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I guess there's some relief in this statement. But if you ignore everything down to what revenue and profit will be for FY24, it's not quite so pretty. The previous Peel Hunt forecast (supposedly reviewed in December but actually unchanged since July) was for a EBIT of £8m. I wrote on here in November that I could just about tweak it up to £5m. Today they say it will be £2.5m. That's after £1.6m in 1H - so just £0.9m in 2H. If you double the first half interest charge (£0.6m) that takes PBT to £1.2m for the FY24 and just £0.3m in 2H. Net debt has risen slightly from £12m in 1H to £12.25m.
So I would say the numbers are pretty poor. Maybe 1.8p EPS for FY24.
However, notwithstanding Cooklin's natural overoptimism, the trends do seem to be in the right direction: case size is growing again, market is growing, house market is reasonably stable (necessary for recoveries) . Profits are squeezed because they've added cost ahead of this growth. I'd be interested to see what forecast Canaccord comes out with for FY25. Perhaps they won't, because it's too difficult to forecast. But that itself is a big problem.
Share price is only back to where it was in February so it's not as if this move means there isn't more upside, but I can't help remain cautious. Fundamentally I find it difficult to trust companies which put 23 paragraphs of good news before telling us - and not even explicitly - that profits will be down in H2 on H1.
Bold. You may of course be right. But I would be wary of attaching too much weight to the company's statements. They are always too bullish - certainly in my experience talking directly to Cooklin and reading his pronouncements.
I'm no chartist but this remorseless downward trend suggests to me that those in the know are not prepared to support it.
I think it's a really interesting proposition but I'm waiting until we have some actual numbers not warm noises. I'd also like to see what forecasts Canaccord come up with. They won't want to be caught out right from the off.
I doubt it's of any material significance to Manolete. Interesting though. It seems to have failed to sell at auction last October
https://www.barnardmarcusauctions.co.uk/auctions/18-october-2023/481773/
Why do you think Taylors are their solicitors? It says here
https://investors.manolete-partners.com/investor-information/registrar-and-advisers
that they're Stephenson Harwood.
I'm interested to know how you came across this info?
I see Canaccord have been appointed brokers. I suggested this might be the case back in November. it was clear that Peel Hunt has lost interest. I think this is (small) good news. It's good to have a new broker to talk about the stock. It was too small for Peel Hunt and they had lost money on it (theirs and their clients) so the salesmen lose interest and stop talking about it. Should be some new vigour from Canaccord. I guess they will publish a report with the trading update with some new forecasts. The numbers will be lower than Peel Hunt's stale forecasts (still up there on Refintiv) but that shouldn't be a surprise. I say "shouldn't" but you never know. I think it might well be interesting after that. I'm not sure I'd risk it going into that.
(Maybe Canaccord have already published - I haven't seen anything)
MANO are too often too bullish in their reporting. I just rechecked Refinitiv and Peel Hunt still haven't changed their (hopelessly wrong) numbers since July last year though it says they reviewed them in December. I can't see any mention of Canaccord following the stock on Refintiv - does anyone have any info on that?
There will presumably be a trading up date at the end of March but there's no guarantee there will actually be clarity on the actual numbers just more positive nosies from Cooklin. For the actual numbers we have to wait until June.
With equal respect to you Forensic505, the 100% return is not comparable to other companies' returns. It is more like a gross margin: it is what they get back from what they paid, the problem is there are then the costs of running the business to be deducted and these are rising just as returns are falling. As Tommy15 says this may be largely down to COVID delays and therefore behind us.
I think the smaller case size is a worrying trend as i should imagine the costs of running a typical case are pretty constant regardless of its actual size; but this shouldn't effect the return.
My concern would be that the Insolvency Practitioners might have read Mano's results with interest and be extracting a few more pounds per case when they sell them on. Just a thought: I have heard nothing to suggest this and it may be off the mark but I saw something similar happen to Arrow Global group who used to buy defaulted consumer debt from banks - lo and behold after it went public and the returns they were making (typically 3x MoM) the price of buying that debt rose and the returns fell.
Fair comment. Also it should be reflected in the price they pay to invest in a case, so it only affects ongoing cases for which higher prices were paid.
As I've said, I'm only interested in MANO because I think it could be a good investment. One fo the problems is that it is fundamentally unforecastable. I plugged the first half numbers into my model and with a few positive tweaks I pushed FY24 EBIT up to £5m, still way short of Peel Hunt's £8m.
I also noticed, looking back on old vintage charts that the RoI and MoM returns have been coming steadily down:
2019 180% 2.8x
2020 174% 2.7x
2021 169% 2.7x
2022 153% 2.5x
2023 121% 2.2x
This is a bit concerning.
There is one aspect to this business that is seldom mentioned. There is some economic momentum to it. If, for example, the economy takes a downturn and, probably more importantly, house prices fall and housing transactions dry up, then recoveries are going to be lower which obviously lowers returns. Because MANO's cases are generally quite short duration this should have only a short term effect but I definitely think it's a drag that hasn't really been talked about.
My experience of MANO is that they are far too optimistic. I published a research report on them in August 2021 (so after COVID disruption was well known.) Cooklin said my numbers were far too low. I forecast, for FY22, 17.5m of revenue, 7p of EPS. And for FY23 £26m of revenue and 21p of EPS. They made £10m and 4p in FY 22 and £15m and 3p in FY23.
The tone of the statements is always bullish. The covenant breach was almost certainly due to this overoptimism
I wouldn't bother with the company if I didn't think it was interesting, but I'm far from convinced that it's out of the woods yet.
I have access to Refintiv (Reuters as was) and only peel Hunt's forecasts are there. No mention of Canaccord. According to Refintiv the Peel Hunt numbers were "reviewed" yesterday but not one of them changed. Including Revenue for FY24 of 13.8m - which is clearly nonsense as they reported £11m for the first half. And EBIT of £8m, EPS of 11.8p which both also look completely wrong in the other direction after £1.6m and 1.4p in the first half.
My guess is that Peel Hunt have lost interest (at £75m and with little or no trading it's too small for them) and Canaccord have pitched for the brokership with a very bullish report. I may be wrong, and often am.
I'm no expert on bank covenants but typically if you breach them the bank will take its pound of flesh: extra charges, higher rates. I don't think it's that serious but it's always bad sign when a company breaches its covenants unless there is a completely unexpected event. It suggests that things are not going as planned or the planning has been poor.
So EBIT was £1.560m down from £2.136m in H2 23. In the trading statement this was described as "marginal". I don't call 27% "marginal". Maybe it's the £600k which is marginal. Peel Hunt still haven't changed their numbers: they have EBIT for FY24 of £8m. I can't see that happening from here.
Business failures hit 14-year high, says the Times. New data confirms that insolvencies are on the rise. Mano has been beefing up for this and yet the shares have drifted back to their lows. That's generally not a good sign: when good news is ignored. Perhaps the problem is that the volume may increase but recoveries will be lower because of the poor economic backdrop (and falling property prices).
Another concern - though it may be entirely innocent - is that Peel Hunt have not updated their forecasts post the upbeat trading statement. Why not? They haven't even confirmed their old forecasts. My expectation is that numbers for 2023/24 are too high. Peel Hunt is forecasting £8m of EBIT. The trading statement implied they would make c£2m in 1H, which requires them to make £6m in 2H. Not impossible but would be their second highest half ever.
I think this is a good/interesting business but there's plenty of time (and quite possibly downside) before I want to invest.
With a market cap of just £66m it's very unlikely to get onto any institutional lists. On the other hand it only needs one institution to start buying...but there is no liquidity so they wouldn't be able to get a decent sized position without moving the share price significantly against themselves. It's going to be a long haul of individual investors gradually cottoning on to the recovery story. (The economic background is not helpful for the market as a whole either however irrelevant it is for MANO*; nor is the suggestion of the removal of AIM relief in IHT which now seems to be on Labour's agenda.)
I did learn recently that it isn't entirely irrelevant to MANO: the amount they can expect to recover from dodgy directors decreases if the economy/housing market tanks.
Peel Hunt's forecasts haven't changed since June. They have MANO making £8m of EBITDA in FY24 and £10m in FY25; equal to 11.8p and 15.1p of EPS. I guess most people on here would think that was cheap (I do). The problem is that there is no reason why it can't get cheaper. It can just as easily trade on 8x FY25 eps or even 7x. 7x is 105p. I'm not saying it's going there but this (160p bid) is no floor. The key will be the next change in forecasts. If they're trimmed, even a bit, it's still going down. If there's a confident reason why they can be raised, we might have seen the bottom. The interims won't be until November. I think I'm going to wait. No need to try to catch the bottom.