African Battery Metals Share Discussion Threads

[quepassa] 20/4/2013 08:22

This share will most probably have a dismal day on Monday.

My guesstimate is that it will fall 20-30% over the next few days due to the RNS on the basis of trading/results now revised to "materially below current market expectations".

When a statement of that ilk is issued, IN MY OPINION ONLY it is frequently followed by a subsequent cut in - or cut of- dividend.

When a CEO leaves so abruptly accompanied by such an RNS to do with materially worse trading, that is a clear sign that there are significant problems and issues afoot in my experience.

ALL IMO. DYOR.

QP

[markrogers88] 20/4/2013 01:15

QP - the plot thickens!

After hours on a Friday no less, very contentious, we could be being cynical I suppose!

A lot of the commentary here seems to have been well placed about the gold segment self-cannibalising some of the traditional business. The gold-buying segment was always going to be a temporary boost, but how quickly it declined was a big question, that perhaps now is being answered?

In my view it's a little early to write off the traditional business yet though, even with that in mind.

I think the investment case here really relies on the traditional business not just pulling through, but replacing the temporary revenues from the Gold segment. Will be interesting to see in next results just how the numbers are shaping up in pawnbroking.

Anyone hazard an estimate for this year's EPS?

[quepassa] 20/4/2013 00:20

Disgraceful in my opinion that the Company issues such an important RNS AFTER HOURS.

The long and the short of what the RNS says is what I have been banging on about for the past few months.

I expect in due course a likely change of strategy to reduce shop expansion in my opinion.

ALL IMO. DYOR.

QP

[sharetips] 19/4/2013 17:53

See the company has announced a profit warning after hours - see www.cityconfidential.co.uk

[bench2] 16/4/2013 00:19

Gold Bears out in force , with genuine fears of Cyprus needing to sell its gold reserves followed by Portugal . All metal and energy spot prices look weak and gold no exception bu at U$1360 looks oversold . ABM share price doing amazingly well particularly vs gold mining stocks ... HAT has hardly budged . Interesting to see if they hold up .

[quepassa] 14/4/2013 08:12

Gold tumbled an astonishing 4% on Friday. To less than $1500 per ounce.

Now down 20% from its August 2011 peak of $1891

Nobody seems to have a good explanation as to why. Even the gold gurus can't explain the enormous fall given geo/econo-political uncertaintainties. In times of uncertainty, gold is meant to go up.

But fall it did.

Further reinforces my opinion that gold-buying for the likes of Albermarle and kin is going to be less and less buoyant and that any expansionary corporate strategy based or part based on the recent boom in gold buying is in for a challenging time ahead.

The ABM share price graph above from July 2011 to now looks dreadful and shows no sign of bottoming in my view. This is against a backdrop of new all-time highs for stock market major indeces.

It is interesting to note that the ABM share price price of £4 odd in late Summer 2011 seems to have coincided with the gold price peak.

In my view, the smart money is on-line and an expansion of High Street shops now is not propitious in my opinion.

ALL IMO. DYOR.

QP

[markrogers88] 20/3/2013 17:18

I'm in agreement with QuePassa on that point - I think this is a separate matter to the price of gold, or any currency crisis. Families have simply already mostly served up their limited gold in my view, if they were ever inclined to do so.

Of greater concern will be how the retained profits from that segment can be utilised going forward. I may be wrong, but a long precedent and track record supports the viability of the traditional pawnbroking business. The investor must decide whether this business can eventually "bridge the gap" of declining gold-buying revenues.

I remain an interested spectator! Hope everyone is satisfied with their own decision regarding the company, it's an interesting case, there are strong for/against arguments. Thanks to all on the thread for illustrating those balanced arguments for everyone else.

[quepassa] 20/3/2013 15:04

That seems unlikely. Even Albermarle indcated that they think the gold-buying boom is way past its peak.

ALL IMO. DYOR.

QP

[grahamite2] 18/3/2013 10:22

Cyprus is of no importance in itself; its entire GDP is not much more than the operating profit of a major British company. But you can't ignore it when a sovereign nation, in Europe, takes action worthy of the crazier Roman emperors. Furthermore this action is approved and supported by the EU.

The idea that the gold buying boom is defunct may prove distinctly premature.

[quepassa] 14/3/2013 14:00

Market sentiment is poor on this stock.

ALL IMO. DYOR.

QP

[quepassa] 12/3/2013 14:36

Good points. i think we need to make the distinction between maintaining existing High street presence and growing it further.

But building further shops on the back of an increasingly defunct gold-buying boom is a dangerous business model.

Interesting to hear your views. thanks. Time will tell.

I think you should look at their web-site because not all their business is pledge-based. Everyone has heard of Wonga which is a household name by now. ABM's Early PayDay Loans is unheard of. Yet it is so similar to Wonga. Why? This is why I think their web offering remains poor.

ALL IMO. DYOR.

QP

[scotches] 12/3/2013 09:31

The point of mentioning bookmakers was simply that this is a non physical product which could be operated 100% online. Yet despite the deep recession and big reduction in spending power the number of high street shops has been maintained. If online only is the obvious future why do these shops persist? Because there is a large segment of the betting public which prefers to do business that way - eg the social aspect, prefer to use cash, reluctance to keep reserve betting cash in bookmaker online accounts.

Similarly the vast majority of the ABM and HAT business involves people physically taking their item for a face to face assessment in a shop. Surely a WONGA loan of a £100 and a similar amount generated by an advance against your item are different markets. It's about £8 a month to finance the PSC but about £36 to payback wonga. That looks like a different area of the market. One where repeat business is arithmetically impossible and another where shops will generate a customer relationship for regular advances at more modest cost.

By all means ABM, HAT might try for more online business but the shop estate and PSC is the main point of their business model. I think its a bit early to say that model doesn't work.

[cnx] 10/3/2013 03:02

does anyone know how many high street shops are owned freehold/long lease and how many rented/short lease?

[quepassa] 09/3/2013 13:42

Well I think you have your answer there.

Over 13 years, ZERO growth in betting shops.

Yet online gambling is going from strength to strength. It's off the graph.

If you are trying to show some clever parallel between gambling and low-val loans, I think they are quite different markets.

However, what is striking from your stats is that bookmakers are NOT increasing their high street shop numbers but we know they have grown exponentially their online businesses. Ask yourself why that is. Ask yourself where the online business comes from.

It is not auspicious in my view that ABM are doing the opposite.

Perhaps ABM have got it wrong. Perhaps they should look to bookmakers as a role model and NOT increase numbers of shops.

At heart ABM's well-regarded MD is a retail man through and through (Superdrug/Woolworths/B&Q/Homebase ) THE CEO is also a retail man ( Allied Breweries, Kingfisher, Woolworths, B&Q, Marks and Spencer, Wyevale). Hence, in my opinion only, perhaps they feel most at home on the High Street.

But I believe that the industry is in major transition and a greater acceptance that the way forward is online would perhaps not go amiss at ABM and they should consider the need to embrace these new frontiers and markets wholeheartedly.

ALL IMO. DYOR.

QP

[scotches] 09/3/2013 12:58

You would wonder why bookmakers still maintain an active high street presence when they all have very highly developed online systems.

March 2009: 8,862
March 2010: 8,822
March 2011: 9,067
March 2012: 9,128
Sept 2012: 9,049

That's the number of betting shops in the UK which has been relatively stable since Gordon Brown went tax free in October 2001.

[quepassa] 09/3/2013 10:55

In my view only, I think ABM have the wrong corporate strategy for the current market.

They are fast growing high street operations and slowly augmenting their online presence.

The High Street is potential dynosaur-land in my view. The physical costs of running a large and expanding chain of small-ish stores are horrible.

It should be the other way around in my opinion, reducing high street operations by adopting a strategy of many, many fewer but much larger stores and vastly moving forward their online presence and capabilities.

They use online to support stores. In my view, it should be the complete opposite. Stores to support online.

ALL IMO. DYOR.

QP

[quepassa] 08/3/2013 18:13

yes and no.

if you read ABM's latest annual accounts, they say they want to diversify into this pledge market for upmarket goods. Pleas check for yourself.

the standard blue-collar market for low value/ same-day loans etc is a strong market but my firm belief is that a lot of this business is indeed migrating online. Otherwise, there is no explanation of Wonga's phenomenal success.

are you suggesting that people in council flats don't have mobile phones?

ALL IMO. DYOR.

QP

[bench2] 08/3/2013 14:34

QP We are talking about very different markets , I am referring to the typical ABM , HAT customer living in say Bermondsey , who will not want to tweet or spend hours staring at a mobile phone even if he has one. He will want to come out of his/her council flat each day , stroll down the high st , visit a betting shop where he will know most people , then onto a Wetherspoons pub , and maybe pawn his watch at an ABM etc . He wants to talk and interact with people he knows . Upscale pawn of Beemers and fine wine etc is a totally different market . In the north these people will be long term customers of Provident Financial or S&U ... this is all about repeat business and trust ... it is not gravitating to the internet

[quepassa] 08/3/2013 13:00

are these the same clients who will be providing the new forms of pledges for ABM such as BMW's, works of art , rolexes and bearer bonds?

Are you connected to grahamburn whom I once met on Cattles?

ALL IMO. DYOR.

QP

[grahamite2] 08/3/2013 12:49

I take your point QuePassa but you're overstating your case. There are millions of people who are barely able to use a computer if at all, and many of them will be exactly the sort who go for very short term finance.

[quepassa] 08/3/2013 12:29

You see that's it.
that's what's changed.
we have seen it time and time again.
everyone has a mobile phone.
not just for pawn-broking.
the new norm is that people don't like farting around in shops, they do prefer being paid on the phone. it's easier, quicker, more convenient. It's all web-based for something as absolutely basic as a small loan.
heard about new payment systems? e-wallets, etc. It really is happening.
Although rents are down a little, rates are up as are labour costs and utility bills.
just think about Wonga.And their phenomenal success. do they have shops? how do their customers get paid.
Compare ABM's growth to Wonga's. That is pointing the way forward.

However well ABM may historically have been run, their online strategy does not impress. And personally I think High Street pawnbroking is on a steep downwards trend.

ALL IMO. DYOR.

QP

[scotches] 08/3/2013 12:25

I think the short term unsecured loan is quite different from the core business of pawnbroking.

The Wonga type model seems to rely on making sure the client cannot repay so you can screw the person until they have nothing left.

The pawnbroking secured loan relies on people using the service for repeat business.

Neither do I believe pledging by post is any kind of threat.

Unless HAT are making up the figures they seem to be doing well and generating more business as they expand their geographic footprint. You need the footprint since you need to meet the people face to face when they present their pledge items.

The question for ABM holders would be why is HAT doing better when they are such similar businesses?

[bench2] 08/3/2013 11:59

QP excellent summary which is why the 2 quoted pawnbrokers sell at a healthy discount . I agree online pawnbroking will grow but most customers are not typical web surfers , also high st shops are not quite so expensive now , we are not talking Oxford St or even Tunbridge Wells High St , shops are located in very poor areas with rents cheap and falling . Clients like face to face with immediate cash in hand not farting about trying to send items over the web and being paid how ? they probably do not have bank a/cs , cr cards , pay pal a/cs . This is a very basic and necessary business ... Remember the oldest business in the world is prostitution .... the second oldest pawnbroking they might both be ex growth but neither will die out .