I Read The News Today Oh Boy! 18-Jan-2018

18th Jan '18 by matylda

15 comments 6360 reads

Morning All!

A lot to get through…

Headlam ( Headlam (LON:HEAD) ) – 570p – £483.6m – PER 12.6

Trading Update For The 12 Months To End December 2017 – Margin enhancements and efficiencies offset the slightly lower than expected revenue growth – Underlying PBT to be comfortably in-line with consensus market expectations (£42.5m, up 6% on last year).

Still attractive enough, especially for that reasonably well covered Dividend of circa 4%+. There’s also a decent cash pile. Wouldn’t mind this yield with the Cash safety net there too. It’s going on my Watchlist, 530p, where that yield will be even more attractive.

Ten Entertainment ( Ten Entertainment (LON:TEG) ) – 262p – £170.3m – PER 13.8

Trading Update For The 12 Months To End December 2017 – In-line with the growth strategy (LFL Revenue up 3.6% (7% in the second half). Expects EBITDA to be at the top end of the range of current market consensus. Encouraged by the performance of the new innovative “Pins & Strings technology” currently being rolled out.

Seems I missed the boat here on this one. Will keep an eye on this from the side-lines for now. Actually decided to add it to my Watchlist, 210p.

Air Partner ( Air Partner (LON:AIR) ) – 151.5p – £79.1m – PER 17.5

Trading Statement – CORRECTION - PBT (not Revenue) to be at least £6.4m (£5.1m last year) which is ahead of market consensus of £5.9m. Group retains a strong net cash position.

A decent update, I hold and will continue to do so.

SafeCharge International ( SafeCharge International (LON:SCH) ) – 311.5p – £457.5m – PER 17.8

Trading Update For The 12 Months To End December 2017 – In-line with market expectations, Revenues in the range of US$111-112 million and Adjusted EBITDA in the range of US$33-34 million. “With robust current trading, a strong sales pipeline and new clients set to join the platform, the Directors look forward with confidence to the 2018 financial year”.

I currently hold a long position here and will continue to do so.

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MrContrarian

18th Jan '18

My morning smallcap tweet:

Franchise Brands (LON:FRAN), Air Partner (LON:AIR), Portmeirion (LON:PMP), Fairfx (LON:FFX), Countrywide (LON:CWD)

Franchise Brands (FRAN) guides FY beat despite a £316k provision re Carillion.
Air Partner (AIR) Guides FY pretax not less than £6.4m, ahead of market consensus of £5.9m.
Portmeirion Group (PMP) guides FY pretax slightly ahead of market expectations. Rev up 10%, organic LFL 5%.
FairFX Group (FFX) expects FY revenues and profits to be ahead of market expectations. T/O up 39%, organic 17%.
Countrywide (CWD) guides FY rev £672m cf F/C £696m. EBITDA £65m (£83.5m). Sales and Lettings disappointing Q4. Good op. C/F at ~£59m (£28m) and net debt around £193m (£248m). I'm short.

jonno

Well done Matylda
Some effort to squeeze all that into one hour. I hold Headlam and Portmerion. Somewhat surprised by the muted response to the former this morning. All in all a good trading update. It is a well managed and wonderfully boring company dealing well with less than perfect trading conditions. I placed an order to add to Portmerion, although I suspect given the share price reaction it is unlikely to be filled.

The positive update from Ten Entertainment bodes well for Hollywood Bowl that I also hold, although I think the the share prices of both are starting to look a little stretched.

Keep up the good work.

Jonno

Aislabie

Thanks for this Matylda
Cloudcall (LON:CALL) also gave a trading update today and really I despair. Simon Cleaver CEO is irrepressibly optimistic as usual and reports all sorts of positive sales movements but fails to mention when this company will become cash positive or indeed anything about profit other than "inline margins".
Cloudcall is now expecting to go over 8 years without making a profit, relying on the market to keep funding its dreams. In 2015 the price got walloped as the market demanded a huge discount to make another placing and it appeared that the CEO got the message, with cash break even getting addressed in each subsequent bulletin.
With a large cash call in November the group now has a bit of money and in this update breakeven is not mentioned, in fact, ominously, there is another of Cleaver's "we are investing in our core operations" - which means, I fear, that the CEO is once again on the loose and cash breakeven is again receding.
Time for me to get out

matylda

Thanks guys, you're welcome thanks for the input. I do like Headlam (LON:HEAD) and Portmeirion (LON:PMP). Cloudcall (LON:CALL) for me, I typically don't invest in loss makers however I am sure others will appreciate your views.

robin66

Hi Matylda,
A very busy morning for you, many thanks.
Re Fairfx (LON:FFX) (which I hold) as you say turnover of £1.1bn is below stocko figure, but as Mr C says they also state that turnover and profit for FY17 will be ahead of market expectations! Very confusing.

Robin

Soundbuy

Re Miton (LON:MGR)

Update 24th November 2017

'The Board remains optimistic about the prospects for the Group and profits for the full year are expected to exceed current market expectations.'

This morning

'Overall financial performance expected to be at least in line with management expectations.'

Market vs Management expectations.....'at least' in line, perhaps leaving room for a (small) beat??

BlueFrew

Air Partner (LON:AIR) - I hold and will continue to do so. I like the way the management have added related businesses with more stable and predictable earnings to the more cyclical private jet business. Sensible acquisitions which have added value rather than destroyed it, while still paying out good dividends to shareholders.

phoenixnight

Matylda

There was an announcement from Draper Esprit (LON:GROW) this morning of a substantial investment in Ledger. My heart sank when I saw the words “Blockchain” and “Crypto” in the title of the RNS. However Ledger are involved in the security surrounding bitcoin, and thus can be seen as a “picks and shovels” type company. Whatever happens in the long run with the blockchain, the requirement for security and confidence will be important. The shares are currently up 9% and I can see the attraction of this.

I took a small stake in Draper Esprit (LON:GROW) when I noticed that they had an investment in fintech company Transferwise, of which I have personal experience. I don’t know if any other subscribers have used this service for transferring foreign currency overseas, but I can’t recommend it highly enough. The savings compared to the traditional banks are significant, but have so far only provided services for bank to bank transfers. However they are about to launch a debit card for use overseas. This will significantly expand their market and bring them into the mainstream, and it is that potential that excites me - think how many debit card transactions are made whilst overseas.

As a general rule I try to find companies where I feel that the overall market for the company or their products is expanding, either through technology, legislation or changing social trends. So far it’s worked reasonably well through Burford Capital (LON:BUR), GB (LON:GBG) (security identification), Smart Metering Systems (LON:SMS) (energy smart meter rollout), IQE (LON:IQE) and others. I’m hoping for similar with Draper Esprit (LON:GROW).

Anyway, I just thought that I would bring it to your attention as it wasn’t covered above. Thanks to you and Mr Contrarian for your morning updates. They are required reading for me every morning, along with the SCVR.

Regards

Paul

Thanks for that and the kind words.

I don't typically do Collective Investments - I guess I just usually find them too complicated.

All the best with the investment though.

cig

Hardware crypto wallets are a very good business to be in at the moment, but if the scene goes puff they'll go for $2 on ebay. They're also useless for legitimate uses of blockchains as financial institutions don't want or need bearer assets.

I've tried to find out the implied valuation of Ledger (aka how much of the company they got for their $24m) but it's apparently kept secret, so I presume it is insane.

andrea34

Re. Air Partner (LON:AIR) I am perhaps missing something, but struggling to get enthusiastic about the update. On the one hand I suppose it's great they are due to beat market expectations... but considering that the interim underlying pre-tax profit figure was 4.1m vs 3.0m (+34.4%) then this means that H2 pre-tax profit will only be at least 2.3m vs 2.1m... which is a much lower percentage rise in profit compared to H1, barely scraping into double digits.

Air Partner (LON:AIR)

Good spot, here's me with my simplistic as usual hat on...

Had a look at 2016/2015.

H1 - 3 vs 2.2
H2 - 2.1 vs 2.1

So 2017 is...

H1 - 4.1 vs 3 (2016)
H2 - 2.3 vs 2.1 (2016)

So I suppose the growth always comes in Q1 with Q2 flat or, as in this year, up 10%.

2015 = 4.3
2016 = 5.1 (18%+)
2017 = 6.4 (25%+)

On a PER of 17.5 I am reasonably comfortable but thanks for pointing that out, hadn't noticed the flatish H2 previously.

VegPatch

re SafeCharge SafeCharge International (LON:SCH)
Forecasts were nudged down at the H1 stage as they had reduced some of the more "interesting" revenue streams (aka porn or "dating"). Thus the FY trading is in line with the new forecasts.
I own as i think it has a strong niche. The main issue management face is that they need to develop new products like marketplace manager, a payments product for all the new marketplace services like Uber etc but that takes human resource and money. So that puts some pressure on profit forecasts. The $100m of cash on the B/S has been earmarked for M&A, but if you look carefully you cant really see that they have an M&A team.
For me I think it will get subsumed by a larger payments player in the next couple of years, as the prices being paid are crazy. In the meantime the valuation is ok, there is cash on the balance sheet, it is less cheap than it was but 75% of EBITDA is paid out as a dividend so i feel you get paid to wait.
I hold

Bitofathickie

19th Jan '18

Hi Vegpatch, I agree with you on SafeCharge International (LON:SCH). and particularly like picking up a nice divi along the way.

However I notice the divis are in $ not £ so by the time I get them it seems fixed transactions fees have knocked a big hole in them (costs are not clear). Do you have this problem? Is there an easy way around it?

I'm always trying to minimise frictional transaction costs so $ divis are really putting me off.

Threepeat

Robin
Been looking at Fairfx (LON:FFX). It's very confusing between turnover and revenue, so I wonder if they are being confused by others?
BTW where are you getting forecasts from for comparative purposes

Steve

I Read The News Today Oh Boy! 18-Jan-2018

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Matylda

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