The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
NicName - I think you're being unduly harsh. I think the management here are highly competent and navigating difficult times very successfully. I also think the sp movement is more to do with momentum and speculative trading than underlying performance. I first bought in early 2018 when I thought this stock was undervalued at 160p ! Watched it rise and fall before returning to that level in Feb 2020 before Covid decimated the retail market. Thankfully I kept the faith and doubled down at prices below 60p and as low as 38p so that my average is now 66p.
I don't think when profits are in the £5-15m range on Sales around £100-180m anybody would be comfortable predicting long into the future
-how well their strategy of moving to online sales would work or
-how many Mum's & Dad's would return to stores to buy their kids new school shoes or
-how lease renegotiations might lower or raise property rentals or
-how to guess at a sensible provision for pension deficit and staff wages in inflationary times
I see a company starting to return to the conditions I first saw in 2018
When results came out two weeks ago I wrote "could easily see 180m revenue and 9m profit as a sustainable long term baseline, growing with inflation and providing a 10p annual dividend" ... I suspect the BoD were of the same mindset, but didn't want to speculate about that until they were more certain that it was going to happen
I would think this has to reflect badly on Ince image - how can a 'professional services' company not look bad when they are trying to be an all embracing adviser to medium sized corporates and yet don't seem to understand the AIM listing rules sufficently that they cause their own shares to be suspended
Interesting to read the posts on this BB after the acquisition announcement
I'm an Arden shareholder and I see things differently to most of you - in my opinion INCE has got the better of this deal
If you folks look at the Arden interims you will see that we made 0.9m net profit on 5m sales ... so FY '21 is likely to show £10m revenue and £2m profit giving you a company with a p/e of 5 ... you've got a bargain.
Question is whether I accept my profits (which are far less than they would have been if we had remained independent) or do I hope that this will revive a mediocre Accounting outfit that was already reeling pre covid. I need to research why your sp halved in Dec '19 ... but if for the moment I assume you can get back to generating a 5% net profit then the combined entity looks like (100m + 10m =) 110m Revenue & (5m + 2m = ) 7m profit with 86mm shares in issue. Put it on a p/e of 8-10 and maybe the Ince sp can get back towards 75p. Somebody below commented revenue is vanity ; profit is sanity - I agree !
I need to determine if I think Ince can generate profits or whether it just pays its partners and to hell with the shareholders
SirGB - that's the way I read the RNS as well "They will retain ~30% in a project valued in at $40m and will receive $1.5m cash"
So long as the IPO is a success - this sp has to double !
Back in April I suggested this was a bit of a gambler's stock and I rated the probability of several scenarios to give a fair value of 0.09 x 0p + 0.25 x 150p + 0.33 x £3 + 0.33 x £5 = 275p. These past few quarters have been consistent and quiet which suits me find. Our 2021 revenue will probably be around $48m from 28k oz production so I think the chances of us going bust have almost disappeared and chances of growth towards that 100k oz production aspiration which they had a few years ago is becoming more likely but still distant. So my revised fair value is now 0.33 x 150p + 0.33 x £2.50 + 0.33 x £4.50 = 283p ... not much different, but I feel much more confident that we will get our re-rating to atleast £2.50 even if gold sticks around $1750 and the company just announces 8k oz production in Q4 .... I'm staying overweight !
I took a punt on BCN in Feb and sold half my holding at just shy of the offer price in the open market a couple of weeks ago
I'm now deciding whether to hold or take my profits.
My understanding is the carrot is a 35k tonnes per annum mine in Mexico running by 2023. Lithium ore prices sky rocketed in 2017/18 on the Tesla hype but have come back down to earth as production has increased. So if we see prices stabilise back around $6000 p.tonne then we get a $200m revenue business ; maybe 30% net margins so $60m profit ; p/e of 10 and the company is worth double what it is currently ... but Ganfeng have to invest significantly to accomplish that. I don't see them making a much higher offer ... think if I can sell for 75-80p over the next few months I'll definitely bank my profits ? Thoughts ?
It was another gloriously awful quarterly update ... but the fact remains that even as a 100k oz miner with appalling AISC this company should still have a market cap above £100m and that is with no new projects. In the 5yrs I've owned this stock I've seen the price rise to 40p twice and (regrettably) not sold a penny because I always thought it undervalued. I'm more wary now because of the rubbish spouted by DB but I can't help but feel the underlying value is compelling. Guess I'll be holding for another year or two !
First bought in here last December below 80p and thought it was ludicrously undervalued - so when the sp rose to 150p in the Summer I thought we were starting to see fair value. Couldn't understand the fall back to 100p, but have learnt to not expect markets to behave rationally. The thing about this RNS is that the BoD are essentially telling the market that FY revenue is going to be around 675mm ... so FY Net Profit really should be above 90m placing us on a p/e of 4 even after this 30% rise in price. Add in 85mm cash and it's no wonder that Peel Hunt have a target of 250p ... but this has all been known about for the past year and yet we haven't seen a sustained re-rating. I can't explain that but am happy to have kept the faith and stayed overweight. Would like to see 150p+ when the results get published !
As well as digital sales it's worth noting that since FY Rev is 120m and H1 was only 40m then H2 Rev of 80m puts us back on track to match 2019 revenue next year and this wasn't even with fully unrestricted trading during H2 only during Q4. I'd love to see the full quarterly breakdown. Could easily see 180m revenue and 9m profit as a sustainable long term baseline, growing with inflation and providing a 10p annual dividend
Popes - you're quite correct about the need to take profits when you can and to double down if you have the conviction.
I bought my first 5000 shares here in 2017 for £18000 ... my next 5000 for £1220 and in between times I've managed to sell the odd 1000 for as much as £2800. My notes to myself on this particular stock have been unchanged for about 4yrs "Basket Case but hype might send it up to 200p+ again - start top slicing" ... I'd suggest others consider the same ! GLA
I do occasionally love the political rants (Deano & DesertJoe) ... especially when no comments being made about the company that is the subject of the BB - amazed that nothing said about the Special Divi paid here this week and the 2nd installment committed to within 6 mths - as a result of which my DRIP will increase my holding by around 10%. I'd be quite happy with that for a few more years !
As for US politics (I retired with my American wife to Florida about 10yrs ago leaving rainy UK behind), one thing I've learnt about western politics in general is that left and right frequently do the exact opposite of what they say.
Trump and the "fiscally conservative" Republicans increased the deficit more in his 4yrs than ALL other Presidents in the 20th Century combined. Blair's Labour govt introduced University Tuition fees, Maggie gave working class people opportunity to buy property (Council Houses) at affordable prices. The IRS collected more income tax revenue in 2018 (after the Trump "tax cuts for the rich") than it had in 2017. Politics is a game for making politician rich and very little else.
My preferred solution to most of our financial ills is to enact two policies as follows
1) Scrap personal allowances and instead give ALL adults a basic income of around £2500
Right now allowances benefit the rich most (45% marginal rate) and lowest paid or unemployed the least ... could pretty much scrap basic unemployment benefit as a result ... and this would be fiscally pretty neutral !
2) Scrap Inheritance Tax / Capital Gains Tax and Corporation Tax (after all a company is really only a piece of paper in a filing cabinet which is very hard to tax !) and instead introduce a 1% annual wealth tax on ALL property and stock portfolio values
This would generate more income for the government and simultaneously incentivise good capitalist behaviour and alleviate stock market volatility.
With a 1% wealth tax on the unrealised value of stocks paid directly by the Share Registrars, there would be zero avoidance and a very quick end to any stocks trading on a p/e > 100 (guaranteed to lose you money). Also the individual sitting on £1bn in the Caymans currently paying no tax, the guy earning just 0.5% in a money account and thus paying about $1m in CGT and the entrepreneur who creates a business making 20% return and currently being taxed around $40-50m would instead each pay $10m - thus creating incentives to use "capital" more efficiently.
With a 1% wealth tax on "market value" of houses / property rather than an attempt to take 35-40% once a generation via inheritance tax there would be regular tax revenue, no avoidance and no need for the myriad exemptions because, say, family farms can't find 40% in one go without liquidating the business
I'd leave a bunch of economists and social do-gooders to iron out the wrinkles.
Oh and by the way I'm a Thatcher's Child Tory who thinks the only US politician with a sensible health policy is Bernie Sanders
twix - happily retired early with more time to do research !
Have you heard / read that about 80-90% of all stocks lose money vs cash or Govt bonds !
It is the small number of stocks that make significant gains that make Equities overall a better investment asset class
So I've taken a chunk of my SIPP and allocated it to 'punts' that I think can work out for me - this is one such stock
You can cover a lot of losers with the occasional big winner and if your selection is such that you get about the same number of winners and losers then you actually make very good returns ... just with some stress ! GLA
The issues for MHC are i) how long will this Covid cash cow last and how large will it be during that time and ii) does it have anything else to offer
Regarding i) The Board has stated that it "expects that revenue generated in Q3 to be at least £8.5m and deliver an adjusted EBITDA profit for the quarter of no less than £1.4m. The business will be cash generative in the quarter and expects cash balances to be at least £3.4m at the end of Q3. However ... given this uncertainty the Company is not making a forecast for either revenue or profitability for Q4 at this time"
Now this company has no Balance Sheet to speak of and large b/fwd losses so effectively EBITDA = Net Profit.
H1 results showed us that Gross Margin is around 33% and Admin Costs were £1.3mm ... so I think Q3 should be closer to £2m Net Profit (Penny is being conservative IMHO) and each month that this continues adds another £500k profit atleast.
I know plenty of people taking holidays now in Oct because they couldn't in July, so the question is whether on 1st Nov Boris & Biden are going to announce an end to all testing pulling the plug on our business model ... I don't see it happening.
So I could see a profit of £4m for 2021 and Cash at 31/12/21 around £5-6m ... this from a company worth £14m !
If we're still messing around through most of next year, or "testing" becomes the new normal then we either re-rate massively or we get a 20%+ dividend until the gravy train abruptly end.
Now regarding ii) the pipeline of products - here I am much more skeptical (remember we were a failed Chinese pregnancy testing company in 2019) so my dilemma is do I see a long term future !
Right now the answer to that is an unequivocal NO but this is a punters stock and I see the odds as something like this :
30% sp goes to zero ; 30% sp goes to 1.5p ; 30% sp returns to 4p ; 10% sp goes to 20p which implies average value of 3.65p
... so I'm looking to double my money from here by Xmas !
Revisiting some of my holdings to determine whether I need to reconsider investments and Arden just stands out as hugely undervalued. Really expect this to move from 20p to 40p+ on full year results .... or maybe Arden get subsumed into a bigger Corporate Finance / Venture Capital house. Either way I could see this becoming one of my top holdings in my SIPP by y/e
I think these forecasrs are deliberately very conservative ... given H1 results I would be very surprised if FY '21 wasn't $650m Revenue and $300m+ ebitda. The forward forecasts are a bit of a joke, since they're just adding about 3% inflation to the figures and that isn't going to happen .... but who can possibly guess what volatility will be like. I suppose we don't have US or UK elections in 22 / 23 so things might stay calm .... but I doubt it. I'm just glad I can stay patient longer than the market can stay irrational. I still have absolute conviction we will re-see 1600p and even 1750p before year end
OnFire - I agree. I bought a handful of housebuilders back in 2018 and a few more in April. They're all still 20% off their pre-COVID highs and yet volumes for this year should be better than 2019 across the board and with higher prices. They seem an excellent hedge against excessive Gov't spending ... and in the case of PSN you get very generous dividends. I bought £15k worth of shares in 2018 and have received £4k in dividends since then. Sometimes all I look for is good mid to high single digit returns with the potential for a little extra and housebuilders are about as good as they come from that perspective
Consistency is what we needed and that is what we got !
Assaubayev's are heavily invested (at around 250p if my memory is correct) so have plenty of skin in the game to turn this company around. At around 25k oz producer I feel this is worth almost double current price, but it is the future growth potential that could really see us make some money. H1 '20 7k oz ; H2 '20 10k oz ; H1 '21 13k oz .... if they can continue that growth into 2022 then our previous high of 306p would be smashed. It's been a long wait but hopefully worth it !
I believe we've seen a fair degree of market manipulation this past month to get some cheap stock for a few insiders ahead of the results announcement. I'm still expecting something around 100m revenue and 7-10m profit for 2021 with future growth predicted for 2022 ... at those levels I think we should return to 275p by 8th Sept ! Happy to be overweight ALU in my SIPP
I've been a holder since the Concepta days and stand to gain very nicely if this multi-bags again
... but I can't help thinking that we have no way of placing a value on this stock or any other "covid" testers.
I just travelled between US & UK for a wedding and had to pay for "negative" fit to fly tests in both directions as well as Day 2 tests in the UK ... in total I paid around £300 for my wife & I ... so we know that the profit margin on this business is around 90%.
But my testing was done in the UK by two young girls (one covering admin ; the other administering tests) in a vacant building on Colchester High Street - i.e barriers to entry are zero !
Furthermore some airlines are requiring "professionally" administered tests and some now starting to allow self testing at home ... and when we were walking around the Southbank during our vacation we were able to pick up 2 packs of 7 home testing kits for free from a designated NHS street vendor ... so potential future testing cost also zero !
... and finally how long will this malarky continue - a few months ; next year another decade !
With £3m sales in May / June it is not inconceivable that we could see £20m sales in H2 and around £18m of net profit.
So we're trading on a p/e <2 but maybe with a one year business model life !
Alternately the market consolidates on a number of reputable names and we end up selling 20m kits @ £15 each with a 33% margin for an indefinite future - annual profit £100m ; p/e of 10 and we're a £billion business.
I can't say which we'll be but it seems our price could move from 4p to zero or 4p to 50p+ with equal probability so well worth being invested with "throw-away" money. DYOR & GLA
PPercy - don't think this will be showing a p/e over 40 when the full year results are in. H1 net profit was 4.8m and the latest trading updates have suggested FY results will be better ; so we might be around a p/e of 10 !