PHOTO-ME TRADING UPDATE

2nd Jun '17 by WarrantStar

6 comments 6364 reads

Photo-Me has today released a strong trading update. Here is a flavour of it:

"The Group made excellent progress in the financial year, reflecting the success of its strategy of investing in new products, growing its laundry business and favourable currency movements.
The photo identification and laundry businesses continued to perform well.
The Board expects the financial year ended 30 April 2017 will be in line with market expectations, with significant revenue growth and record progress in profit before tax (+c.20% compared with 2016), supporting the Group's stated commitment to increase the total ordinary dividend by 20% year on year."
The shares have only edged up 2.2% so far today after releasing the update. So why have they not gone up more? After all, they are only modestly rated with a Value rank of 42, and the boss bought about £7m of shares in Dec 2016.
The answer is that there is a big seller in the market. My stockbroker account shows that about £14m of the company's shares were sold this morning. Can anyone advise who the seller is and how many more shares they still own? I am considering selling my shares because it seems that, no matter how well the company is doing, there may be a big holder who is going to keep selling & depressing the share price. What is your opinion of the situation?

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DVB99

2nd Jun '17

once that seller is cleared though, the price will stabilise.
I love Photo-me as a share - the company generates pots of cash, pays dividends, and every few years pays out a special dividend on top!

Damian Cannon

Well I thought that it was a decent trading update with both the photo-booth and laundromat parts of the business performing well. However market expectations were already set at a 20% rise in pre-tax profit (which is excellent BTW) and so today's update just confirmed this growth - so there's no particular reason for the share price to react.

OTOH if I was a chartist then I might look at the price performance since last summer and say that the share has set a series of higher lows while being capped at around 175p on the upside. Given the convergence between this cap and a line drawn across the lows I'd say that there's a reasonable chance of the share price breaking out.

WarrantStar

Thanks for the replies. What I will do is:
1) Wait for an RNS. Hopefully I will see who the seller is.
2) Figure out how many the seller has left.
3) Assume that their intention is to keep selling until they have none left.
4) If they are still a big holder, after the recent sales, then I will sell.
5) If they don't have many left then I will hold.

ISAallowance

My take would be, it could be a good buying/topping up opportunity (the seller is temporarily depressing the price of a good stock) or it could be a sell signal (the seller knows something we don't). If I was a holder (currently no position) it would at the very least make me double check my investment thesis.

gus 1065

There were a couple of RNS in early March and May of this year indicating that Schroders had sold down from 63 to 52m shares (now about 14% of the company held) from discretionary accounts that they manage. Not clear whether they're selling based on their own discretion for client accounts or under instruction and/or whether the 52m are held over one or many accounts. If it's their discretion or a small number of accounts scaling down their position, that looks like quite a big overhang to shift. Your broker might be able to have a sniff around and see what the scuttlebut is.

Gus.

smatthews1

i agree with your last comment here damian, from a technical point of view looks like the share price has consolidated alot recently. Series of higher lows since last June, and excellent volume today on a modest increase in share price.

Fundamentally it has alot going for it, i personally really like that fact it has got Ireland and France on board with new secure technology for photo ID's.

PHOTO-ME TRADING UPDATE

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WarrantStar

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