Cenkos Securities - Views and Opinions

Tuesday, Nov 04 2014 by

Hi All,

My research has led me to broker Cenkos Securities (LON:CNKS) - The Stockopedia computers seem to love this share and it ranks as:

94 for Value
99 for Quality
98 for Momentum
and has an overall StockRank of 100! (and also passes 5 screens)

Operating margins have been increasing rapidly and return on capital and equity are very high.

It offers a dividend yield of around 6.5% covered over 2 1/2 times for this year. It has a load of net cash on the balance sheet. I can't really find too many negatives - I'm not a holder but am concerned that after such a rise from 2012, when the price was roughly 50p to today when the price is 213p that there may be little more upside, if the IPO market slows. Does anyone else have Cenkos Securities (LON:CNKS) on their watchlist or perhaps are holding and would like to comment - bullish and bearish views welcome!

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Cenkos Securities plc (Cenkos) is a United Kingdom-based independent institutional securities company. The Company's principal activity is institutional stockbroking. Cenkos provides corporate finance, corporate broking, research and execution securities services to small and mid-cap growth companies, and other companies, across a range of industry sectors, as well as investment funds. The Company offers its clients access to equity finance at various stages of their development. The Company's activities also include institutional equities and market making. It provides technical advice on all forms of corporate transactions, including initial public offerings (IPOs), fundraisings, mergers and acquisitions, disposals, restructurings and tender offers. The Company's subsidiaries include Cenkos Nominee UK Limited, Cenkos Securities (Trustees) Limited and Cenkos Securities Asia Pte Limited. more »

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29 Posts on this Thread show/hide all

AlanJenkins2 6th Nov '14 10 of 29

Actually,it can be ! Wincanton is highly geared,so it is highly likely that it will either do well or tank.Hence the low Z score.

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PhilH 6th Nov '14 11 of 29

Hehe Alan our posts crossed. :-)

Btw I've held cenkos since the recent interims.

Professional Services: Sunflower Counselling
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AlanJenkins2 6th Nov '14 12 of 29

Thanks,Phil.I hold Cenkos too.Their business is obviously highly cyclical,but they seem to be progressing as a player  :-].

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Sully8786 7th Nov '14 13 of 29

Hi all, I'm have a long position too. I stripped out the AA business when looking at the company and felt comfortable to have a few bites (Some pyramid buying).
I think we'll see decent FY results with a FY dividend of around 24 and maybe a Special Dividend or a share buyback as the cherry on the cake.
I suspect things will be returning to normal for FY15 and as such won't be getting carried away....just just :)



Company: Dave Sullivan - Talking Stocks
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sminers 8th Nov '14 14 of 29

They are QPP's nomad!

Need I say more?

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Sully8786 17th Nov '14 15 of 29

In reply to post #87567

Enough said! :(

I've rang them today to get an explanation. Watch this space.

Company: Dave Sullivan - Talking Stocks
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JTG 18th Nov '14 16 of 29

I do hold Cenkos, on the basis of their highly performsnce related costs (limiting downside) and the very significant 'skin in the game' for the main directors.

Also "The Board anticipates paying a full year dividend that is higher than
last year. The Board is also evaluating other means of delivering additional distributions to shareholders during the remainder of this year, in particular share buy-backs, such that total distributions for the year are expected to be significantly higher than last year."

I think they have a determined game plan with a flexible business model.

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kirkie001 19th Nov '14 17 of 29

Given all the heat and light around Cenkos' role as QPP's Nomad, and their lack of (any public) challenge to what the QPP BoD has been doing, there has to be severe questions around Cenkos' ability to perform a NOMAD role in accordance with regs. Severe collateral reputational damage is certainly possible, as are sanctions against them if they have been found to have not acted appropriately.

I don't hold, but IMO if I did, that would be enough for a sell signal given the share price performance over the past year. And it would make them uninvestible from a long perspective until those questions had been adequately answered.

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Paul Scott 19th Nov '14 18 of 29

I agree that Cenkos Securities (LON:CNKS) shares might look superficially cheap at the moment, but they are caught up in the mother of all scandals being the last remaining joint broker of Quindell (LON:QPP). So I'm keeping a watching brief. Reputational damage here could be catastrophic, and being a people business, the big fee earners might walk?

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nigelpm 19th Nov '14 19 of 29

This is indeed uninvestable - their continuing relationship with Quindell is beyond belief.

You literally could not make this up.

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peterg 20th Nov '14 20 of 29

In reply to post #87960

their continuing relationship with Quindell is beyond belief.

I wouldn't wish to make excuses for them, after all they got themselves into this mess, or at least have to bear a fair bit of responsibility.

However, in terms of their continuing relationship they are between a rock and a hard place. If they take the nuclear option - withdraw as nomad - then QPP is effectively delisted (or are at least suspended until someone is daft enough to replace them). That leaves any remaining holders in a mess, and is likely to cause as much - and quite probably more - reputational damage than hanging on in, and hopefully trying to exert a bit of a moderating influence over QPPs antics (in their short remaining life)

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Sully8786 20th Nov '14 21 of 29

I spoke tho their compliance department this morning - apparently they are signing off their RNS alerts - what a joke!!!

Company: Dave Sullivan - Talking Stocks
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kirkie001 20th Nov '14 22 of 29

They've ALWAYS been supposed to sign off their RNSs. Is the implication that they weren't before? Because that would be scary.

The reality is that they were possibly not getting any supporting evidence from the Company to support the assertions made in the RNSs - just getting representations from Management.

Hence how a £7m share sale can be made to look like a purchase.....

And, as Peter says, they are most certainly between a rock and a hard place. However, an element of that is down to their own actions (or inactions)......

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Sully8786 20th Nov '14 23 of 29

In reply to post #87982

Hi Kirkie,

I wasn't implying anything, just perplexed that they were continuing to cause themselves reputational damage by being NOMAD to Quindell (LON:QPP)

Surely the best this to have done was exit sooner rather than later? And as both you and Peter have said - They are now between a rock and a hard place with no announcements to their shareholders about this mess - As I said above - What a Joke!!



Company: Dave Sullivan - Talking Stocks
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Ramridge 20th Nov '14 24 of 29

Simon T of IC has expressed his views about Cenkos today.

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nigelpm 20th Nov '14 25 of 29

In reply to post #87966

Couldn't disagree more Peter. Actually their leaving would suspend the shares and stop the farce that is currently taking place.

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peterg 20th Nov '14 26 of 29

In reply to post #87989

Couldn't disagree more Peter. Actually their leaving would suspend the shares and stop the farce that is currently taking place

Yes, of course it would, that's what I said would happen!

My post wasn't about what may be best for the markets overall - it was about what is the best course for Cenkos out of the hole they are in. Cenkos have to weigh up the impact on their credibility of coming clean and forcing QPP off the market or being seen to be the NOMAD who forced a still trading company's shares into suspension or delisting. Not a choice I'd want to have to make - though clearly they have a fair bit of responsibility for the position they are in. But I'm quite certain it's not a black and white decision. My own view is that they might well come off worse resigning.


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nigelpm 20th Nov '14 27 of 29

In reply to post #87990

Sure, it's not black and white (nothing ever is) but it's about doing the least harm to their own reputation and I very much doubt many will be disappointed if they resign.

The longer this carries on the worse it will get for Cenkos.

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cafcash49 20th Dec '14 28 of 29

Re Cenkos; I trade through Barclays Stockbrokers on line. Regarding the Cenkos Tender offer; does anyone have a view on what option to take. The default option is No Action. what would this mean. Sorry if I am being a bit thick here but I could do with some guidance or opinions.
Many thanks in advance.

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cig 21st Dec '14 29 of 29

In reply to post #89140

No action is to keep your shares.

Action is you sell (some of) your shares for £1.88. This is better than the market price at last close, though that may change between now and the day the offer closes. If you wanted to sell some shares, it's a cheap way to do it. If you want to keep your shares, you can sell in the tender and buy back the same quantity on the open market (if the spread/trading costs doesn't nullify the advantage). If you tender more than 9% of your shareholding, how much will be executed depends on what other people do, so you'll be taking a little risk if you do it.

(All that is subject to me not missing unusual conditions.)

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