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The company has been a subpar performer for L-T holders with inconsistent dividend payments. Recently, it recovered some lost ground. There are some things investors may find interesting in 2017: - -Net Profit won’t be boosted by Forex gains and derivative contracts unless both the Pound and commodities prices took a dive. -Net Profit won’t be boosted by Opus Energy because they made £14m. -Free cash flow will turn negative this year. -And, total debt will rise to £750m to £800m, with annual interest costs ranging from £40m to £50m. For more, please visit: http://bit.ly/2qz30Jg What do the analysts think? From 17 analysts, they think about the following: - -Analysts are confident that dividend payment will increase to 9 pence per share in 2017 and rise to 14 pence, a year later. -EPS is expected to rise to 9 pence this year and jump to 17 pence a year later. -Revenue is forecast to grow by £3.5bn this year and rising to £3.62bn.

Either this company is a dud or it went to the market at the wrong time. Nonetheless, they didn’t deliver for shareholders as shares are 75% lower than IPO’s price of 88 pence. Consider these two facts; - A. Since 2013, total operating loss came to $157m, or £120m; B. Cash balance went from $115m to $4m in two and a half years. We will know how much revenue has grown by late June. Despite the latest deal with Pactiv LLC, the share price didn’t response. To be honest, I expect further financing meaning more share price dilution! For more, check out the post which covers the following: Cost of a wooden pallet, the correlation between share price and cash, Neil Woodford, etc. (http://bit.ly/2q8fowW) Some people would argue that RM2 Intl. needs to reach an economy of scale for it to become profitable. That might be true, but we all know it is a long way off! For those who are evaluating RM2 Intl, ask yourself these questions: A. What is the breakeven point? B. How many sales does it need to produce annually to break even? C. Will the costs come down enough to make RM2 a viable investment proposition?

The mining sector has been making a comeback since early January 2016. The Share Price has risen by 389% (was 526%, a few weeks back). There has been some noise coming out of China. Goldman Sachs has downgraded the sector due to Beijing tightening monetary policies. Personally, you should look at China home prices (see chart here) http://bit.ly/2pYXVsU. Because the last time it declined the mining sector saw its share price collapsed in value. In 2016, the Chinese authorities pump credit into the financial system. It helped home prices in Beijing, Shanghai and Shenzhen were rising by 30% to 40% in a year. That saved the mining sector! http://www.reuters.com/article/us-china-economy-homeprices-idUSKCN11P02X Now, a new bubble is frothing beneath the surface. That threaten to undermine its banking system. The reason is infrastructure has reached the maturity stage. More importantly, the likelihood of a credit slowdown is coming, if the government wants to avoid a severe downturn. So, the probability of tightening credit is 65% this year and 85% next year. That will hit commodities imports and will again hit the mining sector. How hard will it hit the mining sector? If China home price declines by 5%, then expect the mining sector to fall by another 40% from current levels. For more: http://bit.ly/2qUM1h0

The mining sector has been making a comeback since early January 2016. Shares in Rio Tinto has risen by 85% (was 120%, a few weeks back). But there has been some noise coming out of China. Goldman Sachs has downgraded the sector due to Beijing tightening monetary policies. Personally, you should look at China home prices (see chart here) http://bit.ly/2pYXVsU. Because the last time it declined the mining sector saw its share price collapsed in value. In 2016, the Chinese authorities pump credit into the financial system. It helped home prices in Beijing, Shanghai and Shenzhen were rising by 30% to 40% in a year. http://www.reuters.com/article/us-china-economy-homeprices-idUSKCN11P02X Now, a new bubble is frothing beneath the surface. That threaten to undermine its banking system. The reason is infrastructure has reached the maturity stage. More importantly, the likelihood of a credit slowdown is coming, if the government wants to avoid a severe downturn. So, the probability of tightening credit is 65% this year and 85% next year. That will hit commodities imports and will again hit the mining sector. How hard will it hit the mining sector? If China home price declines by 5%, then expect the mining sector to fall by another 40% from current levels. For more: http://bit.ly/2qUM1h0

The mining sector has been making a comeback since early January 2016. Shares in Anglo American has risen by 400% (was 550%, a few weeks back). But there has been some noise coming out of China. Goldman Sachs has downgraded the sector due to Beijing tightening monetary policies. Personally, you should look at China home prices (see chart here) http://bit.ly/2pYXVsU. Because the last time it declined the mining sector saw its share price collapsed in value. In 2016, the Chinese authorities pump credit into the financial system. It helped home prices in Beijing, Shanghai and Shenzhen were rising by 30% to 40% in a year. http://www.reuters.com/article/us-china-economy-homeprices-idUSKCN11P02X Now, a new bubble is frothing beneath the surface. That threaten to undermine its banking system. The reason is infrastructure has reached the maturity stage. More importantly, the likelihood of a credit slowdown is coming, if the government wants to avoid a severe downturn. So, the probability of tightening credit is 65% this year and 85% next year. That will hit commodities imports and will again hit the mining sector. How hard will it hit the mining sector? If China home price declines by 5%, then expect the mining sector to fall by another 40% from current levels. For more: http://bit.ly/2qUM1h0

If you want to know how to analyse a success online retailer, then learn from the best. Boohoo in a prime example. Here are seven attributes that make it a well-loved company in the market. http://bit.ly/2pHW0Zf

Notice a mistake on my blog post on H&T. Here is the updated vision: http://bit.ly/2pck6bz

For those who want to understand the H&T business, you may find these interesting factual questions: - 1. Why their cash cycle is around 400 days? 2. What is the cause of their wage bill rising to 25% of revenue? 3. Is there a problem with trade receivables and inventories accounting for 94% of revenue? 4. What is a pledge book? 5. Finally, is the company’s share price on the high-side of valuation? The explanation is here: http://bit.ly/2qIB9T0

This is a brief update for those interested in the music equipment-maker. A part of my Investment First Look series, which you can check it out http://bit.ly/2pwtE41 and keep me your thoughts. Okay, onto Focusrite. To be honest I like this company a lot. I like the financial statements, the business model and the years of experience. I believe Paul Scott has a long position in the company. Brief It got listed in December 2014, at 126 pence per share, valuing it at £76m. Now, the shares at 248 pence, a doubling in valuation. Facts A. Interim revenue grew from £20m to £32m in three years. B. Cash balance at £9m plus accounts for 23% of total assets. C. Zero debt. D. Earnings per share compounding at 16% in the last five years, which excludes the 84% increase in today’s interims. E. Half the revenue derives from the U.S., meaning the strong U.S. Dollar is translating to higher earnings. Valuation I can see Focusrite making £10m in net profit by year-end if the pace of growth carries forward to the second-half. At, £130m market cap. it gives a forward-PE of 13-14 times, an undervaluation if EPS compounding by 16%! Therefore, this company warrants further research. Why the growth in Focusrite? It probably got to do with shows like the X-Factor or The Voice. And musicians making money from YouTube videos. The original post: http://bit.ly/2pEU5CR

Would buy a company if finance costs are rising faster than operating profits?

Looking at the results, I see management blamed lower revenue per room (RevPAR) of $61.7 (down from $71) on the big increase in rooms from 1,561 to 2,181. The real cause is the company been fiddling with the number of rooms. Compare 2015’s operational highlights to 2016’s operational highlights, it is night and day! The 2015’s operational highlights showed 1,928 rooms in operations in 2015. The 2016’s operational highlights showed 1,561 rooms in operations in 2015. http://www.lse.co.uk/share-regulatory-news.asp?shareprice=AHCG&ArticleCode=qyevvf7f&ArticleHeadline=Audited_Results_for_the_year_ended_31_December_15 When you take 2015’s operational numbers, it means the REAL increase is 253 rooms, not 619 rooms! That is lower than 2015 (440) and 2014 (484). Why the discrepancy? Action Hotels doesn’t want to tell investors the real reason for this poor performance, that is LOWER OIL PRICE! That’s affecting the Gulf State economies, representing 65% of total revenue. Lower oil prices mean lower government revenue, which leads to budget cuts. In turn, that means lower business visits. Now, looking at their fundamentals. Results, what you need to know A. Revenue is up to $53m, down to expansion growth; B. Operating profits at $6.5m, but a net loss at $5.9. That is down to high finance costs of $13m. C. Land and buildings are secured by debt. D. Net cash earnings look positive at $21m, but meaningless to cash balance because it helps to fund growth. E. Shouldn’t pay a dividend because it is unsustainable. But, if payments stop, the shares would collapse. Value for shareholders Using last year numbers, I refer to $77m as the difference in total debt and net book value of land and buildings. That number is important. Because after all debt repayments are repaid, it represents the equity portion for shareholders. Further details: http://bit.ly/2p11KK3

I mistakenly uploaded the unedited version, but it has been corrected. http://bit.ly/2oAFZp4

N Brown is under fire from two fronts: - 1. Financial Services; 2. Over Capitalizing expenses. Before we talk about it, here are some key numbers from today: - A. Free cash flow came in at £46m, up from £6m last year. B. Exceptional costs of £20m are from customers complaining of high-interest charges from financial services; (more on that later) C. EPS is 15.67 pence, trending lower. D. The good news is recording pension benefits of £7.8m. On to its Guidance 2018 -Net Debt will rise to £300m-£320m from £291m. -Gross Margins on products to fall by 0.2% to 1.2%, while financial services are flat or 1% higher. -Capex at £40m. -(Important): Group operating costs will rise by 3.5% to 5.5%, this will squeeze profits. In-depth Research on its INTANGIBLES ASSETS N Brown states Software amortisation period is five years meaning the rate charge to expenses is 20%. Also, they have been working on upgrading its new systems, under Fit 4 Development Project, which is Course of construction. The course of construction intangible assets isn’t depreciated. Take 2013 for example, N Brown’s software original cost is £146m. After deducting Courses of Construction of £12.4m. The amortisation portion is £133.6m, then the amortisation charge is £133.6m multiply by 20% = £26.7m. But, N Brown charges £11.1m. A difference of £15m. Secondly, the course of construction intangible assets has grown from £13m in 2012 to £88.8m in 2017. There is an accusation of overcapitalizing expenses. To, N BROWN Financial Services You wonder how N Brown maintains dividends payments. My recent analysis of NEXT PLC, tells me their secret sauce to achieving high operating margins. Here are some numbers from NEXT PLC: - -Credit Card APR = 25%; -Interest fees made = £170m. The interest fees made requires little start-up capital. So, why is N Brown struggling to make decent profit margins? Despite these facts: - -£260m from interest, higher than NEXT PLC; -Charge 40% APR, see JD Williams website. For details, http://bit.ly/2oAFZp4

The company’s results were mixed and don’t be fooled by the 21% like-for-like sales growth. Three things should catch your attention: - A. Net asset per share has collapsed to 14.1 pence per share. B. Net debt of £2.7m. C. Pension deficit rose to £9.4m from £1m. Also, management comments on dividends is a joke because they haven’t been paying one since 2009. Over a five-year period, here are the following factors: -The company is sensitive to gross profits margins because a fall below 12% means zero operating profits http://bit.ly/2pZHI4j -Since 2011, revenue went from £100m to £60m. -Business is struggling, as management reduced borrowings. But, now it has to resume borrowings to survive. And the agreement of a new overdraft facility of £6m is repayable on demand. -Cash position is in an overdraft of over £2m. -Exceptional charges remain high and total £12m since 2011. -The company was growing before the financial crisis http://bit.ly/2pcVikU -The dividend was lasted paid in 2009. Final Thoughts With the tough retail environment and changing buying habits, along with the public-sector budget being under pressure, this company won’t last long in the market. http://bit.ly/2oqGYrz Disclosure The opinions expressed by the writer is for entertainment and research purposes. It does not constitute professional investment advice. Data is correct on available information at the time. Finally, the writer does not own the company’s stock, unless stated otherwise.

Record PLC announces a record $58.2bn but mentioned there was a mandated termination of $1.2bn. Something to know about Record PLC; - 1. Management take home pay is equivalent 12% of total sales; 2. They also hold 50% of the company’s stock. 3. Cash balance accounts for 50% of total assets, that comes to £21m. 4. Business hasn’t grown due to financial regulation. 5. The share price was below 10 pence, now is 42 pence. 6.Despite managing more currency hedges for clients, revenue is only £20m. Compared that in 2011, it generates £28m in revenue, but manages $30bn. It is possible that lower interest rate and bond rates are causing this. The stock looks overvalued, as current valuation is close to six-year highs. Price to cash flow is at 18 times. And Earnings Yield of 5.8% means fundamentals have not caught up with market valuation. http://bit.ly/2ot2Mz1

Thanks Stellarshares

Fevertree Drink is a great and straightforward business to understand. The shares became an 11 bagger in just 28 months! But analysts forecast for Fevertree going forward doesn’t look fundamentally great with estimates of revenue for 2017 and 2018 at £119m and £136m respectively. Meanwhile, EPS is estimated at 26 pence/share for 2017, and 29 pence/share in 2018. Remember, 2016’s EPS is 23.7 pence/share. Below is a summary of Fevertree: - The company sells premium mixers at 36 pence per 100ml vs. Schweppes’s 22 pence. - It operates in over 50 different markets, especially in two most important locations of Europe and America. - It raised £90m from its IPOs, this money is instrumental in paying off past loans. -The net margin grew to 26%. - Capex spending is £1m per year. But, as sales grow, will it have enough capacity to fulfil larger orders? -Fevertree’s cash balance has ballooned from £3m to £33m making it cash generative. -Management cash in some early success by selling combined shares worth £17m at £6.25 per share. -Last year was a breakout year for Fevertree with revenue up 72%. But analysts could spoil the party if estimates of between 14% and 16% revenue growth for 2017 and 2018 comes true. It would make the shares look overvalue. -The share price more than doubled from a year ago. Found the above information interesting, then click for more analysis and charts: http://walbrockresearch.com/fevertree-drinks-share-price-worth-investing-today/

I like this business because management has a record of past success in the industry. Below are some key findings: 1. Annual lease per restaurant is £88k, down from £110k seven years ago. 2. The leasing duration for each chain is roughly 16.7 years. This worked out as annual lease/total operating lease = 6%. So, (1/6% = 16.7) 3. Asset turnover minus cash is stable. 4. External funding since IPO’s admission totals £32m or £3.2m per year. 5. Market valuation is at a three-year low. 6. As management revise that new store openings to seven, it helps reduce capex down to around £6m. Previous guidance of 15 new stores would result in £13m to £14m capex. Industry Outlook The Guardian posted a piece stating an accountancy firm cite 5,570 restaurants has a 30% probability of going bust in the next three years. These contributing reasons are: - -The UK imports 48% of its food, this leads to higher operating costs; -The cost of labour is rising from £6.70 to £7.20 in April, with a further rise to £7.50 to take place next April; -More consumers are in debt; - 48% of borrowers have a credit card which is not cleared in full each month, compared with 39% a year ago. Although they were valid points, we don’t know how many of them are restaurant goers? TASTY PLC SHARE PRICE OUTLOOK This is my opinion: “The forecast share price of between 40 pence to 80 pence per share.” For more read article: http://bit.ly/2nKcdc6

Apple certainly screwed over IMG! I wonder what management is feeling today. Probably screaming and shouting in their offices as they see their share options and bonuses go up in smoke!

Did some research in this business and found some interesting facts: -It has 160 clients on their books compared with 130 last year. -The capital turnover ratio is an early indicator for investors to sell if valuation got too frothy. - The depreciation and amortisation charge since 2002 is £341m. -Since 2002, total gross capex spending came to £477m with net capex amounts to £136m. -The business disposed of assets worth £500m since 2002. - In the last 14 years, there have been 15 occasions where the share price movement were greater than 20% in either directions. See here: [img]http://i.imgur.com/1Vd6tDq.jpg[/img] -The weekly technical chart shows a strong buy signal. [img]http://i.imgur.com/APja03L.png[/img] For further research analysis, here the link: http://bit.ly/StIvesarticle