3i Share Discussion Threads

[craftyale] 08/6/2023 11:11

Thanks for the info re PE. Perhaps i was more focused on its PE relative to its peers group ie other private equity companies. Nice to see abive 2000 again today.

[elbrus55] 07/6/2023 09:47

Yes, that's right - valuation multiple is based on Ebitda not net earnings.From the results."At 31 March 2023, Action was valued using its LTM run-rate EBITDA to the end of P3 2023 of €1,439 million. These includedour normal adjustment to reflect stores opened in the year. Action has consistently outperformed the peers that we currentlyreference across its most important KPIs, supporting our valuation multiple, which remained unchanged at 18.5x net of theliquidity discount (31 March 2022: 18.5x)."Shares price is at a premium to NAV.

[riverman77] 07/6/2023 09:21

I believe Action is valued with reference to EBITDA not earnings. Earnings will obviously be a lot lower than EBITDA so can't really do a like for like comparison with Tesco. As a very rough guess, Action is probably on the equivalent of a 25-30 PE multiple - so expensive, but this is based on a backward earnings. If you think it can continue to grow at current pace then probably still reasonable value.

[elbrus55] 07/6/2023 04:26

Agree that PE of c.4 is not meaningful. It is bringing unrealized gains into the E which are not ongoing earnings comparable to those of a non-investment company.A more relevant PE ratio is the one used for Action in their valuation which is 18.5 it is key assumption they discuss in their announcements. This can be compared with other retailers e.g. Tesco trades on 12xThe continuing growth prospects of Action may well justify the higher multiple. Difference in debt levels should also be considered - Action doesn't have too much debt.But that PE of 18.5x is relative to the NAV. Relative to the share price it will be higher - north of 20x.

[riverman77] 06/6/2023 20:45

Great rise here and can see it continuing. Another one where the IC were wildly out.

PE ratio not applicable here though as it's a fund so doesn't produce earnings in the traditional sense - should be valued with reference to NAV.

[chc15] 06/6/2023 20:18

I'm sticking of course, the global institutional demand for this stock is crazy atm, they are buying loads at this current price, so expecting further price rises. 'Momentum' investors will be piling in this now.

[craftyale] 06/6/2023 17:08

Hmm some may do that, Im sticking with 3i though. Interesting to see 2000p at the close. See what Fridays close holds, PE still at 4, revenue revised upwards.

[jonwig] 06/6/2023 15:46

Probably not. If the wider market was worth buying, folks might take profits here to jump in.

[craftyale] 06/6/2023 15:39

2000p this week or even tomorrow? I wouldnt mind if all my shares did this well. Whould it fly quicker if the wider market woke up.

[craftyale] 22/5/2023 09:42

IC on Feb 16 advised a sell. Since then the share price has gone from 1655 to 1950. Its PE is presently 4.1 while its peer group average is 12x. Enjoy your short. This will pass 2000 very shortly.

[skyship] 20/5/2023 16:28

APEO announced an April reduction in their Action holding. Price was the Dec'22 valuation.

Perhaps suggests 3i share price now rather overcooked at 1930 - some 16% up on the recent sell notice by the IC; and now at a 10% premium to NAV.

A good short at this level...

[chc15] 15/5/2023 12:51

Indeed, all good news, director buys, strong institutional demand. I think I'll hold.

[craftyale] 15/5/2023 11:53

Another good day. Let your winners run.

[craftyale] 12/5/2023 19:24

1887 intra day high. Wow. 19 pounds soon then.

[chc15] 12/5/2023 16:34

yet another Director buy at this high level, very interesting.

[cardinal3] 12/5/2023 13:56

This is a play on Action rather than PE generally, and is very visible with the presentation earlier this year, which showed significant potential growth. Something will have to give at some point given the proportion of Action in the portfolio. I do wonder whether another firm is looking at this for a t/o with a view to floating off Action. Just my own thinking without any evidence.

[chc15] 12/5/2023 08:32

Good article, the Action demerger option is interesting, though doubt that will happen. Therefore this is still a strong buy, as global institutions have to buy 3i for exposure. Value, growth, income, pe all in one stock.
I wish I bought more earlier this week, no brainer!

[jonwig] 12/5/2023 07:34

Thanks. The article doesn't add anything new but gives a pretty strong buy recommendation.
If you register you can, I believe, read two free articles a week free. Here's the Questor link:



There's another article about 3i. here's the gist;

... in terms of value creation for UK investors, Action has been unparallelled. 3i has made almost 100 times its initial investment since alighting on the no-frills discounter in 2011.

Another record-smashing year has boosted the value of 3i’s 53 per cent stake in Action to £11.2 billion, up from £7.2 billion a year ago. That compares with £8.8 billion for the entire market value of Next.

The 2,300-shop Action chain seems to be one of those rare things, a franchise that can expand from country to country with absolutely no loss of customer appeal. If there are diseconomies of scale or cultural impediments, it hasn’t encountered them yet.

Borrows deserves kudos for running this bet for 12 years and not being tempted to cash out early. He would have been a mug to do so, he says, and 3i shareholders will doubtless agree, even with so many of their eggs in the one basket.

But the idea that 3i can continue to bill itself as a general investment company now stretches credulity. Action, which Borrows chairs alongside his 3i job, now accounts for 61 per cent of the total 3i portfolio, up from 59 per cent in January. That is an egregious level of concentration of risk.

One option would be to accept reality and rebrand and recategorise 3i as a retailer in the FTSE listings. The company is attracting as much attention from retail analysts as their investment trust counterparts.
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But that would be to diminish 3i’s wide investor appeal as a blue-chip listed vehicle that gives easy access to private equity and to infrastructure investment.

Perhaps better would be a demerger of Action into a separate listed company. 3i shareholders could be given free Action shares and could decide for themselves whether to run the bet further or take some profit off the table. If Borrows is right about how conservatively Action is valued in the 3i books, they could expect a boost in value. The two businesses in aggregate would be worth more than the single entity.

Borrows doesn’t agree. Action has boomed, he argues, partly because there is none of the distraction of the public markets. But if it continues to thrive, the conundrum for 3i will only intensify.
I don't agree much there.

[steeplejack] 12/5/2023 07:08

Tempus buy recommendation in todays Times

[chc15] 11/5/2023 08:14

Indeed, amazing results considering the current environment.
Wonder what the NAV will be once mkt condition's improve, I can see £20 next year easy.

[jonwig] 11/5/2023 07:30

FY results -



Total return of £4,585 million or 36% on opening shareholders' funds (2022: £4,014 million, 44%) and NAV per share of 1,745 pence (31 March 2022: 1,321 pence).

... driven primarily by Action's very strong performance in FY2023, with a good contribution from a number of our other portfolio companies operating in the value-for-money and private label, healthcare, industrial technology and business and technology services. We saw weaker trading in a small proportion of our portfolio, most notably our discretionary consumer segment.

So more broad-based than just Action. Can't help thinking that PE in general is a lot healthier than markets assume.

[chc15] 10/5/2023 10:32

Sold off some of my underpeerforming inv trusts, and bought some more 3i earlier.

[chc15] 09/5/2023 12:08

Yes 18 soon, I may actually buy more here, as seems there is strong institutional buying going on for the share price to do this well.

[craftyale] 02/5/2023 10:28

18 pounds soon, what a great 3 yr chart