|Zeus on BCA;
BCA has delivered a strong set of results that are 5% ahead of our forecast at the adjusted EPS level. Strong growth has been made across all four divisions leading to an impressive +31% increase in adjusted EBITDA. Our EPS assumptions remain unchanged, and we are comfortable at the top end of the consensus range. We continue to believe BCA remains well positioned as an attractive structural growth play and is underpinned by a solid dividend yield.
§ H1 results: BCA has delivered strong results, which were 5% ahead of our forecast at the adjusted EPS level. The Group has delivered an impressive 31% YOY EBITDA growth driven by strong organic growth and the successful integration of acquisitions. Cash conversion was 116% and net debt on track vs. our FY assumptions. The interim dividend was +10% and in line with our expectations.
§ Key performance drivers: UK Remarketing was a strong performance with core volumes +8.4% (including SMA) producing YOY EBITDA growth of 23.4%. International Remarketing saw volumes +5.7% YOY with FX rates providing a 11% favourable movement to reported results vs. the prior period. Revenue per vehicle were +19.9% YOY driving revenues +26.5% and EBITDA +33.3%. WBAC continued to deliver strong volume growth ahead of our expectations, which was running at 13.3% during the period, driving revenues +14.3% and EBITDA +6.0%. Acquisitions have been integrated well via Automotive Services, with management also taking decisive action to drive enhanced profitability namely via UK logistics. Group costs were broadly in line with our expectations.
§ Forecast assumptions: We are maintaining our headline EPS forecasts on the back of these results. We have increased volumes in the UK, albeit this is largely offset by slightly higher depreciation and interest cost. We remain comfortable with our assumptions at the upper end of the consensus range.
§ Investment view: We remain comfortable with our original investment thesis based on the underlying performance of the business. We continue to believe the growth potential is significant from here across all divisions, especially in Europe in future years. We continue to see BCA as attractive critical infrastructure as it now touched over 3.5m vehicles in the UK supply chain alone, and would expect to see continued growth under most post Brexit scenarios. With an attractive dividend yield of 4% following some share price weakness, we would expect the shares to perform well given the attractive structural growth opportunities.|
Lol MVIR - 135/145 now.|
|BCA interims well received by the market so far this morning - currently up 4.4%|
|MVIR now listed, 110/120, about right I'd say, if not a bit high. Peeved that the co has wasted money on this corporate action (and the cost of another listing/more complicated shareholder structure), but also quite pleased so many took it up - though they're mad to have done so. An element of "buyer beware" but also not convinced the co should be giving people the choice of being suckered.
And suckered is how I see it - at least 5 years until any payout expected, during which time the ord holders will have received over 41p in dividends, and that's without compounding.
Any forced seller of MVIR is going to have a hell of a job.|
|BCA going great guns today|
|Is the feeling here that we still have a seller? Could present an interesting dynamic if the BCA results are good next Wed (on top of today's RNS re NAV increase).|
|Can't imagine there'd be many buyers! Tho feel for anyone who didn't read it properly.|
|Can you imagine the spread on those given the likely lack of a market?|
|Well spotted. Even better news - nearly 11% of shareholders have chosen to convert to Realisation Shares. Hopefully the listing costs etc aren't too large, but that's the divi saved on over a tenth of the outstanding shares.|
|Nice increase in NAV today, as expected....2.13 to 2.21|
|That's what I figured tbh - but what I don't get is why they need to create this extra class of shares as the way I read it the proceeds of realisation would be pro-rated across the two classes - so why would anyone want to own realisation shares?
What am I missing?|
|Don't touch with a bargepole! Can see almost no benefit to them - they promise capital returns when holdings sold, but go on to say "at least 5 years until any sales". In the meantime, the "normal" shares attract a really good yield, & the realisation shares don't pay anything.|
|What's the general thoughts as to what action should be taken over the realisation shares?|
|Might the next couple of weeks present a catalyst for a boost in the share price here?
- the next few NAV Reports should reflect the recent performance of ZEG which has continued to climb
- BCA Results on 30th Nov|
|Thanks again for your comments.These combined with ST in IC , make a good cased for MVI, so I am onboard. The discount looks too deep at around 35%. I don't see anything suspiscious in the trust , It has very high profile backers, has raised money recently , has a very good track record and a style that has worked well. They are paying an 8p a year dividend and the investments are very concentrated and mostly quoted , so you can see what is happening . If we look at MCA and ZEG, we see companies moving forward nicely operationally and in part also in share price terms. They look solid and are working in mature sectors where they have prospects and positive earnings potential.GLOO should spring into life at some point, not sure about the potential of the posh french welly boot business and the chemicals side is an unknown. The overall valuation looks attractive to me with plenty of margin for error.
Happy to hold with the 6% yield and see if they can work their magic again over the next 3-5 years.
|@Robsy2 - MVI hasn't performed well over all time periods, and much of the outperformance over others is due solely to ETO.
They've previously raised money at a discount to NAV, run a very concentrated portfolio, and claim not to be targeting any realisations for at least the next 5 years.
|ZEG up another 4% today and now more than 25% up since early Sept lows.
There used to be an obviously slow reaction by MVI to significant movements in ETO share price in the past - I presume this slow reaction might now be even more pronounced so would expect a tick up in the not too distant...|
|Thanks for sharing, this looks interesting butvsomething is nagging away at me and stopping me buying....what is the problem here ? Why is the trust do friendless? They have a grest track record but there sre doubts about costs and the structure, i need to do more work to see if i can to the required comfort level before i can buy
|I think ZEG is 30% of MVI. Its up 6% since last NAV news, £2.129. Add roughly 1.8% gets me to £2.17 current NAV. that's about 35% discount which I assume is about as high as its ever reached. I see discounts were previously 25.9% in June & only 10.7% a year ago.
Together with the boards stated intention of reducing the discount, id like to believe this share price is due a rise.|
|Digging deeper into MVI divi policy:
"From January 2016, The Company will deliver a quarterly dividend of 2.064p per Ord. The distribution policy will remain progressive. In each year, the dividend will be maintained or grown on a pence per share basis. For the avoidance of doubt, the return of 50% of the excess on any net capital gains to the Company for onward distribution to Shareholders shall continue to apply under the New Distribution Policy."
Try reading that and understanding the redemption share proposal.|
|"Still - everything has a price" - exactly how I see it...for me it's LMS & OCL.|
|One thing that does appeal with OCL - very tightly held, so doesn't take much buying of the small free float to push the price up. Still waiting to see a Holdings RNS of who sold/bought c.6.5% of the co last week.
But the divi wins out for me on MVI - admittedly that's all the return you're going to get medium term (their point about not envisaging selling out of anything in at least the next 5 years) but I don't mind being paid to wait.
But fair point about pre-emptive dilutory placings on both MVI & OCL. Like DNE & LMS, they seem to be Trusts run at least in part for management enrichment.
Still - everything has a price.|
|Surely Invesco must be beginning to regret this association with Robert Ware...
Solution for PIs - sell MVI on a 32.8% discount and buy into OCL on a 39.1% discount. They suffer from perceived rather than real management failings; though both made non pre-emptive right placings!|
|Hoping this preposterous new scheme makes divi safer for those remaining, but perhaps that's what's behind it - save the divi on as many shares as possible (not, surely, that anyone will take them up on conversion to redemption shares).|
|Wouldn't surprise me if they cancel the dividend next. Can't wait to exit this investment! About time they started quoting the 3 year numbers as well, but that would embarrass them. The board and their brokers should hang their heads in shame.
Corporate governance seriously lacking here!|