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This doesn't feel like rumour, nor should it be. Amazing value in the insurance sector.
FTSE 250 as a whole is yet to be re-valued. We've been impacted for years by pension deficits with profits hived off to top up pensions schemes. With long term rates 30+ years at record yields every scheme is moving to surplus and this should mean money will flow the way of the shareholder. Oh and Aviva etc benefit from bulk buy outs. Win win win.
There's a vote of confidence. Mad valuation if you ask me.
https://www.sharesmagazine.co.uk/news/market/1696359959024034100/in-brief-wife-of-phoenix-group-ceo-buys-shares-worth-gbp100000
The gap between HSBC and it's peers is growing, that's good to see as it is a quality bank so it'll hopefully continue to hold that martin and then it will go one of two ways. It'll fall back inline with sector performance or what I am hoping is the sector will follow suit. Only time will tell. £8.20 would be very nice, although I'll take some profit around £7.50 for sure.
Hi Hedgehog,
Great to hear from you.
Yes, it is a blip I'd agree. I posted after the AGM earlier in the year that UKG would impact the 2H but I think we could have told the story a little better and prepared shareholders as to the significance of the impact. My calculations were well out on the impact of the lost revenue and we have taken a bigger hit in the 2H than I expected.
I have a call tomorrow with Marie-Claire and Paul to chat through whether we can get more clarity published on the UKG impact. My assumptions are now that we lost around £1m of revenue in 2H due to UKG and whilst we worked hard to make it up, things didn't go quite to plan and we left a gap that dents the story.
This impact will continue into 1H 24, like for like, we had UKG income in the numbers for 1H23 so 1H24 will not look so pretty. So my steer to the team is to explain the like for like with the UKG numbers as a known assumption so we can see the underlying growth picture. At the moment we can't see it and that has made investors nervous. Not me as I know the history, although I would really value seeing the underlying picture in order to be really bullish.
It'll take a whole year from now to have the UKG impact visible and that is just too long to wait.
It is great that they are listening and my feedback is there just to help. They might run with it, they might not but I think that most shareholder will accept there was nothing we could do about the loss of UKG (it was a takeover) and if our growth story can continue to be told with the underlying numbers then what have we got to lose by being a little more transparent at the next update.
Keep well. Good luck.
We made a loss in 2H 22/23 by my simple calculations due to the loss of UKG (announced a while ago) impacting revenue. Revenues dropped £0.9m in 2H over the 1H where we made a £0.5m profit. FY profit of £0.3m suggests a £0.2m loss. This significantly impacts the growth story so why we are not highlighting the impact of the loss of the contract in financial terms amazes me. I'll be firing that over as a question for the results call later today.
I've not had time to run through line by line and will be doing that later. What stood out was the US where I was expect £10m of revenue. Revenues actually dropped from £4.87m to £3.9m. Again we need to understand this from the call later, is this where the UKG revenue was running through?
Things are still too tight for my liking. An annual positive return for shareholders is welcome, but it looks due to the fact that we reduced R&D costs by £300k is driving the profit number. Lots of commentary on new sales teams and growth but headcount fell by 4 FTE. Again if this is driven by refocusing and cutting costs on non-revenue earning FTE then great but where are the results?
On the bright side the message on revenue growth of 2/3 times was put out in the coming reporting period so Marie-Claire must have enough confidence to continue with that message. If we knew the value loss of UKG we could all do our sums and work out the true performance - I want to know that number and I want a Q1/1H 24 update ASAP.
Indeed a massive boost! The whole UK market with DB liabilities will surely be announcing similar positions in the coming months. The whole market could take off. I hope Wincanton is reviewing it's options around bulk DB transfer so we can get the liabilities risk gone for good.
As per my exchange with Marie-Claire we can now all pencil in the 26th September for our results!
Looks like we have added an RNS service to the website. Let's hope it is there for a good reason :)
https://newmarksecurity.com/investor-relations/rns-alerts/
I've exchanged messages with Marie-Claire today. The company has set a date for the results and she advised there is also another investors presentation to follow along with the AGM which will take place at the end of October. I fed back that it would be really good for investors to know these dates in advance, particularly as I expect we'll see some interest from investors on the back of the results. She agreed that she would put these dates out into the public domain now that they are set. So let the countdown commence to a significant re-rating!
The US opening up is the catalyst for huge revenue growth and the company is well positioned. The HardRock deal looks good. Paying down 200m of debt is a positive sign and again the timing couldn't be better. No need to roll the debt into higher interest bonds and no need for short term borrowing is good news. Profit? Well it looks like they have had a clear out, not gone into the detail as yet but I would say we should be looking at revenues, profits and dividends all being re-rated in the next few days by analysts who will up their recommendations on the target price.
Not sure of an L&G offer anywhere near those levels. A buyer might come in but a lot of the major firms do exactly what JUST does, so they don't need the infrastructure, products or regulatory permissions. They do need forward cashflow and with IRFS17 the growing run off will look good for profits and the balance sheet given there is 204p of value. Any price below 150 would be an effective use of capital. I'd hope the average analyst price moves towards this number. Capital returns will be light here, clearly the capital can be used better growing the balance sheet/ An offer nearer 200 would only come from a player that is not already in the market but the PRA have made the bar high for these takeovers. This business is now shipshape virtually no nasties in the closet with most of the past risks managed away. A definite BUY for me. DYOR
I'd expect a fair few analysts to shift to a more positive position and up their target price. This should help continued momentum in the price so worth adding on dips as we rise. Great to see investors recognising market share is only one part of the equation and it'll be sensible profitable growth that wins the day here.
I hope he apologised for his earlier tips, now is probably the right time to be tipping but his previous timing has been awful. My tip which is worth checking out is Newmark Security. Due to report a tidy profit in September, 4x PE, US business is stella growth. If you like to take a little risk there is far more upside on offer than downside. I don't usually ramp but they've just revamped their website and are boasting about 3x revenue growth in the next 3-5 years. https://newmarksecurity.com/
Nice post Hedgehog. A good video although we of course know most of this. It is great to have the CEO stating them for the record, we just need to ensure other investors find this. It's somewhat frustrating that there have been no RNS's this year on new contracts to back up these bold claims although I'm happy adding at these levels. My summary of the past 6 months is we have had little news about forward momentum. We're awaiting the results, which we know will show a good profit c£1m+ but it is the outlook which will be all important. It has also not been a bad period for the shares that have traded sideways with a stable price creating a good resistance around 50p. But I am hungry for a rise to the next level!
What about an offer Hedgehog? My wife's firm has just been picked up by a private equity business and I have to say having been part of a couple a take overs and a float in my career both PE, I can imagine that as news breaks on the full year and the new model is understood out there, we have a real opportunity for a firm to come in with an offer (say at £20m) and look to invest £5m (through loan notes) to drive the value to £100m with a 3-5 year exit plan. This would be an ideal opportunity to incentivise the new management team as well. I can't see anything below £20m being considered given the shareholder structure and I could see the PE firm offering the incentive to retain some investment if the existing shareholders want to roll again.
If I was the Chairman and CEO, it would be something I'd be exploring, if only to see what interest there is.
You make a good point in the structural changes around rates but managing the balance sheet based on risk and rates is what these businesses are about. To be fair, I think I understand. Firstly, they have the PRA all over them, internal models and hedging on key positions. Unfortunately, low risk pension/unit trust holders have/are taking the hit on the low returns. Those who purchase annuities and other matched products are taking the hit. Whilst they have some skin in the game, the companies themselves are constantly protecting their positions and whilst they will take a hit here or there exposure is limited.
Mad world. Our long term savings and insurance businesses in the UK hit great numbers, are well capitalised and provide great pay-outs yet remain on low P/Es. Great whilst you're a buyer for a period but it would be nice to see the true value at some point.
Agreed, we are where we are and that is now better capitalised albeit with a lot more shares in circulation and those investing today likely to take some profits along the way (if we rise from here of course). The only way to claw back losses is to go again for the brave. The investment from those in the know is the best signal we have as to future prospects, so I am in.
I did the same and took the decision to get out around a month ago when the previous deal was rejected. I'd been here from the start, in and out but I am now definitely out. Just popped back to look at the results and everything that made me sell has been confirmed. This is now a massive turnaround play and frankly I can't see it happening, if you are an income investor it will be a long time perhaps never before a divi can be reinstated.
Unfortunately, the competition is just too good, they are investing and winning customers. It must be pretty easy to sell against IDD, when your competition can't actually deliver because its staff are out on strike and they will be again as things get tougher, layoffs are required, pay rises can't be given. The only way you can pay your staff more is by being successful and the latest financial position says decline and bust . A lack of change in the modern world will take out any commercial organisation and unfortunately this is an old world business.