Share Name Share Symbol Market Type Share ISIN Share Description
600 Group LSE:SIXH London Ordinary Share GB0008121641 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 14.50p 14.00p 15.00p 14.50p 14.50p 14.50p 0 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Industrial Engineering 47.0 3.2 2.0 7.4 16.38

600 Group Share Discussion Threads

Showing 1851 to 1875 of 1875 messages
Chat Pages: 75  74  73  72  71  70  69  68  67  66  65  64  Older
DateSubjectAuthorDiscuss
27/11/2017
21:13
Good point Cjohn
dan_the_epic
22/11/2017
13:32
Returning to the subject of debt. It seems to me that suppliers would worry about SIXH's cash position. (Solvency is much less of an issue,) And that SIXH went for the equity raise, instead of taking on further debt, precisely to reassure suppliers and clients in the UK of their liquidity. They need to get into a virtuous cycle. If operational cash flow goes towards paying down debt rather than building up stocks, then creditors will be more relaxed about payment dates and the cash position will improve further etc
cjohn
22/11/2017
08:42
I remain a cautious holder here. If they do as well as they say they are going to, there's considerable upside.
cjohn
22/11/2017
08:41
Hi Kazoom and Hastings, thanks for your kind and informative replies. Sometimes,I don't signal irony very well! "Also I don't see they can go on reducing payables",... was sarcasm. So I agree with you on this one, Kazoom The most optimistic possibility would be that they're actively paying off more quickly to get better terms. I'd like to see another half, before coming to conclusions. Ok, what you say about the order books makes sense, though I don't see what they'd gain by any attempt to mislead. My own feeling is that we still don't have enough of these claims about the order book to come to firm conclusions. It could just be chance that they've pronounced strong order books and then trading has deteriorated or some orders have been cancelled. I guess forward books are only for a few weeks??And world machine tool sales seem particularly unpredictable, with quite marked swings in growth/decline. If this realtively benign reading of the situation is the case, it still suggests they haven't learnt from previous experience. all best CJohn
cjohn
21/11/2017
23:32
Thanks CJohn, for a well thought out reply as ever. "The management sound particularly confident currently; they tend to be over-optimistic however." Yup that pretty much encapsulates my current waning interest / growing scepticism. On the pension, I have to confess that I hadn't actually looked at the latest numbers and was basing my comment on the quote from the FD. On reflection I think that there are actually two "buyout" valuations : 1 - The cost of buying matching annuities individually for each prospective pensioner less the net assets (which I think is effectively the conventional measure) and 2 - The amount for which the scheme could be sold to an enterprising insurer prepared to take on the risk in return for the probable gain. (This would require some ironclad underwriting to get past the trustees I would imagine) Even if diminished the second measure sounds like it would be positive. Anyway back to matter operational. I cannot buy the idea that the short term nature of the order book explains the mismatch between order book and revenues, that would infer that the order book is artificially high every time they report on it and very negative in the intervening periods. (I am aware that companies massage order book to ensure that everything possible is signed before the end of a reporting period, but some of the figures I quoted were in between figures). If the next HY does not deliver a substantial improvement in revenues I think it will categorically demonstrated that the order book is "unreliable" (I was about to use other words but I think they might have been considered defamatory.) On the cashflow you say : "Also I don't see that they can go on reducing payables." I do not believe that any company actively sets out to reduce payables, so if payables are reducing whilst the amount of stuff they are buying is actually increasing, this suggests to me that suppliers regard them as a bad risk and will not offer them extended payment terms. I'm afraid that every turn makes me more wary about this as an investment, which is really not where I wanted to be; in terms of what they do it's something I wanted to believe in.
kazoom
21/11/2017
13:45
Hi CJohn, good to read another of your posts which I always find most interesting, particularly as you appear pretty well versed in all things 600! You are right of course regarding EV as opposed to purely concentrating on a PER, although we can throw in EBITDA for good measure, particularly given where we are or hope we are at present. Interestingly, Hardman has today released a very substantial and interesting initiation note (still reading through) which although some will often sniff at, invariably proves most worthwhile. Two very small extracts for interest given what has been mentioned here which further highlights the potential upside. *The risk/reward profile is favourable, and the shares are compellingly valued on most methodologies. *Valuation: The shares are attractively valued trading on calendar 2018 EV/sales and EV/EBITDA of 0.6 and 7.3 times compared with sector averages of 1.0 and 7.7 times respectively. Recent industry wide M&A transactions further suggest inherent value within the group with a ‘sum of parts’ valuation of around 35p.
hastings
21/11/2017
11:27
Hi Hastings, it seems to me that we should be looking at earnings to enterprise value, rather than a simple PE, given that there's still 12.1 m sterling debt here.... BTW Tangible equity - discounting the pension surplus - is at now at about 7m. It's up a million on the half. The sterling value of US assets was down because of the weakening dollar; there was 1.1m of new equity and there was about 1m in profit. That means tangible gearing is now down to around 170%......
cjohn
21/11/2017
10:13
Interesting if brief comment from FinnCap in this article from yesterday. Given it is "hoping for an upgrade in figures later this year" then perhaps we would see EPS moving up from the current 2p forecast which at current levels would provide for a PER of little more than 6! Throw in the increasing possibility of a resolution to the pension issue, then there could be some decent upside from here. Http://www.yorkshirepost.co.uk/news/the-600-group-reports-much-improved-order-books-1-8867267
hastings
21/11/2017
09:04
"It’s heart-warming stuff By Evil Knievil 20 November 2017 600 Group (LON:SIXH) this morning report their six months to 30th September 2017. These figures are not stellar but they are very encouraging. There are a couple of exceptional items but, allowing for these, EPS is at 0.8p per share. Doubling this to 1.6p for a full year gives a PE of 10 at 16p. At 16p SIXH is capitalised at £17 million in contrast to tangible net asset value of the order of £38 million. This share price is far too low. 25p would be more in point."
someuwin
21/11/2017
07:58
Hi kazoom, a series of interesting posts from you. 1. You make a good point regarding increased order books not translating into much higher sales. The answer to this conundrum is I think that visibility is pretty limited: ie order books are only for a short period ahead. Another reason perhaps why a low rating is justified? The management sound particularly confident currently; they tend to be over-optimistic however. 2. Which brings us nicely to the pension surplus. Given that on a technicial provisions basis, the surplus has shrunk over the last 6 months, it's slightly surprising to read that they are now in surplus on a buy out basis, when they weren't at the full year. (different assumptions....) Even so, the buy out surplus must be pretty small, so although I'm a holder, i remain sceptical of possiblities here for shareholders. I do take your point again that waiting might produce an even larger buy out surplus. And I fervently hope to be proved wrong on this issue.... 3. Debt was down 1.6m after 2.6m funds raised. Operational cash flow went into buying more inventory: up 900k and paying off bills: payables were down 700k. Capex was a few hundred thousand. Increased inventory reflects the higher order book, but also - less positively - the wider range of products. My guess is that inventory is more likely than not to level out now. Also I don't see that they can go on reducing payables. So assuming the higher order book does translate into an uplift in sales, there should be decent free cash flow this half.
cjohn
20/11/2017
19:22
For the purposes of spurious transparency, I should just confirm that actually I am still invested in SIXH - to the tune of 10 shares. I was forgetting my policy of leaving a residual holding in my CREST account so that I can remain on the share register. Anyway - I would really love to be proven wrong here, so it would be great to read a robust counter case.
kazoom
20/11/2017
19:15
Interesting articles from you both, thanks. I particularly liked the title of the investorschampion one : "600 Group (AIM:SIXH) it’s looking more encouraging for the pension scheme with a business". I was musing earlier whether to tweak CJohn, how argues that despite being in surplus the pension should be regarded as a liability to the company. I'm beginning to form the view that in fact maybe the company should be regarded as a liability to the pension fund. ;-) If the two were listed separately, I think I know which one I would be invested in. On that subject Hastings's article provides an informative quote from the FD : "One way to do that [release value from the pension scheme] is going with a buy out option with an insurance company. That is something we are looking at and it could give a surplus back to the company after such a process is complete. We are exploring this as it is very much a competitive space where a number of players would be interested in our scheme. " Personally, because I believe that with patience the company could extract much more than this, I think this would be bad news (at least for part of my original investment hypothesis - read back a few pages.) The FD's comments confirm that the scheme is now in surplus on a buyout basis (the most stringent test) and left alone growth in "profits" from the pension scheme look set to continue to outstrip profits from the underlying company. The FD is keen to emphasise that they are committed to reducing debt, but with debt only down by £1.6m despite £2.6m of fundraising (sale of assets, new share placement) - so the company is still leaking cash - it seems the only way at the moment to continue to reduce debt will be to sell of the pension surplus on the cheap to an insurance company who will then reap significant rewards. And then there will be nothing left to sell. Oh apart from the company's products - apparently they are doing a great job getting people to order them, but getting people to actually buy them seems to be much more problematic. (See my post of earlier today.) I do not normally like to "stick the knife in" to a company that I have sold out of, but in this case I can't help feeling something is wrong unless there is a valid reason why aggressive growth in the order book over the last 14 months (or more) has not translated into sales. However, the price is up today on these results, so were I still a holder I would be selling now.
kazoom
20/11/2017
17:23
Also penned following speaking with the FD. Http://www.cambridge-news.co.uk/business/
hastings
20/11/2017
16:40
'It’s looking more encouraging for the pension scheme with a business' but the 'cash cow' of Machine Tools is hardly that. New comment at hxxp://www.investorschampion.com/channel/blog/600-group-aimsixh-its-looking-more-encouraging-for-the-pension-scheme-with
investorschampion
20/11/2017
13:00
I've only just had a quick look, but one thing that puzzles / troubles me is this : In Sep-16 they told us their order book was up 20% YoY In Dec-16 it was +30% YoY In Jul-17 it was +42% And now it is up 36%. Yet we see revenue growth of only 7%. I cannot square that unless : A - their book to bill is astronomically long and therefore 'jam' is just around the corner. or B - The order book is so soft that the majority of orders get cancelled prior to delivery. Is there something I am missing here?
kazoom
20/11/2017
10:44
So the results today see a rise in revenue of 7%, and order books up 36% on last year. Very promising. As guessed at the time of the recent small equity raise, this was used to pay down working capital debt (in the UK) and maintain headroom with the existing debt facility with HSBC. As ever, operating cash flow, 1.5m sterling before working capital changes, has been used up in increasing stock levels, to support the increased order book. Irritatingly, payables were down: ie they are paying off their creditors more quickly than they receive payment. Is this to get better terms? So debt is down 1.6 m to 12.1m sterling. But they realised 1.5m in selling the Prophotonix shares and they had the 1m equity raise. So once again, shareholders' equity (not including the pension surplus) is up, but mostly in the form of stock! In the next half, I'd dearly like to see the increased trading not being matched by an increase in working capital. But to be fair, these were pretty promising results for SIXH. I remain a holder.
cjohn
19/11/2017
17:10
Appreciate that hastings but a bit off from the company to be telling individuals when the next results will be when they haven't told the whole market! I presume not an issue as nothing price sensitive, but still not best practice.
dan_the_epic
19/11/2017
16:42
Hi NTV, I've a call lined up with them tomorrow, so I will be penning a piece following on from my last article.
hastings
19/11/2017
15:23
how do you know that hastings? was hoping for a top up before they came out
ntv
19/11/2017
11:29
Interim results tomorrow, if all as expected the shares should surely see an uplift from the current level.
hastings
27/9/2017
10:23
Hi Kazoom, thanks for your excellent overview of the debt situation. My own feeling is that the large - and to me, very surprsiing - increase in the order book, has left them having to finance a working capital increase that would have left them close to their headroom if financed solely by debt. You'd still expect, on the figures given, that cash flow should be quite positive, once the adjustment upwards in working capital haas stabilised.
cjohn
25/9/2017
19:38
Yes gearing remains high and I think we have to conclude that they are very cash constrained at this time (why else the issue of new shares?) Last year, taking aside the £2m they received on sale of the Letchworth property they actually had negative cashflow of c. £0.5m. This was particularly due to a £2.8m adverse movement in working capital (the £1.4m increase in inventories can be put down to growth, but why the £1.2m decrease in payables?) During the last year they swapped out some Loans with Santander (one due to be repaid by November this year and the other by 2019) with facilities from HSBC : totalling £4.95m including £1.6m trade financing facility, £0.3 mortgage on their last freehold payable by 2020 - I cannot immediately see what the other £3m relates to. At the year end they had "headroom" within their (overall) facilities of £3.2m. This compares with the c. £1m (presuming the net amount) raised through the placing. I would guess from this that they did not have an option to raise new debt, or perhaps even that their assumption (from the R&A) that "It is expected that the short term facilities in place at the year-end will be extended on similar terms." maybe did not prove to be true and their borrowing facilities are reduced. Conclusions? Well to be honest I'm not totally sure, but I have more questions now about the liquidity risk to the business than I had really taken into account when I most recently held the shares. I'd really want to have a close look for any clarity in the December interims before considering reinvesting. Also for me this heightens the risk that they prematurely crystalise the pensions surplus in order to release a small amount of cash, whereas with a 'bit of patience' (alright, maybe the patience of Job) there could be the opportunity to unlock a substantial cash return at some point in the future. The bull case would of course be that the increase in trading and strong order book will unlock sufficient cash-flow to self finance future growth. I they have done their sums right by "only" raising £1m in the recent placing, then this should come to pass. For now though, whilst my recent sell at c. 16p was somewhat opportunistic I find myself quite comfortable to watch from the sidelines for the moment.
kazoom
25/9/2017
18:04
The balance sheet remains quite highly geared. Borrowings at 30 April 2017 included £7.87 million of 8.5% convertible notes to which are attached warrants for new shares at 20p. These are repayable in Feb 2020. We need not only increased profits in these next 3 years but also good cash flow. I continue to be hopeful.
varies
25/9/2017
09:34
Hi rburtn, the UK pension fund is in surplus and there have been no payments made to the funds for many years. So they've been on holiday for years already. Hi My Retirement Funds, obviously profitability is being absorbed by working capital increases and capex. This has been the pattern at SIXH since it returned to profitability a couple of years ago. I couldn't agree with you more re debt. They should have raised more. Unless there'd been a collapse in trading, they would have have been able to do this. Clearly, there hasn't been such a collapse. We awat the results for any enlightenment. Pretty unsatisfactory.
cjohn
21/9/2017
11:03
I agree with MyRF entirely. This is a Financial Engineering outfit masquerading as a Mechanical Engineer - and we all should know who the winners are in that scenario. If the pension fund is in surplus, why was a pension holiday not taken and the proceeds used instead of the capital raising. I shall be interested to see who subscribed and what their reason might be - certainly I don't expect their interests as shareholders to be served.
rburtn
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