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Not surprised about the insurance capacity and pricing issues, in view of my own personal experience. However, it's a shame they don't highlight in the trading statement the fact that they still expect to make approaching £2m adjusted profit this year. The question is, when will that be reflected in the share price?
Yes, I've been around a long time, but I managed to average down when it dropped to 5p, so I'm now sitting on a tidy profit. But there's more to come...
More unflattering reporting by Alliance News, with its focus on "unchanged" statutory profit and “soaring” admin expenses.
The expenses are merely a reflection of the increased size of the company (turnover up 144%)!
In any case, £1m of them were one-off items - without which statutory profit would have been £2.3m, an increase of 77% over the previous year.
Moreover, since these costs are, by definition, not expected to recur, we can look forward to the same sort of increase in statutory profit for the current year.
This should at long last get us back into the 20s...
You can't ignore the bear case, which is that once pent-up demand has been satisfied, the industry will no longer be insulated from the recession. As if that wasn’t enough, there’s also talk of a new Covid wave, and rumours of travel restrictions coming back this autumn.
TUI is certainly not a one-way bet.
Or even 2%, because 1% takes you to 3%.
1% is reportable if you already own at least 3%.
Ports – I agree the margins are on the low side, but not paper thin, like with the supermarkets, say. In fact, they’re shooting for 7.5% to 10%, which would be quite respectable.
Moreover, it doesn’t look like there’ll be a severe downturn. Of course, they’re playing down the economic headwinds, but it looks to me like in any event they’re already priced in to some extent; moreover, I take comfort from the fact that DX has no debt to worry about (except for lease liabilities).
The acid test for me, is: “Would I invest at this point if I weren’t already a holder?” I see 20% upside this year, and with more to come, so the answer is “Yes” - but as part of a balanced portfolio (to include a sizeable chunk of cash, just in case...).
Low margin maybe, but that in itself is not a problem or a reason to avoid the share (especially just after a big chunk of the competition has been taken out!)
The opposite in fact: even with a low margin it’s making healthy profits - which is what matters to the SP – and if its revenues increase by 10%, its profits (and in theory its SP) will also increase by 10% - actually, more than 10% due to operational gearing, and also because its profit margin is on the up from a low base.
Insofar as anything at all can be regarded as a "solid" investment in the current macroeconomic climate, I think DX ticks more boxes (or parcels!) than most, but we shall see...
To be honest, the bit about "making a packet" is just poetic licence - they couldn't resist the pun when referring to a "parcels" company.
However, I wouldn't argue with their verdict that the "outlook is upbeat" and the "shares are undervalued", seeing as I've gone with upper 30s by the end of this year, which represents a 20% upside.
Managed to renew car insurance recently with only a 15% increase on last year, after shopping around. Quickly looked at telematics policies, but they were ridiculously expensive. Perhaps they only work well for younger drivers.
Ports - I think corporate communications is a big factor, given the need to shake off the spectre of the prolonged suspension once and for all. To me the RNS didn’t cut the mustard in this respect – it just came across as a bit lacklustre. It felt like it wasn’t telling us anything we didn’t already know., hence in theory already priced in.
Better broker engagement and buy backs may also help, but in the end, it may need a buyer. So depending on the patience of the major shareholders, who I think own over 70% of the shares, maybe it’s time - nearly 6 years out from the company’s rescue in 2017 - for the company to show a little leg?
Back in late 2021, when the SP was broadly in the low 30s (pre-governance fiasco), Gatemore (c20% shareholder) got so frustrated by DX’s “dislocated value” - which they put down to “mismanagement across multiple areas, including corporate messaging and transparency, audit process, broker engagement, and the lack of return of capital to shareholders” – that they muscled their way onto the board.
Within a year, they’d resigned from the board, as if to say “job done”.
But now, nearly 2 years later, and despite all the improved financial metrics, the SP is still languishing in the low 30s. So we’ve stood still, basically.
If there's no material improvement by the end of the year, I suspect Gatemore will again start to agitate for the company to find ways to realise its full value.
Tep1 - if it’s an objective view of value that you are looking for, to be honest you couldn’t really do any better than study the brokers’ reports, rather than ask anyone on this board.
That’s where the target price of (I think) 58p came from.
However, what the brokers never seem to take account of is a whole host of other positive/negative imponderables: the dizzying array of macroeconomic factors, sentiment (following the protracted share suspension/untested management etc), the behaviour of a handful of unpredictable major shareholders, the possibility of a takeover, directors’ purchases, regulatory changes…..
That’s why people’s views differ so much about the SP trajectory. My own feeling right now, for what it’s worth, is that it will move up this year towards 40p, but fall tantalisingly short of that. So upper 30s.
That feeling could, of course, change next week after the trading update. But, however impressive the revenue/margin growth, I think it will struggle to break through 40p this year. But who knows?
KBYK - I can’t blame you for bailing out: it’s been such a long slow haul…..and we must all have wondered from time to time whether we should hang around or cut our losses.
However, the company is now reaping the rewards of its change in strategy. There may be further bumps in the road, of course, but it’s nevertheless hard to see anything getting in the way of a decent result this year - one that will at least be enough to finally drag the SP off the bottom. So at the current price of 17.8p to buy, it should be a good bet, if you're still interested...