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Floyd81

Brilliant research - thanks for finding and sharing that

* that I said I would do

I've got a bit stick from the DLG bulletin board for selling today (the ex-divi day) but I obviously stand by my decision to move that money and profits over here into more BMN shares

Great stuff guys! MPs are a clever bunch on average but they won't know anything about the lithium vs vanadium debate so it's a good idea to educate them. One day it'll pay dividends.

Also, for your info, I made that top up I would do today a little earlier, and am feeling super positive to have increased my holding at this price level : )

The future is bright

Have decided to buy a 2nd tranche, averaging up quite significantly.

DYOR & GLA
: )

They’ve got a track record of scalable profitable growth, even during the years where there were yoy declines in number of insolvences, from 24k companies going insolvent in 2019 to 14k companies last year.

With both the effects of Covid and what is likely to be a disastrously hard Brexit, the number of insolvencies is likely to increase 70-100% over the next couple of years, providing them with ample opportunity to grow.

At the same, the group should grow in terms of market share from (1) the increased regulatory & political scruinty of the “Big Four” and also (2) Due to the fact the “Big Four” miss out on restructuring opportunities due to the fact they were the ones who audited the companies in the first place!

The company is heavily reliant upon the Partners within the company, especially the top 10 Partners who account for collectively account for 50% of revenues.

However, as long as they retain the Partners, and continue to grow their workforce, they will continue to make more and more money. Because the more staff they have, the more hours they can bill, the more revenue they generate, and the EBITDA margin has consistently been about 50%!

What’s very encouraging is that the number of employees has increased from 360 in February (50 Partners + 310 other staff) to ~460 today (consisting of 56 Partners + 400 staff) = ~28% growth

If they’re also picking up engagements on larger clients with more complexity, they can also charge more money. Looking online, looking at Patisserie Valerie, Laura Ashley, Comet, etc, this also appears to the case.

All of this points to revenues being £70-80m in the 30 April 2020 to 30 April 2021 year.

EBITDA would be roughly £35-40m as a result.

On this basis and using this price level / MC:

- EV/EBITDA should end up being 8 ish (maybe a tad lower or higher), which is v good.

- Yield should be 7%-8%. Also v good.

All of which suggests this is undervalued and on course for superb growth in the next few years.

Obviously I've missed out on most of the rise since this listed on AIM but I honestly feel there's far more to the FRP story with so many businesses in financial distress and little end in sight (sadly!)

I don't need the cash but I've never seen DLG as a long term investment, just a superb short term one (less than 12 month investment).

Whereas other shares I hold like BMN and AON are much longer term investments where even though I'm 100%+ up on both, I haven't sold out of at all on the former, and only sold half of my holding on the latter (cos I correctly guessed what was going to happen on 6 March 2020).

Appreciate that may not be what you wish to hear but if you look at DLG's long term performance it hasn't been great. I spotted the opportunity here simply because I could see the net effect from covid-19 would be very good for them and result in a resumption in their dividend plus a special dividend. But, as I've always said, this FY would be a one-off fantastic year.

I'm confident the Q3/H2/FY results will prove that. And I'm also confident the results for 2021 and beyond won't be half as good... unless I've misjudged the longer term effects on covid-19! (which is entirely possible of course)

Hope that all makes sense.

i.e. I don't like buying and selling in one go. As you saw, I staggered multiple buys over 8 weeks, and I have a similar but even slower approach when it comes to selling as well. [I actually find selling an entire holding v difficult to do]

Ahh right, that makes sense, and yes I agree with you there. It may appear rather nonsensical when the share price has dropped 24p and the dividend totals ~22p but I've been keen to book some profit from calling the dividend resumption correctly so it made sense for me. It was my first sell after a whole series of buys in recent weeks, and I can assure you that the bulk of my holding remains here, and there'll need to be a better return available before I made a 2nd sell.

Maybe I'm too impatient to take some profit from my holding but I feel comfortable with the decision.

Classic, isn't it? We all believe we need more green energy but no one wants a big solar farm too close by!

Although perhaps I'm being a bit harsh, I do have sympathy for them given the sheer scale of the Cleve Hill project. The problem these protesters have is that they're in such Tory strongholds they're likely to be ignored.

I wonder if the answer is to convince the Faversham Society that vanadium is better than lithium, so they start contacting their local MPs etc in favour of VRFB technology being used...

Phew, thank you, tomglan - that's what I thought and that's reflected in today's share price movement today!

Also would make no sense for the share price to fall like this if it wasn't safe to sell and keep the dividend

What ?? Are you sure ?

https://www.sharesmagazine.co.uk/article/the-essential-guide-to-getting-dividends

"If you want to sell a stock and still receive the dividend that has been declared, you need to sell on or after the ex-dividend date. If you sell earlier, you will lose your right to claim the dividend."

This probably influenced the timing of the release of Q2 Operational Update

Because now they can say how there's been solid progress on 2 different fronts in Q2

To be honest, I'm more excited about the Q3 or Q4 Operational Updates now we know that the Eskom tenders are on the go over the next few weeks!

Currently having a discussion on the IES board and this poster over there called Mike says that he's joined a group in Kent which will protest if they choose to use lithium instead of vanadium !

https://www.lse.co.uk/ShareChat.asp?shareTicker=IES&share=Invinity-Energy

As mentioned already, I intend to send some emails to Cleve Hill this weekend to try persuade them against lithium and to use vanadium instead.

(I don't intend to mention Bushveld but naturally BMN will benefit if the 350 MW batteries require vanadium since it'll massively drive up demand in the UK - a relatively untouched market for vanadium from what I can see)

Thanks for the responses guys.

I find it intriguing to hear that there's people buying the stock when the dividend is announced on 4 August and then selling prior to the ex-divi date only a few days later. Suggests to me these people know nothing about the companies they're buying into, which would feel far too risky for me.

Agreed - I've sold a little to take some profit (and top up in BMN actually), but have kept most of my holding in place because motor profitability will still be superb in H2, there'll be much smaller travel and BI losses in H2 than £35m, and fewer one-off costs, so I honestly believe H2 will be better than H1. Consequently the market are still undervaluing DLG and will be surprised once again in November when the Q3 results come out. Plus, as stated by us all, the promotion to the FTSE100 will also provide a re-rating in itself.

Best of luck to you all : )

No, I haven't heard of them, but I've certainly heard of their US parent company called UET

https://en.wikipedia.org/wiki/UniEnergy_Technologies

And finally, as a reminder, let's not forget that this price is completely bogus. Every other vanadium company is doing really well (look at IES, look at Largo, etc). You've got companies deliberately putting the word 'Vanadium' in their name in order to do better on their respective stock markets. Etc.

And yet somehow Bushveld, the best vanadium producer in the world (super high quality vanadium with incredibly low production costs, already producing 3% of the world's vanadium, and ramping up production massively over the next few years), is still languishing far off it's pre-covid level ... which was already too low!

You've then got incredibly exciting Eskom tenders which are officially happening in the next few weeks.

You've then got to factor in how vanadium demand and prices will sky rocket in the years to come. The revolution has already begun, with VRFBs being built in China, Saudi Arabia, Japan, Korea, S. Africa, and more countries. This is before all the billions of pounds of government stimulus money helps boost the green energy industry.

You've then also got to factor in how we've got a genius CEO who seems to be in the right place at the right time repeatedly, negotiating the most incredibly deals time and time again.

So it's clear to me that this sp is complete and utter nonsense.

.. and that's why it's such an amazing buying opportunity at these levels!

I've just sold 2000 DLG shares and I will making a top-up here imminently : )

Ah I don't mind people discussion re the financial figures.

It's just of limited value when Bushveld is still very much in growth mode. I mean god have you seen how many companies in growth mode are completely loss-making year after year, and they still trade at much higher valuations than BMN does.

Also feel that Bushveld turning super profitable as dramatically as they did should not be used against them now.

Lastly it's worth emphasising that the share price doesn't ever seem to have been influenced by the revenues etc, instead the main driver of the sp has been the commodity price of vanadium. It's an overly simplistic way to value Bushveld (I've always thought this) but that's broadly how it's been so far.

...up until the recent nonsense where we've failed to recover from where we were pre-Covid!

Fair point actually, operating profit isn't meant to take acquisition costs into account.

Having said that, this would've partially been as a result of Bushveld not selling towards the very bottom of the cycle since they anticipated a recovery in 2020 which has materialised. This would have had an impact because it obviously costs to mine and process the vanadium. So by stockpiling / not selling it on during the financial period it would've impacted the 2019 figures ... and boosted the 2020 H1 figures. A wise move that's easy to miss.

And yes the Vanchem acquisition is massively significant. We needed it in order to ramp up production in order to fulfil the needs of these Eskom contracts which will be hugely lucrative.

Furthermore the more that we produce the lower the production costs (due to economies of scale) to a level that's even lower than our already very low level. Which will improve profitability in itself.

... before you even take into account V prices rising since and expected to explode in the years to come!

Basically the Vanchem acquisition was a master stroke and something that we haven't seen the full benefit of yet. Not even close.

Also the effect of average up in order to increase your holding of course. Had I stuck with my original purchase I'd be 25% up but on a much smaller figure than what I ended up with. i.e. averaging up was definitely the right decision.