can anybody tell me why this share is dropping so quickly today
OK thanks.
Yes you should just put a £ in front but does not always work, Adept Telecom (LON:ADT)
I think they are changing that soon.
About the Author
Andrew Niven
27 comments
Howard Adams
Herbie
Thanks for be so kind to give me that tip I'll try it.
I spotted the reason Adept Telecom (LON:ADT) did not appear on my screens. In my screens windows the P/E is 34.1 (I screen out something this high), yet on the StockReport the 'PE Ratio (f)' is only 12.7 (much more reasonable). I also note that on the StockReport the 'TTM' 'PE Ratio' is 34.1. I guess I need to determine if I need to edit my screens to switch from the 'P/E Ratio' to the 'PE Ratio (f)'.
Has this tripped you up before, by chance?
Regards
Howard
Rusty2
Yes the P/E can changed quickly as its on forward P/E, high P/E is ok if the future profits are growing, I prefer PEG I think this is a better guide to value, as used by Slater and others. I do use screens but then look into shares in more detail. I have not bought Adept Telecom (LON:ADT), I know about it as it was on the NAPS which started last year. I got close to buying when it dipped down to about 225p a few months ago but I missed it.
Howard Adams
Herbie
Thanks for that explanation. I am just moving towards learning how to use the PEG now, so taking your advice I'll dig into it more rapidly to understand it more. Many thanks for taking the time to 'cyber' chat, I have read many of your comments in the posts and always found them helpful.
Bye for now, a glass of wine has my name on it I believe :)
Regards
Howard
Carey Blunt
I'm also a holder on an entirely mechanical basis (part of my own NAP hand). I like the divis but the telecoms sector was a tough one to pick from due to the low number of stocks in it.
Howard Adams
Carey
I quite agree with you. To update on my earlier posts (above). I was attracted to Manx Telecom (LON:MANX) but herbie (above) kindly pointed out the pension issue, I walked away. I looked favourably at Adept Telecom (LON:ADT) (as per points mentioned above), but then realised that the spread was 7%!! (in Hargreaves). That idea ditched. Using the Stockopedia bubbles screens, 9 options could have been possibilities. After a few hours of research I was attracted to Maintel Holdings (LON:MAI), but pulled up short as again the spread was 7%!!!!. Ironically I've ended up topping up on Vodafone (LON:VOD) which I am holding long-term. Its price dropped 4% as it went ex-div as well as doing a large deal with Sky NZ. So, yes I too concur with your observation.
Regards
Howard
timarr
What's the pension issue? As far as I can see you have a company with a Market Cap of £230 million and a pension deficit of £7.7 million, free cash flow of £15.6 million and pension contributions of £1.1 million. I'm obviously missing something, because that doesn't look onerous.
timarr
Rusty2
Probably not a major issue on its own but debt is also high and balance is weak according to Paul.
Cuthbert C
Herbie
I think you are misrepresenting (unintentionally) what Paul said about MANX.
The text of his comment is here.
As you can see he did not have very much to say about the company. He made a few remarks about the balance sheet as it was in 2013 pre-IPO but he made it clear that the company post-IPO was in a different position. What he concluded was:
"I'm a bit nervous about getting into anything directly regulated by Governments, as there is always the risk that some vote-hungry politician might do something that harms the commercial interests of the companies concerned. It could be an interesting dividend play though, as the forecast yield for next year is 6.1% (for a 10p payout)."
As always the proof of the pudding is in the eating. Since Paul's comment was made the share price has risen from 160p to somewhere north of 200p and there have also been dividend payments >5% pa. In my opinion that vindicates those like me who bought in 2014.
I have recently sold many of my holdings because of the risk of Referendum volatility. I have so far retained MANX since it is hard to see it being much affected one way or the other and it keeps churning out the divis.
Rusty2
That was not the report I was looking at. This is what he said "Balance sheet - this is weak. The company has net tangible assets of only £3.5m. Also it is carrying a lot of debt - which was £53.7m at the year end. The company says this is about 2 times EBITDA, but there is an ongoing capex requirement, which EBITDA ignores." dated 14/04/15. This is one year after your link. Of course its just his opinion, I'm not saying he is right or wrong but I think you should take his view into account. I don't like companies that pay out high dividends but have high debt but thats just me.
Cuthbert C
I'm sorry, I must be being even slower and dimmer than normal, but I can't reconcile the figures quoted by herbie (and thence paul) for net tangible assets (£3.5 million) and debt (53.7 million) with the figures shown in the accounts
Can someone help me understand where those numbers come from please?
Thanks in advance.
T (in senior moment mode)
timarr
The SCVR from April 2015? That's not exactly current information.
In any case with the SCVR it's important to differentiate between the companies Paul analyses and the ones he just skims. With the latter it’s a starting point, no more. So to address the points raised:
- Manx Telecom (LON:MANX) doesn’t have a pension issue, at all.
- It is relatively heavily indebted, but that’s due to the private equity investors taking their pounds and pounds of flesh at the IPO; operationally it’s absolutely fine, debt repayments are only about 10% of profits . Clearly they could pay this down by cutting capex and the dividend, but their income streams look secure so it’s hard to see why they’d want to.
- The weak balance sheet comment from Paul is about the high P/TBV. To show how perspectives can alter perception, Simon Thompson reckoned the balance sheet wasn’t stretched, back in March this year, because net borrowings were less than two times cash profits. As Buffett would argue, net tangible assets are great, but long term guaranteed income streams are better, although it’s rare to find them at reasonable prices.
- It’s not quite a monopoly on the island, but close enough. The Irish Sea is an moat in itself, in both senses: it wouldn’t be worth a competitor investing to unseat them, given a total population of 85,000, admittedly affluent, people.
- A significant and growing part of the business is neither monopolistic nor regulated – some of the capex is into the offshore data centre business which is growing nicely, up to 10% of revenues last year.
- As they’re not in the EU they are highly unlikely to be impacted by the Brexit vote one way or another. And being based in the Isle of Man means zero corporate taxes.
It’s not going to shoot the lights out, but it’s highly unlikely to cause any sleepless nights for investors. I hold (obviously).
timarr
Rusty2
Well its a year more current than the link I was referred to above. Oh Simon Thompson yes he did think there was anything wrong with GBO either and he does not think there is anything wrong with most of his tips, had arguements with him over Stanley Gibbons (LON:SGI) and look where that is now. He also could not see a problem with certain Chinese companies.
Anyway good luck, I used to be a holder, sold out about 1 year ago after reading Paul's reports.
Rusty2
I said they were from Paul's report. The debt is in the accounts link. Tangible net assets you better ask Paul how he got to them but is current assets minus intangibles minus goodwill minus liabilities, I see there is a lot of goodwill.
timarr
Hi tournesol
It's an good question, actually. I haven't gone back to the 2014 report, but the 2015 report would indicate how these numbers are created.
The net tangible assets isn't too hard - it's simply (net assets - net liabilities - goodwill).
However, the net debt isn't the standard calculation quoted above. If you go to the annual report and look at note 16 it turns out that the definition of net debt used is (secured bank loans - cash and cash equivalents). So basically, if you look at the accounts the net debt figure is calculated as (interest bearing loans and liabilities - cash and cash equivalents).
This doesn't seem to be specific to Manx Telecom (LON:MANX), it looks like it's the way net debt is commonly calculated.
timarr
Rusty2
I'm sorry I tried to help but I don't what you want. Do you want a link to Paul's report? If you look under discuss it will list every post that has Manx Telecom (LON:MANX) as a subjuct. If you have an issue with Paul's figures I suggest you take it with him.
Whitbyview
At these levels I am thinking of averaging down, especially as I find it hard to believe a Brexit vote (should it happen) would affect an IoM stock particularly anyway. Am I missing something? If we're were to leave, devaluing the pound, how would that effect a company earning in the IoM? Based on the share price it seems 'badly' but I'm struggling to see this. Any thoughts? Thanks.
