Southern Bear Share Discussion Threads

[spangle93] 24/12/2009 08:17

Originally posted by themoneymonster2 on the BAO thread


Southern Bear* (STBR) has announced that it has issued £2.68 million of 8% 2014 loan notes convertible at 1.5p per share and has as a result completed the acquisition of Intumescent Protective Coatings, first announced on 16th December. Four directors took £50,000 of the issue each and Nigel Wray* £1.75 million. As stated at the time, Southern Bear looks to have struck a pretty compelling deal for Intumescent and with the rating, at 1.875p, already looking conservative, my stance (despite the potential dilutive impact of the conversion of the loan notes), remains " long term buy".

You may ask why the SF Fund did not back this placing. The reason is that it was handled (very badly) by Astaire Securities which has a habit of failing to raise as much cash as it promises it can and doing so largely through bucket shops and by dumping stock on the market maker. Its after market support is minimal. As such why on earth would anyone sign up to buy shares in a placing by Astaire? We have a house policy ( after a bad experience elsewhere) that we will not touch any issue being bodged by this firm. I fear that as the bucket shops take their turn Southern Bear shares will tread water for a while so while I am sure that the long term case will come out I cannot see short term fireworks. I have made the point to Southern Bear that Astaire did a rubbish job on this placing and that anyone backing any Astaire placing is certifiable and urged the company to upgrade its broker. Who to - I care not. Anyone else is an upgrade. We hold our stock for the long term but will not buy any more until Astaire is fired and the risk of bucket shop/market maker placings at a big discount is reduced.

[argy2] 18/12/2009 07:20

Now there's a surprise. Likes of TW get more shares at 1.25p to help boost their fund performance figures whilst the existing shareholders just see more and more dilution.If the company told that good a story they could have placed stock at 2p+

[spangle93] 18/12/2009 07:11

A dilutive issue of shares

[argy2] 08/12/2009 15:59

Hopefully not another dilutive issue of shares.

[spangle93] 25/9/2009 18:47

Sorry pachandl, I can do italics but I didn't know the hypertext for irony

[pachandl] 25/9/2009 12:38

10p by end of day? Spangle, stop sniffing the glue mate.

[spangle93] 25/9/2009 07:18

Phew, 10p by end of the day.

At what point do acquisitions cease to be material?



The Directors of Southern Bear are pleased to announce that CFC 0084 Limited, a
newly incorporated wholly owned subsidiary of Southern Bear, has purchased the
goodwill, stock, plant and work in progress from the Administrators of Ronald
Thompson Limited ("RTL"). RTL is engaged in the refurbishment and maintenance of
commercial properties including the provision of heating and plumbing services.
The consideration was GBP40,000 in cash

[argy2] 26/8/2009 14:52

Yet even more shares issued to TW I suspect.Shouldn't be too long before we get one or two ramps from that camp then. Not done them much good in the past though, just seems to let any sellers out.

[investinggarden] 14/8/2009 15:10

Southern Bear expands

[spangle93] 14/8/2009 12:11

Friday's free bonus recommendation is from GE&CR and is on Southern Bear


Southern Bear* Buy
Full - Year Results Comment;
Reiterate Buy' at 2.5p - Target Price 3.8p

Southern Bear, the holding group focused on investments in the support services, industrial and engineering sectors of the UK and Europe, has today announced results for the year ended 31st March 2009. These show a 95% increase in operating profit before the amortisation of intangibles to £2.03 million and a 190% increase in pre-tax profit to £1.03 million on turnover up 116% to £18.84 million. Basic earnings per share increased from 0.12p to 0.17p as the company particularly benefitted from contributions from acquisitions Fenhams (seven months) and RJ Patterns & Mouldings (three months).

The cash flow statement showed £499,000 generated from operating activities though largely as a result of a £3.74 million outflow due to acquisitive activity, net debt increased from £2.51 million at 31st March 2008 to £3.70 million. At the period end, net current liabilities totalled £113,000 and net tangible liabilities were £5.72 million. In terms of the debt, underlying interest cover was improved from 3.5 times in the prior year to 5.6 times and the burden has been reduced further since the year end with £760,000 net of costs raised in April via a placing and unsecured convertible loan notes offering. The convertible loan issue showed the confidence the directors have in the company with seven of the eight partaking alongside the trustee company which controls significant shareholder Nigel Wray's* family trust.

Looking forward, Southern Bear reports that the various businesses it comprises are encouragingly placed. Based on the current level of business and order book, the support services division is expected to deliver "strong growth" in the current year and on the engineering & industrial side, each business sees positives – with Phoenix Dynamics, a supplier and contractor of electronics equipment and components to the electronics, defence and energy industries, particularly worthy of note as it has a record order book which is continuing to grow. Southern Bear reports that overall "management figures show that the first quarter's operations of the current financial year are fully in accordance with expectations".

This together with these results reflecting that the company's operating businesses are working in relatively robust market sectors, it being "quietly optimistic looking ahead" and set to benefit from a full 12 months' trading from the recently acquired businesses means we continue to believe an underlying pre-tax profit of £3.5 million is achievable in the current year. This should generate underlying earnings per share of 0.38p. In 2011, as the UK economy looks set for a gradual recovery, we would expect profit and earnings to increase at a double digit rate and this may be augmented by a resumption of the company's 'buy and build' strategy. As such, we regard a price earnings multiple of 10 as a far from demanding valuation metric – which suggests a target price of 3.8p. With the shares at 2.5p, the stance remains buy.

[howdlep] 14/8/2009 08:20

Now looking very good as demand for stock kicks in. Offer moved out to 3.5p

[howdlep] 14/8/2009 08:17

50,000 buy limit online with Idealing

[argy2] 14/8/2009 08:17

MMs will adjust price as they see fit which is why they mark it up before 8am in anticipation.Let's just watch over next T20 and see.

[howdlep] 14/8/2009 08:15

MM's will adjust the share price according to demand and they cannot be caught short

[argy2] 14/8/2009 08:13

Which is exactly what the MMs will be expecting hence the mark up and then pull them back afterwards to pick up cheaper stock.

[spangle93] 14/8/2009 07:15

Well, I've read a lot worse. Shame that like-for-like isn't possible for a direct comparison, but this now feels well placed.

I'm not an expert on reading accounts - any red flags in there?

[cestnous] 02/7/2009 17:02

Did this dog just bark?

[howdlep] 12/5/2009 12:45

Taken from the May newsletter of the SF T1PS Smaller Companies Growth Fund:-

But assuming that the economy is set to recover during 2010 how are we positioning the fund to benefit? Firstly we believe that our heavy investments since last Autumn in semi cyclicals will pay off. Companies such as Southern Bear, ILX, Interquest, Northern Bear, IQ Holdings and Access Intelligence have enough secure state backed and quasi state backed derived earnings that they were always set to remain profitable during the downturn but as the economy recovers, operational gearing should see a sharp increase in earnings and we expect their shares to be re-rated on the back of increasing earnings forecasts – a double gain for investors.

[pachandl] 25/4/2009 14:45

Thanks Spangle - I was e-mailed that report earlier this week. Yes, I agree with you that it is probably the reason for the increase in the price. Let's hope the share price does not retrace next week. Cheers.

[spangle93] 25/4/2009 07:16

Pachandl - yesterday I received the freebie research daily tip from GE and CR. This usually comes out several days after it's gone to subscribers. They instigated coverage of Southern Bear with a Buy (strangely enough)

So with hindsight, that's probably the reason for the buy spike, and subsequent drift back, as this pattern seems to be often followed after tips.

I only have the research as an email, so I can't post a link. Conclusions are:

In terms of outlook, Southern Bear commented in its interim results statement published on 17th December 2008 that "in spite of the current financial climate, the Board looks to the future with quiet confidence". In particular the company noted that a substantial part of its work is in the refurbishment of social housing and similar projects where the customer base nationally is expected to remain strong for the foreseeable future. It also remarked that "the prospects for Phoenix both in the current year and for the foreseeable future look extremely strong especially in the light of the new contracts recently won" and that "Tarvail is continuing its policy of expanding its customer base".

The size and resilience of Southern Bear's key social housing repair and maintenance market together with the close relationships its businesses typically have with their customer bases and the company's multi-faceted organic growth strategy, suggest it has a sound foundation to weather the present economic downturn. As such, we regard our forecasts as appropriately conservative – with our 2010 numbers benefitting particularly from a full year's contribution from Fenhams but assuming no further acquisitions are made. Considering Southern Bear's track-record, the increasing number of attractively priced opportunities likely to become available as a result of the economic climate, comfortable current debt levels and strong support enjoyed from its bank and shareholders, we believe this is unlikely.

Whilst there are also risks as highlighted, the company's interim results and re-positioning in the last 18 months into markets, such as those addressing the standard of social housing, fuel poverty and energy efficiency, which look to have strong long-term prospects, mean that we expect Southern Bear to report solid results for both the year to March 31st 2009 and also for 2010 with pre-tax profits and earnings of £1.7 million and 0.23p and £3.5 million and 0.35p achievable for the year just ended and the current year respectively. The fact that earnings are set to increase more slowly than profits reflects a sharp increase in the number of shares in issue. In 2011 as the UK economy recovers we would expect profits and earnings to increase at a double digit rate. On that basis we regard a price earnings multiple of 10 as a far from demanding valuation metric. This suggests a six month target price of 3.5p and with the company's buy and build strategy looking set to generate further earnings growth in the years from 2011 onwards, we initiate coverage, at 2p, with a stance of buy.

[argy2] 24/4/2009 06:20

Looks like Wray's partner in crime Tom Whingerfrith might have been persuaded to support the price when a large seller appeared.No doubt they will appear in his fund soon as a long term hold.Help make up for the money Wray lost in MYH.