Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Investors's Champion tip sheet comment 4/4/24
https://www.investorschampion.com/channel/blog/an-interesting-business-lurks-in-the-wreckage
Future: why so cheap?
Future (AIM: FUTR), which calls itself the global platform for specialist media and also combines Go.Compare, the financial services comparison company it acquired in 2020 for £594m, updated on trading for the six months ended 31 March 2024.
Future owns more than 230 well-known brands such as Country Life, Homes & Gardens, Decanter, Money Week and plenty of technology and gaming titles. It acquired Money Week through the acquisition of Dennis Publishing for £300m in 2021.
The return to growth in the current year has been driven by a strong performance in Go.Compare, alongside good growth in B2B, and a resilient performance in Magazines. This has been offset by a more challenging performance in affiliate products and digital advertising.
There is lots of marketing speak in the update around the “reorganisation to accelerate the Growth Acceleration Strategy”, which means little to us, and plenty more marketing speak to enjoy in the investor relations section of their website here.
They also stated how “cash conversion in the half has been strong” but gave no indication of what this is and indeed the period end net debt position, which was £327m at the 30 September 2023 year end.
Despite the lack of detail, the market was clearly reassured with the news that Future is “on-track to deliver on expectations for FY 2024”, pushing the shares up 16% to 695 pence and market capitalisation to £800m.
By our reckoning statutory free cash flow in the financial year to 30 September 2023 was £159m (the results gave adjusted free cash flow as £253m, which conveniently ignores interest and tax!), which equates to a highly attractive free cash flow yield of c16% based on an enterprise value of £1 billion.
Forecast adjusted earnings of 121 pence for the year to September 20204 result in a PE ratio of only 5.7x, which suggests the market has little faith in forecasts and indeed the longer term outlook.
The shares are 80% down on the highs hit in August 2021, when the market capitalisation was over £4 billion, as it basked in the glory of an acquisition boom under former CEO Zillah Byng-Thorne, who stepped down in 2023.
If the future isn’t half as bad as the market clearly fears, there could be another good recovery story here and as we commented in our earlier article here, with appealing brands and cash flow it certainly looks vulnerable to a bid.
Mark@1973
Yes Accredited is RQIH's jewel in the crown.
Yes the money will partially bail out legacy, but I doubt it will be enough to make up all legacies losses.
If there was a surplus here I ask myself why the funds aren't hovering up the share ?
Follow link:-
https://www.lse.co.uk/rns/DSM/net-asset-values-2xg86agbd0r2hrz.html
The question is are why are Rockwood so keen to sell at a distressed price ?
Flowtech Fluidpower had a good end to the week at 90-91p.
Could it be the new product PRIMA ?
I believe Fire Angel has valuable technology, but if the legal case succeeds it looks like some will have tjeopportunity to acquire it for a bargain price.
I believe the current buyer is getting it cheap so the current buyer may wait in the wings to acquire the company if the legal case fails or buy out from administration for an even cheaper price if it succeeds.
It's possible there will be a flurry of DSM sells on Tuesday by dismayed PI's.
Update from Investor's Champion paid for tip site :-
HTtps://www.investorschampion.com/channel/blog/bonkers-bargains-1pm
Trading update for 9 months ended 29 February 2024 (26/03/24)
Continued strong demand from UK businesses for the Group's multi-product offering is driving further growth in own-book lending origination which has contributed to a record gross lending book of more than £190m at the end of February 2024. That’s the eleventh consecutive quarter of loan book growth for Time Finance.
For the 9 months revenue is up 20% to £24.0m and pre-tax profit 40% higher at £4.2m, surpassing the level achieved for the whole of the previous year. Revenue continues to be driven by strong growth in the larger-ticket, more secured lending areas of Invoice Finance and the 'Hard Asset' subset of Asset Finance.
Despite the very strong growth it is reassuring that net arrears remain unchanged at 6% of the gross lending book at 29 February 2024.
Net Tangible Assets at the period end rose 14% to £37.6m.
Full-year results are anticipated to be “at least in line with the market expectations” as upgraded on 5 March 2024.
Broker forecasts
Following the trading update covering the 9 months to the end of February (see above), the house broker upgraded forecasts for the year ending May 2024 for revenue by 2% to £31.5m, pre-tax profit by 6% to £5.7m and earnings per share by 6% to 4.6 pence (growth 31%).
For May 2025 forecasts remain for revenue of £33.1m, pre-tax profit to £6.3m and earnings per share of 5.1 pence (growth +11%).
As anticipated Time Finance appears to have ridden out the Covid storm through its multi-product lending offering and the flexibility of its business model.
With the significant government support packages no longer in place post-Covid, and with the ever-increasing economic challenges facing small businesses, access to finance will be a key priority for SMEs over the coming months and years.
Bonkers Bargain appeal
At the current share price of 39p (initially 17p) the market capitalisation is still a lowly c£36m, a c5% discount to net tangible assets at 29 February 2024 of £37.6m, which has also been subjected to meaningful provisions. Despite the strong share price performance over the past 12 months the PE multiple is a lowly 8.4x forecast earnings for the year to May 2024. Prior to the pandemic impacting returns, which pulled down earnings per share to 2.6p for the year ending May 2020, this business consistently delivered earnings of more than 6p and 6.8p in 2019 - net income of £6.35m. This equates to a normalised price earnings multiple of approx 6.5x.
While the shares have had a good run over recent months, they remain well down on previous highs and this business continues to look ridiculously cheap on many levels. The Group's multi-product tailored offering to UK SMEs, its own-book lending strategy and its quality of service have become ever more appreciated by introducers a
Fire Angel legal claim :-
https://www.lse.co.uk/rns/FA./statement-re-legal-claim-vg3ziygsn478x6s.html
Results were reasonable IMO. Nice to see debt coming down.
However, more to do to attract the crowds ...
The Simon Thomson and Master Investor readers can power us to the close Cavendish 300p target.
Share price not making any progress today, but hopefully that's a few more of Downing Strategic Micro Caps holding in HSP sold off.
Downing Strategic Micro Cap I.T had 3.89% on 5th Feb and they are winding down so selling off their holding.
Thus that will probably restrain share price until they are out..
Sold out at 66p. I've bought back today. I'm looking for the rejiggled management to turn the it around.
It's a punt for me.
The market is starting to warm to Time Finance. First bought this at around 17p back when they were 1pm in the days of the pandemic.
However, Ed Rimmer deserves a lot of credit for putting them on the growth path and even in these difficult economic times they are making excellent progress.