|And glad to see the LTC overhang reducing. Hope that is them done for a while|
|Encouraging to see the Business Growth Fund buying from LTC over 5%, or 2.2m shares, in one block:
Correct sebass, no direct involvement:
|I assume we don't have anything to do with lettings or get fees with that area except maybe collectingg them?|
|Moved up another 1p on just 10k of buys.....new recent high now.|
|Online looks good - you can only buy a maximum 1,500 shares at 36.98p, but you can sell 15,000 at a nice premium at 35.56p.|
|Great to see Oryx becoming an new major shareholder with 1.192m shares - hopefully they'll continue buying more!
|The competitors are all private companies and none listed. There is the largest one which is First Port with 170,000 units so three times the size of HML. Then of a similar size there are Residential Management Group with 80,000 Trinity Estates with 47,000 and Mainstay with 40,000. Apparently the latter two have recently done deals to take them through 60,000 so both very similar to HML who are going to be at 65,000 within next few months.
At the results meeting on Thursday I suggested that Trinity had much faster growth and higher margins but it was almost as if I had said a dirty word and needed to wash my mouth out with soap as RP claimed their business was low quality and mainly with large developers who could pull the plug at any point...
It would be interesting if any of you do have any detailed research into the competition.|
|Does anyone have a list of comparable companies / peers for HMLH which they could send me? Was thinking through the valuation again, and looking back at my notes from when I invested 6-12 months ago.
Feels to me that they can/will increase earnings at a relatively somewhere around high single digit to 10% p.a. going forwards...so probably a bit lower than increases in adjusted EPS in recent years, however that feels reasonable given that now that leverage is higher, there is less scope for earnings enhancing acquisitions.
So the question then is what is the fair multiple based on that growth - on the plus side they've demonstrated a decent track record in growing earnings over several years and I would expect that the contracts are somewhat long-term which provides them with stable earnings. On the downside, they are too small to attract institutions in and thinking about attractions for private investors, those chasing growth will find it boring, whilst those looking for boring companies often want a decent yield which HMLH doesn't pay.|
|I see Oryx have gone over 3%...|
|The adjusted EPS number is a lot more meaningful as to the profitability of HMLH.|
|This is looking a lot better now, always knew it was just a matter of time before this starting moving upwards.|
|Yes good to see, especially as I have accumulated a large holding, at this low level.
I`M happy to hold these for many years to come.|
|...and up another 1p on just £2k of buys today! Seemingly stock is rather scarce....|
|Good to see a tick up after just a 5k buy.
Hopefully we'll get some reports back from the investors' meeting today.|
|Here's Finncap's key investment considerations FYI:
Our EPS estimate for 2016/17 of 3.8p adjusts for amortisation of acquired
intangible assets and SBP. At 32p, the group’s diluted equity is valued at
£12.7m on an adjusted forward P/E of 8.4x for forecast EBITDA of £2.1m after
Tight cost control saw staff costs rise 11% in the period against revenue growth
of 13%. Premises cost increases at over 20% incorporate acquisition activity
but also reflects the rising impact of London weighted rent and rate reviews.
Last year, group property management operating profit margins were 6%,
compensated for by a much stronger contribution from insurance activity, and
that structure remains intact. Underlying group operating profit margins
therefore equate to 14.5% before corporate overheads.
Free cash generation of c.£1.5m+ pa supports acquisitive growth but
expansion also generates funds to support investment into the business. While
free cash flow could support a higher dividend, the market opportunity justifies
increasing group scale to drive longer-term EPS growth.
Net debt of £1.4m may increase given bank support of up to 2x EBITDA to
facilitate growth. The group has access to a £1.5m overdraft facility aside from
a term loan as part of this arrangement. However, in the absence of
acquisitions, cash balances would grow quickly.
Acquisition formula: HML is paying just over one times revenue for acquisitions
(on average less than £300/unit) with an element of consideration deferred for
a year (the group paid £0.3m def. con. in 2015/16).
Target price: At our 45p TP, the EV/EBITDA multiple is 9.2x and the adj. P/E is
11.8x based on 2016/17 adjusted earnings estimates. Without acquisitions and
therefore allowing for some debt reduction, the EV/EBITDA multiple would
become 7.8x at our TP, based on 2017/18 EBITDA of £2.3m."
"Forecasts and conclusion
We have allowed for revenue growth into 2017/18 based on the expectation of
organic growth rather than fee increases. The assumption also remains that
acquisition-driven growth will continue, although the timing and benefit is difficult to predict. EPS growth is anticipated. The dividend policy is progressive, but overall we expect the yield to remain modest during the group’s expansion.
While revenue multiples have declined over the past decade, the value the group is
building in its insurance book should not be overlooked, and as the residential
property management sector improves its operating quality threshold under better
regulation, the value of the group's market share will become more apparent.
Forecast EBITDA for FY 2018 of £2.3m is presently valued at £12.5m in the
market for a 6x EV/EBITDA multiple and 0.68x revenue."|
|There were four acquisitions, Coupe Property ( cost £320k, revenue c£260k); H&W ( £364k, £220k); Arkleygate ( £256k, ? C£150k); Crown ( £291k, ?c£200k)
Annualised revenue of c£800,000|
|The H1 report contains a cash outflow of £1,006k for the period relating to acquisitions. I've only seen H&W reported (which cost 292k) as bought in H1 and they report deferred consideration separately.
Have I missed an acquisition?|
|Could I get a copy of the broker note please? jak.nifetmf at gmail.com|
|Cheers Graham - with 3.8p EPS now forecast for this year ending in 4 months, and 4p EPS for next year (plus a 0.4p dividend), HMLH is looking pretty cheap imo.
A 45p share price would represent over 30% upside from here.
Chinahere, correct, amortisation is almost always the main difference.|
|Am I right in thinking that the main difference between the EPS and the adjusted EPS is the accounted increase (/amortization) of Intangibles?
How is this worked out?|
|Rivaldo, I have sent you on the brokers note by email|
|FinnCap increased forecast from 3.4p to 3.8p ( adjusted earnings). Target price remains 45p|
Very good to see an adjusted EPS number albeit I would be marginally happier for the adjustment to exclude interest and share-based payments, both of which are ongoing genuine costs to the business.
Thankfully these are both small numbers, so the adjusted number is representatibe of business performance and emphasises HMLH as being on a very low P/E.|
|Surprisingly good interims at first look this morning?
2.1p adjusted EPS (yes, they showed the adjusted EPS!) in H1 means they're likely to smash forecasts of 3.3p EPS.
Nice long-term work in Canary Wharf revealed too. Plus improvements in volumes, acquisitions integrating well....time for a re-rating perhaps:
|I have arranged a results presentation at 12.45 on 17th November if any of you want to join us then do email me|