600 Share Discussion Threads

[cjohn] 16/4/2018 11:45

Thank you, rburtn, for bringing this to our attention. I appreciate it.

Hi Kazoom, I do feel very reassured by that wonderful upward sloping crimson line you've drawn in there; presumably it goes on to infinity.

[rburtn] 07/4/2018 13:34

As the subject of pension fund surplus has been mentioned before on this thread, I thought it worthwhile to refer to recent changes on the Hunting pension arrangements - likewise in surplus. The liabilities have been re-insured with a third party, Rothesay Life plc, which has not only removed the inflation linked ceiling which currently applies but is offering the remaining surplus back to the employer. There is a period of grace of 2 months for consultation. Any thought that sixh should pay a premium for a re-insurer to take the surplus off the company's hands should be given short shrift.

[kazoom] 04/4/2018 19:40

For the benefit of CJohn, who loves this stuff ;-) there is a nice support line here:



However, given the doubts I have expressed over the last few months, the valuation would still be a little rich for me.

The reason for the drop though would surely be based on the risk of any sales SIXH make from the US businesses to China. If the price were lower and more tempting to me, I'd be bothered to search for the numbers, but I seem to recall there are sales in this direction that could be at risk.

[varies] 04/4/2018 19:10

MRF
Just a dismal market, I believe.
Similar losses are afflicting most of my portfolio.
In many cases the falls may be caused by investors realising their losses for CGT relief before the new tax year but I doubt if this applies here.

[wynmck] 04/4/2018 19:08

end of tax yr?

[my retirement fund] 04/4/2018 18:44

Lots of selling, any reason ?

[pireric] 16/3/2018 22:20

I cant get comfortable here but came across the note. Basically saying new markets and new products could drive growth and global economy is good. Say net debt kind of equates to the pension surplus. And say they see fair value at 25.5p

The story seems the laser products here, rather than the lathes, which seems GDP+ growth. maybe GDP +1% as a base case. Not really exciting so all depends how lasers turn out vs. lathes.

[cjohn] 10/3/2018 11:34

Hi Hastings, could you post a link?

I haven't been able to find this note from WH Ireland.

Or alternatively, give a summary here?


Thanks

[hastings] 07/3/2018 07:49

New 16 page note out from Ireland today, lots of reading today!

[rburtn] 20/2/2018 15:52

CJ at that time, of fast growth, the sales force were a law to themselves. I never heard of a claw back, that day of reckoning came much later.

[cjohn] 20/2/2018 14:40

Ok,rburtn, I wil bow to your experience in the IT industry.

This may explain (part of) the shortfall; I suspect they cherry-pick dates as well.

I'd certainly be expecting some explanation from the company if backing out on orders was the only reason for the very considerable shortfall.




all best

CJohn

BTW Did the IT company you cite wise up and only pay commissions on received revenue?

[rburtn] 19/2/2018 14:03

I'm sorry CJohn but I've been there, seen it done. Orders booked before the end of month, commission paid, two or three days into the next month the order is interpreted as a letter of intent, customer changes mind, sale/order disappears, salesman left with commission. Industry was fast growing IT but I would be naive to think it didn't happen elsewhere and I give it as a possible explanation. Firm orders can be cancelled as a result of many circumstances and not many participants reach for their lawyers when they do - not if they wish to maintain the goodwill of their prospects.

[cjohn] 18/2/2018 13:08

We are not talking here about the language that salespeople use when they win an order. "I've made another sale." We are talking about language used in company documents and sccounting.

In that context, an order and a sale are not the same.

An order - when mutually accepted - is a legally binding contract to buy/sell etc.

The sale is when that contract is realised. In some cases, there can be years between an order and the subsequent sale going through.

Order books are not then the same as revenue or turnover, which IS equivalent to sales.


By the way, you say these orders to SIXH have "turned sour". This is highly unlikely to be the explanation for the apparent mystery. We would have heard if SIXH or clients were constantly backing out of contracts. Legal costs would be high!

I've suggested that SIXH cherry-pick times to report on order books. Growth in the order books at other points in the annual cycle might be then less dramatic. This would acount for sales only then rising by a much lesser amount.

Or there may be several factors at play.

[value hound] 18/2/2018 10:43

rburtn - just out of interest; how do you know that Qingdao offered 25p?

[rburtn] 18/2/2018 10:34

Semantics, I agree, my mistake which you compound, sales and orders are synonyms, the problem which the earlier poster raised was sales exceeding revenue. In a sales-driven environment, booked 'sales' or 'orders' meet targets and generate commission- sometimes on flimsy intent. If they turn sour, for whatever reason, you get what is mentioned, revenue falling far short of bookings.
Someone must be prospering with the free use of capital for over 15 years (no divis), the pension contribution holiday and refusal of a 25p take over bid. It certainly is not the ordinary shareholder. Let's hope things are about to change.

[cjohn] 18/2/2018 09:37

Sales exceed orders?

It's the other way round. On several occasions they have announced big increases in the order book. But subsequents sales increases are much more modest.


Orders generate profit and dividends? Not until they turn into sales!

[rburtn] 16/2/2018 10:11

Just some historic data: 1996,7,8: t/o 146m, 143m, 133m: divi 4p/sh, 5, 5.5;

It would not be the first company where 'sales' - which generate commissions, exceed 'orders' which generate profit - and divis.

[cjohn] 16/2/2018 09:35

Hi Kazoom,

Im don't think the Hardman analyst has quite got his head round the complexities of the pension situation!!! Maybe we should invite him for a chat....

Having said that, SIXH are clearly in a much better position than TNI with regards pensions.

The crux of SIXH is whether they can translate profits into cash rather than merely increasing working capital.

The very good point you made re announced order book increases not corresponding to subsequent increased sales levels remains a mystery by the way.

[kazoom] 15/2/2018 22:05

Thanks coolen,

Blimey - the co dates back to 1834 (I had it in the back of my mind that there was history into the 19th century but not that far !!)

[coolen] 15/2/2018 21:32

The present "600 Group" was previously named "The George Cohen 600 Group" and the same company has been listed on the Stock Exchange since the year dot.

But I agree, they have made acquisitions over the years. And trimmed the name.

[kazoom] 15/2/2018 20:49

I think the GROUP was formed in the 80's but I wouldn't be surprised if some of the companies were formed MUCH earlier.

[coolen] 15/2/2018 20:38

Did I hear the analyst say the company was formed in the 1980's ? It goes back much further.

[kazoom] 15/2/2018 20:25

From that Hardman Q&A :

" I do think if the Group is able to secure a cash refund owing to the pension fund surplus then subsequent to paying off any its debt, we are in a scenario of the possibility of restoration of the dividend or special dividend payment."

Really????

Even I wasn't that bullish about monetising the Pensions surplus.

They also fail to see the elephant in the room - namely that pretty much all of the realisable disposals have been made and they desperately need to generate real cash the HY or else they run out of money.

Even though I'm not a holder at this time I do hope they can achieve that, but given that they don't do trading statements it's a long old wait until June to find out in the FY results.

For my money the projected revenue growth of 7-8% is nowhere near sufficient to compensate for the risk - particularly at this relatively "lofty" valuation.

So I am more than happy to sit on the sidelines and take the chance that this becomes "one that got away".

What's going to propel the share price in advance of the results?

[cjohn] 15/2/2018 09:51

Thanks for the link, value hound.

The Q & A is a very short - and positive - summary of the recent Hardman report.

[value hound] 09/2/2018 12:00

600 Group PLC Q&A with Hardman & Co:

hxxps://www.directorstalkinterviews.com/600-group-plc-qa-hardman-co-lonsixh/412745506

in summary, we think that the shares are very attractively valued

- so do I :-)