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Ahead of expectations on all fronts. Tasty 5p dividend and share buyback to boot. Superb cash pile too
I’ve read into this and there are no issues with holding the US shares from a regulatory point of view. Hargreaves lets you buy and sell. The arbitrage economics are real and material shareholders will be locked in for 6 months post merger. The risk reward looks incredible. Must be missing something but have taken an an entry level position as a punt!
My question is this: how can a 100% upside arbitrage opportunity exist. There is no such thing as a free lunch. The only explanation I can think of is that the market is anticipating a sell off post merger to bring the valuation back to reality - I.e. the spac overpaid.
Any other sensible thoughts on this? The arbitrage has existed for too long for it to simply be a clear opportunity…
Undervalued UK small caps like this are about to explode. Inflation print next Tuesday i think could be the best day of the year for UK markets.
Look at the US rally.
Hold on tight. Those minus 10-20% portfolios could be back in the black soon, gents!
Edison also updated its note:
"On an EV/sales multiple of 1.0x for FY24e and 0.9x FY25e, Checkit trades at a material discount to the UK software sector (2.4x current year sales, 2.2x next year sales) and US SaaS peers (6.7x current year, 5.6x next year). If Checkit were to trade on the UK average for FY24e, it would be worth 39p per share and moving to trade in line with US SaaS peers would imply a valuation of 89p. Sustained ARR growth will be the key trigger for Checkit to attract a multiple more in line with SaaS peers, evidenced by customers signing up to use its software and existing customers expanding their usage. Faster movement towards break-even should also support the share price. "
"CKT has released a positive H1 update to July, which highlights continued strong ARR growth of +24% y/y to £12.6m, while FCF burn has almost halved - from £-5.0m to £-2.8m and so means Checkit is making meaningful steps towards breakeven. Progress on both fronts is very supportive of the investment case in our view. Driving this, CKT has continued to see very encouraging growth in the US – ARR: +41% y/y to £3.2m, while adjacent to this, upsell/cross-sell deals (with existing customers) also continues to be an important theme, thus providing predictable underlying growth. NRR of 113% also highlights this, while similarly, GRR continues to be very healthy too (at 98%) and reflects the mission critical nature and strong ROI of CKT’s hardware and software, in our opinion. In view of this very solid start, we our maintain our FY24 & 25 expectations - looking for continued healthy growth and a further narrowing of P&L losses profile, such that, in our view, it’s very conceivable CKT could reach breakeven in FY26 - and importantly – with existing cash resources. This increasing likelihood seems at odds with the company’s very modest 2x mkt cap/sales multiple and herein lies the opportunity."
This business is doing very well in a difficult market.
Nice update on the 4.30 call - clear focus on reducing NAV discount. Buyback mooted once pension issue sorted.
Simon Thomson also upgraded target price to £7.
https://www.investorschronicle.co.uk/ideas/2023/08/09/hargreaves-remains-a-classic-value-play/
here's the link - https://*********************/companies/uk/other/hargreaves-services-plc/research/singer-capital-markets/clear-value-creation-plan-supports-investment-case/2c8e7d92-8893-473f-8d51-c95e5d5ff17c
Talking to myself but bang on cue Singers have upped FY25 forecast and FY24 dividend. NAV also upped. Target price upped from 710 to 770. Obvious buy and hold
Expect the analysts upgrades to come within a week. Easy buy and hold to £6 minimum. Singers will upgrade target to £7.50-£8 IMO. Very strong results
Well that was an enjoyable read. Excellent stuff
Https://www.investorschronicle.co.uk/ideas/2023/07/26/lock-in-this-9-free-cash-flow-yield/
Tomorrow should be enlightening. I think there is a lot of hidden value with HSP. No debt. Steady revenues and profit. Strong tailwinds for decent chunks of the business. I note the 1 year forward p/e of 7 does not yet include the renewables upside recently announced by the company. Current NAV, as well as Singers' price target of 710p, does not include this upside.
I expect a material upgrade tomorrow by Singers (i.e. the company). On a current p/e of 6, with no debt, this looks at danger of a takeover unless the market rerates this to at least £6.
DYOR.
GLA
So the current p/e of 8 now seems even more ludicrous. Materially ahead means more than 10% above, which, if applied to the current expected earnings and coupled with low valuation and continuing reducing debt, means I think this could do 15% today. Cracking company and the management are clearly doing a Stella job - macro may be tough but is there ANY competition left other than MOON (which is not keeping up with CARD by all metrics)
And now Clintons in serious trouble and closing 1/5th of stores https://t.co/72kdwGVwv6
Card the survivor will absolutely clean up market share. Growth plus value on offer
Not long to the Interims now - 3 weeks.
Reduction in debt, no collapse in profits and a reassuring outlook for H2 should result in a decent rerate from current p/e of 3-4.
Excellent update. Reassuring to hear all on course with expectations. Been scratching my head as to the extremely low rating for VLG (was worried there was something I was missing) but we should now see a good rerate to 50/60p this year. Happy camper