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Real-Time news about Topnotch (London Stock Exchange): 0 recent articles
|sore loser: From "Market Miscellany" section of the Sunday Telegraph (Business) November 2000:
"Having been as high as 201.5p earlier this year, shares in THC, the AIM-quoted leisure business, have crashed to a low of 82.5p. The company issued a statement on Friday noting the downward movement in the share price. It insists the fall has nothing to do with the trading outlook for the company but instead has been caused by an instiution selling shares acquired when it merged with another fund management group. Topnotch, a newcomer to the quoted leisure market, is trading in line with expectations. The company recently bought 5 clubs from rival Cannons for £1.7m. Half-year results due out in January are not expected to dissapoint having reported a £130,000 loss in its maiden results. The company is undervalued. BUY."
Funny old world......|
Please browse my previous posts to get my detailed thoughts, but once the banking is sorted and there are some signs of recovery then the discount of share price to net tangible assets should decrease dramatically. The last announced NTA were 42p per share and after today's annoying little drop, the share price is only 5.25p, or 6p to buy.|
A bit of a spat between directors earlier, but 5p cash plus an announcement that 3 of their investments will float at the same time in December. Share price only 3p to buy (can buy under the offer).
Of course there is always uncertainty when it comes to flotations, but if these are delayed it will be due to dire market conditions or unacceptable pricing. The directors would probably try again. They appear to have cash to give some flexibility.
The share price has been as high as 20p. I think results and more details of the proposed flotations are expected shortly.
I have 750,000 of them.
Out of favour and some sellers has given this buying opportunity, and hopefully the more information that comes out the more the market will be confident on the ability to realise the value from its investments. The potential value of the investments and cash is much more than the current market cap. See recent press coverage (eg Daily Mail 12.11.02 amongst others).
A good risk/reward situation, IMHO.|
|sreddy: Rapid reaction to dive. This marketplace is giving rise to really quirky valuations (although this share also has the uncertainty of the bank discussions). The illiquidity of the share helps provide the opportunity, but as, hopefully, the share price rises and the spread becomes a lower %, then buying and selling can become more fluid. At a much higher price even size can be sold more easily at close to the market bid price. In the case of a take-over/MBO, the illiquidity is irrelevant. The tightly held shares can actually help in the take-over scenario.|
I added on Friday - 25,000 at 7p. Now have 500,000 at average 2.3p.
Awaiting bank confirmation (or not!) and results of the strategic review.
Even boring old 'recovery to profitability' over the coming months should see a share price nearer the NTA of 45p than currently.|
|sreddy: London Trader (or AS),
Hi. I don't agree that we are looking at only a double. Given the special circumstances of this share (the warning, the illiquidity, overall market conditions) the graph is much less relevant. If the banking is sorted, and because the asset write-downs have already been done and because there is some optimism that trading can be turned (see results), then the discount of 85% from NTA to share price would be far too high. If this were a profitable company then there is no reason why it should not trade above NTA, ie above 45p!
This may take some time, of course, but in the meantime a lower discount would seem appropriate. What that should be is subjective, but 85% is too high. If, say, it was a still large 50% discount, then a share price of 22.5p would result. This share has traded in excess of 50p this year and for most of the year was above 20p.
Remember also that there is a strategic review going on. This could lead to disposals and a re-focussing of the group, speeding up it's return to profitability and reducing bank debt. It could also lead to an offer for the company from a competitor or even via an MBO. In these scenarios the offer price would probably need to be much nearer the NTA than currently for an offer to be successful.
As you know I am heavily into this share, but hopefully you see the logic of my analysis. We all know that logic does not always count in this market, but I think the share offers above average chance of significant capital growth. If held for 2 years any CGT would also be chargeable at only 10%. There are risks involved, but if you don't take risks you rarely get above average returns.|
|london trader: Hi sreddy,
well I was tipped when the share price was 4.5-5p to buy. Before I did not know anything hardly about them except that the share price had already gone up from 1.25p to buy. They are not my cup of tea since there is only double to go at the most according to the graph if you go by what they were before the fall.
|sreddy: London Trader,
I'm up over 200% in a week and we haven't even had the bank announcement yet. If it does come then the discount of 85% between share price (6.75p) and NTA (c.45p) is just not justified at all.
Even if you then keep a discount of 55% because of continuing losses (this discount still would be high in my opinion if the bank is sorted), then you get a share price of 20p per share. I'm not promising this will happen, but I'm not in this share only for a couple more pence.|
|sreddy: Further analysis of the results:
If you look at the results for the year ended 04/2002 you will see that the
loss before exceptionals but after interest was £0.5m, after a change in accounting policy deferred £0.5m of annual subscription income to later months. The statement also gives reasons for some slow branch starts due to disruption and states that September and October show marked improvement. Although they say they are still making losses, the situation appears mendable, particularly if management aren't side-tracked by too many new openings. This appears to be recognised. Also the disposal of loss-makers should improve profitability and release management time.
All-in-all, some reasonable grounds for optimism. If this trend of improvement continues, then the discount of 80% between NTA and share price will be well over the top. Assuming the bank negotiations are satisfactory and reducing the discount from NTA to, say, 40% gives a share price of 27p. In the longer term, if profitability returns then there is no reason why the shares should not trade at a premium to NTA, ie. in excess of 45p.|
|sreddy: That is odd. I can't think of the reason for that delay.
For the other poster - If you are prepared to take the risk on successful bank negotiations (given the directors' comments), then this company is FUNDAMENTALLY undervalued and I am looking for a share price many multiples of my average 2p buying price. This expectation is backed up by the massive NTA per share compared to share price.
We should hear about the bank negotiations soon and the results are expected tomorrow, when we will get confirmation of the current net tangible assets (NTA) per share.|
Topnotch share price data is direct from the London Stock Exchange