Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
And this time last year;
"Investec analysts argued that the company “has recovered well from Covid with its strategic initiatives delivering better profitability”. As the board works towards targets of annual revenues of £650mn and a pre-tax profit margin of 14 per cent in financial year 2027, we think that is accurate. The shares trade at a consensus 10 times forward earnings, according to FactSet, slightly above the 5-year average of 9 times. Hold."
And of course that 5 year period included Covid...
@bhaveen, the IC are an absolute joke.
Here's the conclusion to their last piece on 26/09;
"The lowly forward rating of eight times consensus earnings reflects the question marks hanging over the business despite the respectable interim outturn. Hold."
https://www.investorschronicle.co.uk/news/2023/09/26/card-factory-faces-challenging-christmas-as-online-sales-fall
And then todays contradiction;
"But the lowly rating of seven times forward consensus earnings prices in the opportunity. Hold. "
Turns out they nailed Christmas, reinstated a 5% dividend, derated from 8x to 7x and are still a hold. Embarrassing doesn't come close to describing the output of that magazine.
One relatively minor piece of info that I wanted from the prospectus was confirmation on PDMR holdings of the director of FXRM who sold some 11,495 shares after the last set of results. Helpfully it is stated that he owns 232,547 shares, so that sale was less than 5% of his total holding. Notable that Howorth & Marsh (director of institutional) hold a little of 1% of share capital between them.
An interesting little exercise I just did was the following;
Shares in issue at IPO 32,761,979
Shares issued in October 2018 placing 3,218,602
Shares issued in April 2020 placing 2,941,177
Less share buybacks to date of 602,127, gives a sub total before accounting for employee share options of 38,319,621 shares
The current issued share capital is 42,919,313, meaning that 4,599,682 shares have been issued to employees since 2017.
The relevance of this is that if we add the list of II, director & PI shareholdings of >1% at 29/03/24, the total comes to ~38m shares...
If we assume that most of the 4.5m employee shares have gone to senior management like the two PDMR's referenced in the prospectus, then it's possible / likely that the majority of those shares are still held tightly.
If Alpha keep buying back at their current rate then sooner or later shares are simply going to dry up at this level. It's happened to a degree today with the sudden jump from £20.70 to £21.40
Ps. I fully expect the buyback to be extended in the next few weeks, given the contents of the AGM agenda contain a special resolution to extend their buyback authority beyond 5m shares...
Heading off here soon, lots of profit taking PI's are going to miss the boat because they can't wait 5 minutes...
Oh and @bhaveen, a little thing called inflation has been impacting operating costs of almost every company in the world... plus the interest on their debt & store leases is clearly substantially higher than in 2014-2019.
Nevertheless, the 14% PBT margin achieved in H2 is superb, combined with the debt reduction & dividend reinstatement it should be easily enough to justify a PE of 12x and a share price north of 150p.
Overhangs usually create the best opportunities, my view is that new II's coming in will clear out Teleios over the coming months and cause a re-rate. The market isn't renowned for rewarding impatient profit takers who sell what is obviously good news, to make money here you've got to ignore the noise...
I explained the context of the large seller Teleios last week - they bought 37m of Woodford / Invesco's holding pre Covid in the £1.80 range, so were hammered when Covid hit and shares went to 30p. They doubled up down there and then started reducing this time last year. I'd be very surprised if they don't run a good part of their holding back to £1.80, especially with a 4.5p dividend on their holding compensating them nicely...
"The Board confirms that it has decided to recommend the payment of an ordinary dividend. Whilst any dividend will be dependent on, inter alia, the performance and prospects of the Group, the Board will target a progressive dividend policy, which it expects to deliver a dividend cover over time of between 2x and 3x Adjusted EPS"
So if we take their £650m FY27 target & 14% PBT margin and assume 25% tax, that would give PAT of £68.75m and EPS of ~20p, so based on the 2-3x cover, that would be a 7-10p divi.
Astonishing that it's trading at just over 5x FY27 forecast EPS, particularly when FY27 is the year end Jan 2027 and is therefore within the standard 3 year forecasting period. I can't ever remember finding a share that pays a material dividend, has virtually no debt & generates huge recurring cash flows valued at 5x forecast PE.
Bhaveen, the last time it was paying a dividend and not trading was this good, shares were well over £2...
That's another woeful decision from AVCT's board IMO. AS was a key part of the story here, having been involved since before the 2006 IPO. To get the company to this stage and then be booted is extremely strange.
Lovely, called that one spot on. Should be a very decent re-rate here now as income funds buy back in.
In the interims it stated; "The final maturity date for tranche 'A' of the term loans is 31 January 2024, and accordingly the earliest that dividend payments will be considered is during the FY25 financial year."
The key point being that the finals tomorrow will be 'during' the FY25 financial year.
The annual report said;
"the current restrictions on payment of dividends whilst CLBILS facilities and Term Loan A remain in place (to be repaid by 31 January 2024)"
Again, these restrictions should now be removed if these loans have been repaid as planned
As usual with investing, semantics / the words used in an RNS often matter more than the numbers...
If you want to be cynical then the 4m volume last Friday & resultant 10% jump looks a lot more meaningful than a subsequent 5% pullback
Classic behaviour to shake out weak hands ahead of Tuesday's results IMO.
Worth flagging the Capital Market's Day slides from last May; https://www.cardfactoryinvestors.com/media/sl0nstlz/cardfactory_capitalmarketsday_final-slides.pdf
Slide 94 is the key one
"Restrictions on payment of dividends continue to apply until CLBILs and certain term loans are repaid, these
restrictions are expected to be lifted after January 2024."
"Board intends to maintain a leverage ratio of between 0.5 and 1.5 times1. Provided leverage remains within this
range it is the Boards intention to pay annual dividends based on a targeted dividend cover of between 2 and 3 times
the groups consolidated post-tax profits."
Leverage at the HY results was only 0.6x, so there is clear headroom, particularly when they are trading at the top end of expectations.
Income funds & investors returning to the register should provide a significant boost.
Quite the week here! The fundamentals are heavily set towards this continuing to march higher - they've so far completed just over 10% of the buyback, so still have around £22.5m to deploy. At present the quote is well above the advertised ask, with them wanting 68p for 30k shares. If the major shareholders value FCN at even half of what it IPO'd at (£4) then we are in for quite the ride.
So many impatient sellers / profit takers. If everyone stopped selling for an hour this would be over 50p in a flash. If there are 3 consecutive buys the ask moves up instantly - that tells me we'll continue moving up once the consolidation phase is complete.
Based on updated broker notes by Edison & Cavendish, FY25 EPS is now forecast to be 2.74p, this compares to the prior forecast of 1.1p for FY25 and 1.07p for FY24 (now 1.3p) . So on Tuesday, shares were trading on a FY24 PE of 25x and FY25 PE of 30x. Today they are trading on an FY25 PE of 18x... This plainly doesn't make sense, particularly with the Starlink relationship now formalised.
The minimum I'd expect would be a re-rate to 25x the FY25 PE, so a target of 67p. Of course this doesn't include the very real potential for additional starlink orders at additional frequencies, so the reality is I think the fundamentals could support a 30x PE given the nascent size of the LEO industry & expected growth over the next few years.
Was looking into the buying history of the current largest shareholder Teleios Capital Partners LLC to understand why they have been selling. It was pretty interesting.
They bought a 10% stake from Invesco / Woodford back in mid 2019 when shares were trading at £1.80 range. Then covid hit and sunk the shares, they doubled down and added another 31m in the 30-40p range, giving them a likely average in the £1.10 range.
When shares regained this level last April, they started reducing heavily, and at last update in Feb they were back down to their pre covid holding of 37m.
This is fairly obviously why shares have been stuck in the current range for the last 12 months on a sub 7x PE.
Now they have seemingly reduced their exposure considerably, you'd think that they would want to run the remainder of their holding back up to fair value, which is surely around 12x PE, where shares traded in 2017-19?
It could get US interest - the last LSE small cap company which garnered a US following was Ilika, which was pushed by Matt McCall etc. Doubt it'll be via the OTC listing though, given the likely illiquidity. Suspect this moves higher over the coming days once profit takers are out, if it was a private company and signed a deal like this then the valuation would certainly have at least doubled IMO.
Kat-079, not sure you've thought about that much... If they bought the shares back and cancelled them, then issued the vested inventive shares to employees as they have done in previous years, then there would be the same number of shares in issue today? You also need to read note 24 - share based payments - in the annual report, as it the shares aren't given away by any means...
Also, if they paid a £10m dividend rather than buyback the 566k shares then right now the share price would be 40p lower (43.5m shares / £877m market cap - £10m dividend). You'd have a ~23p extra dividend, but lower share price...
You then also have to factor in that 566k shares would have been pressuring the share price, so it's highly likely it would still be sitting under resistance at £18
As for letting shares drift, would you be happy buying today at £12 and then waking up tomorrow to a £18 takeover offer?
For long term holders, a buyback at these levels make loads of sense. A lower number of shares in issue = a higher share price in future years. The ROI should end up way higher than a 1% dividend yield at present levels...
Yep I'm eagerly awaiting the prospectus. Re. Share buyback quantities, they've purchased 566k shares in the 58 trading days since the buyback commenced, so just under 10k per day. At that rate they would buy back just over 5% of the company per annum. Given the ~85% institutional holding here that is massive.
Another critical part of the bull case here is contained in this presentation deck from way back in April / May 2007; https://www.slideserve.com/thora/april-may-2007-private-equity-financing
The fact they were planning an AIM listing in late 2007 / early 2008 pending receiving permitting tells me that they very likely had some fairly advanced modelling of the resource, CAPEX requirements and near term plans...
The fact that they had also received the first foreign forestry and environmental approvals in Rajasthan way back then also has to be pretty useful in terms of negotiating a settlement
Agree on using the likes of De Grey as a benchmark, but think we should be using post tax NPV numbers rather than market caps, which would put De Grey at £1.5b based on $1700 gold...