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Gable Holdings: Update 11th September 2013; JIC Portfolio Holding Sold
Following the "transformational" agreement signed with Toweregate Holdings last week I have seen some big increases in profit forecasts of around 25% next year and 10% in 2014. On consensus forecasts the shares, at 41p are valued at about 5.2x 2013 earnings and only 3.7x 2014 earnings. My view is that this is far too cheap!
The Chief Executive, William Dewsall seems to agree, having bought 50,000shares at 41.5p. Mind you, he already holds 25,049,022 shares or 22.1% of the Company. I think they say "he has some skin in the game"!
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9 comments
Gable Holdings (61p and 0% of JIC Portfolio). I am disappointed with the reaction to last Friday's half year results with the stock dropping through its 21 day trailing closing low. I have a 33% profit on the stock I purchased on 2nd July and have decided to be disciplined and take my profits. (See Transactions)
On the face of it the stock looks cheap and so I will keep it on the watch list with a view to reinvesting in the future.
I am lucky enough to get morning meeting notes from the odd broker!
I think the broker has moved the recommendation to Hold on account of it having rallied so fast over the last couple of months and being close to their 71p price target! They do however acknowledge that the shares are valued at about half that of its peers. They are waiting for short term triggers to enable it to revise its forecasts and target price (presumably upwards!).
Could I ask where you get you additional broker info as the stock report here is showing it as a strong buy?
Gable Holdings (66p and 2.7% of JIC Portfolio); Half year results to 30th June show strong growth in both written premiums, up 77% and pre tax profits ,up 25%. The Company is confident that growth will continue into the second half as it enters two new markets, Belgium and the Netherlands on top of its existing activities in UK, Denmark, France, Germany, Italy, Norway and Spain.
Conclusion; I can't help but be a little wary of Gable given the shenanigans surrounding its 2012 results. I take some comfort however, from Ernst & Young's appointment as auditors; 2013 results should be published much more quickly after the end of the year and be a more conservative reflection of the businesses true profitability. In the meantime it is growing at a decent pace and the shares look pretty good value. Consensus forecasts for 2013 are for earnings of 9.7p, up 137% on 2012 and further growth of 36% in 2014 to 13.2p. On a PE ratio of 6.8x to December 2013 and 5.0x to Dec 2014, I think the shares can make further progress. Happy Holder.
Thanks for the update John. I took the plunge a couple of months back and bought a few of these. Pleased with the interim results albeit perplexed by the fall in the share price in early trading. Hopefully there is nothing sinister that insiders may know but we don't.
I guess there are some risks with this; growing so quickly and having just had to re-state prior years profits. I have been slightly surprised by how quickly it has bounced back and regained market confidence. It does look very cheap however. Good luck. john
Morning John,
Funnily enough I just ran a screen and this came up. Has me pretty excited actually. I may well add to my ISA on Monday when AIM shares become eligible!
Gable Holdings (54p and 2.3% of JIC). The AGM statement this morning states that; "the Company's trading results in the year-to-date are fully in line with market expectations and the Company expects to achieve another year of significant profit growth". It also says that it has strenghthend the management team considerably in recent weeks to provide a resilient platform of financial control as the board anticipates further substantial growth in the Company's pan-European business. It notes the appointment of new Chairman, Michael Sofaer and that it has identified candidates for both a new non-executive director and a new Group Finance Director.
Conclusion; After the debacle of its restatement of prior year results which accompanied its 2012 results released on the 28th June, the Company is slowly but surely rebuilding credibility. The strengthening of management is welcome as will be the appointment of a new Finance Director when it comes. On consensus forecasts for 2013 the shares are valued at 5.6x for 136% growth and 4.1x 2014 for a further 37% growth. The appointment of Ernst & Young, which precipitated the restatement of prior year profits and a change in accounting policy, should give some confidence in these figures.The shares have recovered well since the end of June but I think have further to go. Happy Holder, may add!