Ramsdens Share Discussion Threads

[pireric] 26/6/2018 19:23

I think GHF is right as I've pointed out recently as well.

I don't think this is a business that is going to have a steady upward trend in their results. Look at their 2017 results. They were exceptional.

The broker only has modest EPS increase in for this year. I wouldn't be surprised if EPS actually ended up falling y/y just because 2017 was so strong. There is nothing really unique about their FX business as far as I can see..... If this does pan out then arguably a value trap

[aishah] 26/6/2018 19:02

Whoever took them must have done their due diligence surely? Might take a position here

[adamb1978] 26/6/2018 18:31

Fair point topvest. CEO base salary last year was just £177k so owning £3m equity is massively material. The IT guy and Ops guy I'm guessing are perhaps only on say £100k - £120k given CFO is on £144k and they've taken roughly £225k and £550k off the table with the share sales so c.2x and c.5x annual base salary

[adamb1978] 26/6/2018 18:22

Not their finest hour indeed. Two plausible scenarios:

1) Its either insider trading, so a criminal offence, in which case we should all run for the hills

2) As someone said above, the sales were to satisfy institutional demand, in which case its ridiculous that they didnt put the 3 sales into one RNS and say what the reason was

I dont think the scenario where these were sales but not underlying weakness in trading is plausible given all 3 happened together.

One other thing to note is that the CFO didnt sell any, though he only owns c.200k

What to do....

[glasshalfull] 26/6/2018 18:16

Courtesy to update that I’m now fully out of the stock having sold 65% at 190-205p over recent weeks & remainder today.

Recognise that the Directors are very much hamstrung in when they can sell stock & I’m certainly not adverse to them liquidating some of their holding BUT it’s the magnitude of sales today which prompted me to dispose of the remainder of my holding.

CEO - 500k sold (32% of holding)
Ops Dir wife - 300k sold
IT Dir - 125k sold (50% of holding)

Of course this will have been arranged in conjunction with Institutional Investors taking stock.

My concern is that these sales come on top of the concerns I’ve expressed recently on this thread that I felt caution was required as Ramsden’s were up against strong FX comparators in 2017.

In H1 2017 FX delivered £7.5m Gross Profit which was +35% on the £5.5m GP in 2016. This figure amounted to 37% of overall GP for RFX in H1 2017. Therefore now the main arm of the group & a reduction in footfall on the High Street &/or combination of competitors offering improved FX rates could impact. Not saying it will...just that I was mindful of this when selling on the back of Simon Thomson’s latest buy tip.

In respect of the well documented pressures on the High St, I’m also slightly wary on the retail jewellery side of the business. Again, plenty competition & poor retail environment may lead to lower footfall in their stores.

So when adding large Director sales into the mix this compounded my risk aversion & I sold out completely.

I may be well off the mark but having acquired my holding at 114p avg have to say I’ve been delighted with the investment & may well be back in due course.

Good luck to all holders.

Kind regards
GHF

[topvest] 26/6/2018 18:04

I don’t think it’s a big deal personally. Their salaries are not massive, so they probably want to cash-in some of their sizeable gains. It just volatility that scares a few to sell.

[podgyted] 26/6/2018 17:47

They've essentially done a placing since they all sold at 180p (think Shanklin above is right) - but whereas normally this would result in the share price drifting down to 180p, they've engineered a situation where the share price has gone down to 173p.

Probably not their finest hour.

[podgyted] 26/6/2018 17:36

Result is that the share price is back where it was in Sept 2017 - and people have to decide whether this is a prelude to Armageddon or just a diversification strategy by a concert party of insiders.

Tough call!

[spob] 26/6/2018 17:33

Maybe they are worried about brexit causing stock market turbulence later on


i'm still watching here

but have not bought back any since my stop was triggered in February

[shanklin] 26/6/2018 17:04

Given the combined sell is just under 3% per my earlier post I imagine somebody or institution expressed an interest in buying 925k shares at a discount to the prevailing price and these sells are the response.

[manrobert] 26/6/2018 16:44

allat the same time?

[gorse] 26/6/2018 16:43

It may well be that Ramsdens' directors are prudently rebalancing their portfolios assets - but still retaining substantial stakes in the business. So, it may be good news in reaffirming that Ramsden has a management team who are smart cookies.

[topvest] 26/6/2018 16:35

They are retaining big stakes, so whilst not the most positive of signals it probably just means that they want to cash out some of their stakes. Not unreasonable.

[xajorkith] 26/6/2018 16:15

Yeah, sold out too regrettably despite the apparent value here.

Not taking any chances after XLM & agree that Directors selling en masse not the most positive signal, along with a move below the 200 day MA.

Remains on my watchlist though & GLA who continue to hold.

[igoe104] 26/6/2018 16:12

Always disappointing when directors sell, and kick off lots of stop losers. but as we know from results a couple of weeks ago the business is going extremely well, someone / fund will be picking these shares up on the cheap now, at the expense of PI.

I popped in a Ramsdens store in Swansea (whilst on a cricket trip) to buy some currency last week, and was very impressed with the service, the staff seemed very well trained.

[cheshire man] 26/6/2018 15:41

Stop loss hit and out at breakeven,,,,,,,glad I had set one,I'll be staying out for now

[firtashia] 26/6/2018 15:30

I realise that they are under no obligation to do so, but you'd hope that the 3 parties involved in selling would be well aware of the unsettling effect this has on existing shareholders and make an exception by offering an explanation for their selling. I'll make my judgement on whether to continue to hold based upon whether or not this happens.

[shanklin] 26/6/2018 15:25

Well its a lot less bad than the CEO selling the whole of his holding.

925,000 shares sold in all, which is a fraction under 3% of the company (2.9996% if the shares in issue are still 30,837,653 as per the latest holdings RNS). So, whoever the buyer, perhaps they want to avoid declaring their position.

[palmermpz] 26/6/2018 15:19

Sold at break even. Frustrating share and co-ordinated director selling in big quantities doesn't inspire confidence. Back on the watch list as results suggest it is a solid company...

[michaeljames1] 26/6/2018 15:11

When the CEO reduces his holding by a third that's definitely not a good sign....

[stevegrass777] 26/6/2018 14:50

Why the director sell off today I wonder.
Just profit taking?
I don't like it when two or three do it in one go.
Do you think the currency exchange business will be effected by the very hot weather and people staying home instead.

[wanttowin] 21/6/2018 13:51

just added 1500 on this dip

[topvest] 18/6/2018 20:48

Seems a nice little company here. Happy to hold.

[lammylover] 18/6/2018 17:05

Surely got to break through 200p shortly? 175k buys today, 10k sells and MMs dropped price at the end of the day. Got to still be a big seller out there or an overhang to clear in my view. Hopefully clear shortly and we will be ready to move on up (as Curtis Mayfield said!) gla holders Rich

[igoe104] 17/6/2018 09:07

IC Comment.


Ramsdens upgrades yet again
Simon Thompson
Middlesbrough-based Ramsdens (RFX:197p), a diversified and fast-growing financial services company, joined London’s junior market early last year, and has been posting a series of earnings beats ever since.
To put the upgrade cycle into perspective, when I suggested buying the shares, at 132p ('A jewel in the north', 12 Jun 2017), analyst Justin Bates at Liberum Capital predicted the company would deliver pre-tax profit of £4.8m and EPS of 12.6p in the financial year to the end of March 2018. He subsequently upgraded his estimates twice last autumn to £6.23m and 16.2p, respectively. In the event, Ramsdens increased pre-tax profit by 56 per cent to £6.31m and delivered EPS of 16.4p, up from £4m and 10.1p in the 2017 financial year.
The fivefold rise in the payout to 6.6p a share was better than I had expected and is supported by a bumper operating cash inflow of £5.5m, which boosted closing net funds by a third to £12.7m, a sum worth 41p a share. This provides the directors ample capital to finance a planned store roll-out programme of 10 new stores this year at an average cash cost of £220,000 each. A 30-month payback period for their investment highlights the high returns to be made. The cash pile also offers firepower for the directors to make small bolt-on acquisitions on the pawnbroking side of the business, with a view to cross-selling Ramsdens' full product range in the acquired businesses. It makes sense to do so in light of the success the company is enjoying.

Specific profit drivers
A key driver behind this stellar organic growth story has been the company’s highly competitive foreign currency arm, which exchanged £483m-worth of currency, up from £408m in the previous financial year, for 687,000 retail customers. Total commission rose by more than a quarter to £11.3m to account for 40 per cent of the company’s total gross profit of £28.3m, partly reflecting the 13 per cent growth in transactions but also a focus on margin pricing, with Ramsdens increasing its cut from 2.2 per cent to 2.33 per cent per transaction.
There was also a strong contribution from the company’s pawnbroking operation, which has 34,000 customers and raised its loan book by 8 per cent to £6.4m. Interest income increased at even faster rate, up 14 per cent to £7m to account for 25 per cent of Ramsdens’ gross profits, reflecting higher lending on jewellery. The company has been able to do so because it has been scaling up its jewellery retail operations by cross-selling to its 800,000 customers through the 131 store network and increasing its online presence. The jewellery retail business increased revenues by more than a third to £8m and lifted gross profits by a quarter to £4.1m.

Value on offer
Admittedly, investors are cottoning onto the ongoing growth story, which is why the company’s share price is up 46 per cent in the past year. However, there is still value on offer as net of cash on the balance sheet the shares are still only rated on nine times Liberum’s conservative looking upgraded EPS estimates of 17p for the new financial year. They also offer a prospective dividend yield of 3.6 per cent based on a payout of 7.1p a share.
So, having last advised buying the shares at 185p ahead of the full-year results (‘Riding earnings momentum, 16 April 2018), I feel a new target of 225p a share is warranted to value the equity at £69.5m and give the company an enterprise value of £56m net of cash, or seven times annual cash profits. Moreover, even if my target is achieved it still represents a ratings discount to rival H&T (HAT:351p), which is rated on eight times this year’s likely cash profits to enterprise value. I included H&T, at 289p, in my 2017 Bargain Shares Portfolio, since when the board have paid out total dividends of 15.8p, and have a 400p target based on a 2018 cash profit multiple of nine times (‘Bargain Shares: Beating the market Part II’, 14 Mar 2018).
With scope for the ratings discount to its larger rival to narrow, and the company making a good start to the new financial year, Ramsden’s shares rate a buy.