDA). If T/o increased as per the first half and with the weighting of previous years then £20.4m x 1.13 = £23.1m thus £13.7m T/o in second half. If all the increase in cash flowed from that (and with no other factors) then the cash from trading would rise from 7.5% to 12.4% of T/O providing a reasonable return. All needed to provide cash for investment,( the cash needed to pay for the new CNC machines will flow out from this), as will future dividends. If EBITDA has the same effect in the second half it should give a profit of between £1m and £1.2m for the year. Discounting the cash leaves TP valued at £25m for the business based on current share price and that would give TP a PE in the range 21 - 25. However a profit for the year of £1.5m would bring that down to a PE of 17. The market will however give it's PE based on the market cap (including the cash) so the PE will be higher.
for those who haven't seen this http://www.tpgroup.uk.com/files/9114/8603/1102/TPG_Cenkos_GandI_2017-01-31D_compressed.pdf