I Read The News Today Oh Boy! 1-Mar-2019

1st Mar '19 by matylda

8 comments 2250 reads

Morning all!

AFH Financial Group ( AFH Financial (OFEX:AFHP) ) – 336p – £142.8m – PER 10.3

AGM Statement – 5th year of improved profitability, record Revenue of £50.7m (up 51%), EPS up 43%, the Dividend is up 50%. Complete 16 accertive acquisitions, continuing to implement operational efficiencies through scale. Current year trading remains in-line with expectations with 4 acquisitions in the first 4 months.

I am Long here and in-line will do for me, forecasts for in Revenue and EPS to increase again 40%+ this year (on almost a single digit PER!).

Revolution Bars ( Revolution Bars (LON:RBG) ) – 79.5p – £40m – PER 12.7

Interim Results For The 26 Weeks To The 29th December 2018 – Lots or words here but basics are LFL Revenue is down -4%, Operating Loss of £3.1m (£3.7m Profit last time – Exceptional costs of £5.2m blamed) and the Interim Dividend is suspended. Slow start to H2 means Adjusted EBITDA of £11m – £12m (no idea what it should be but assume higher than this). Focusing on refurbishments not new openings.

Yes, I am still guilty of holding here on potential take-over talks – I remain close to the Sell button albeit way too late! Lesson learnt, again, hopefully the last time ever – Never continue to hold a share purely based on the potential for a take-over.

Robert Walters ( Robert Walters (LON:RWA) ) – 526p – £398m – PER 10.7

Results For The 12 Months To End December 2018 – Revenue up 7% (CC) to £1.23bn, PBT, up ahead of expectations, 23% (CC) to £49.1m, EPS up 17% and the Dividend is up 15%. Net Cash stands at £74.3m. 2019 has started well, in-line with the Board's expectations, 73% of net fee income outside of the UK, should help balance any Brexit type disruption.

I still see some potential for upside here but just not enough for me to get involved at this level.

Vertu ( Vertu Motors (LON:VTU) ) – 38.5p – £145m – PER 7.2

Trading Update For The 12 Months To End February 2019 – Expects FY to be in-line.…

Unlock with Email

Unlock with Google

Already have an account?
Login here

MrContrarian

1st Mar '19

My morning smallcap tweet: Revolution gives holders fresh hangover

Revolution Bars (LON:RBG)

Revolution Bars (RBG) H1 poor. Rev up 6% but LFL -4%. Adj EPS 4.2 (9.4). Div passed. Recent trading worse. LFL --7.3% in 8 weeks to Feb 23. Blames lack of investment in Revolution. Guides FY adj EBITDA £11m - £12m. WIll prioritise refurbishment over new openings. "We expect trading to improve as we come up against softer comparatives for the rest of the financial year." I hold.

timarr

Never looked at AFH Financial (OFEX:AFHP) before but a quick look at its numbers shows that they're addicted to issuing new shares, presumably for add-on acquisitions - the number of shares in issue has more than doubled over the last 5 years. Each to their own, but you have to wonder why companies doing this are also paying dividends.

Anyway, companies performing lots of purchases are always hard to analyse without spending lots of time, but if was going to consider buying I'd really want to understand why OCF collapsed last year (although at a guess it's something to do with receivables).

But I'm not, so I'm not going to bother :)

matylda

AFH Financial (OFEX:AFHP) openly admit they grow by acquisition. For me I am comfortable enough given that the EPS generally keeps up.

Thanks for the observation, great weekend to you.

InvestorJohn

I just bought more Robert Walters (LON:RWA) as I think it represents good value at this level with nice 17% EPS growth for the year and Profit ahead.

I think price has been under pressure from the perceived Brexit risk but with most of their business outside the UK this doesn't worry me much.

Margins are quite tight in all these recruitment companies which is one drawback...
CEO Robert Walters bought more shares in December (£150K worth) and holds around 3% so good level of owners eye on the business

Re: Robert Walters (LON:RWA) - Yes, the diversification should help, seems the market is in agreement with your view at present.

Damian Cannon

Likewise I'm very happy with the Robert Walters (LON:RWA) results and may buy more once I've gone through them. I'm curious about your comment suggesting that you're not interested at the current level. To me the current P/E of 10-11 seems pretty cheap even for a recruiter and it's at the bottom of their long-term P/E range. So I'm wondering what level you would be interested at?

Hi Damian,

First, thanks for your excellent Feb write up, much appreciated, always great to read them.

I said "I still see some potential for upside here but just not enough for me to get involved at this level.".

This is mainly based on my general feeling about the recruitment sector at present and the fact I don't see the market pricing companies in that sector at much more than Parity PEG (inclusive of Net Cash/Debt and Yield).

"Back of a fag packet" (will try and do a more formal analysis at the weekend though) looks like somewhere around 600p is fair enough value to me (hence I see the "potential for upside but not enough for me to get involved at this level").

"Back of a fag packet" - 600p seems about fair value, it gives a Mkt Cap of, say, £500m (say EV of £450m), a PER of, say, 12 - Growth 10% per annum and a 3% Yield, I just see 600p as a decent enough cap here.

As I say just a snap view (figures may be out slightly) and will try and do a little more analysis at the weekend - Although I doubt very much I will buy into the sector anyway.

Cheers and have a great weekend.

Fair enough - that makes sense. Thanks matylda.

I Read The News Today Oh Boy! 1-Mar-2019

Unlock the rest of this article with a 14 day trial

About the Author

Matylda

8 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...