Alpha Fx Share Discussion Threads

[ali47fish] 19/5/2020 08:24

when is this one going to come back

[euclid5] 22/4/2020 18:12

Would you inverst into AGFX then?

[konradpuss] 22/4/2020 15:16

Long, do you really think Alpha would let a company run up circa £30 million of margin in the normal course of business unless the counter party was blue chip i.e. good for the sum under stressed conditions?

I would put my pension on it that the 'risk management' system was not in place and before they (Alpha) new it they were owed £30 million. Have a look at the balance sheet - that is virtually half of their net assets.

I am sure you are going to be proved right that this stock is way under valued, however as stated previously I will not be investing.

[longshanks] 22/4/2020 14:52

I think you miss the point on the distressed client's debt.This is the client's debt to AFX because they could not cover the margin call. AFX has not lost any money as far as I can tell and is instead doing its best to support a valued client meet its obligations.This is heavily undervalued now IMO. Ripe for a recovery in due course once the placing shares have been digested.

[konradpuss] 21/4/2020 13:31

Carson, well said in respect of growth and profits.

I am afraid you are completely wrong if you think a 15% exchange rate shift is a 'black swan' event. O.K. one would call for less of a margin from a client on a Norwegian Krona/Pound trade than a Nigerian Naira/Dollar trade!

As an aside why did they let this trade go so badly wrong without stopping their client out? That trade is a very, very liquid trade. That worries me.

You are obviously a great believer in this company and have profited from their growth and results I suspect.

I have found it is always good to invert and look from the outside in to try and destroy long set beliefs so as to try and find if there are any flaws in the original rational for the investment.

I am not saying this company will eventually 'blow up' by the way.

I would not buy, however I am probably wrong.

[carsonblocked] 21/4/2020 12:48

Fundamentally, a company in the last 5 years that has grown revenues from £2.96M to £23.47M, approx. average growth rate of 68% per year. And, after-tax profits from £1.13M to £7.82M approx. average growth rate of 64% per year. With an annual profit to cash conversion rate of 65%+ per year. All within the context of 50% of employees are shareholders, is a pretty tasty proposition.

[carsonblocked] 21/4/2020 12:44

Risk mgmt.? What measures would you suggest for a once in a century event, or risk modelling for a black swan event like Coronavirus? How was placing the note in the third paragraph a 'little disingenuous'? It was a trading update; which AFX introduced the trading update, and set the context for the bad debt provision (the first two paragraph), then provided detail in paragraph three. I suppose when the Company published the RNS, they assumed readers would read the entire thing rather than only read to paragraph three and then criticise them for the structure of the RNS, rather than the content. Who's to say.

[konradpuss] 21/4/2020 10:58

Longshanks, I agree that the business and share price had not disappointed up to the point that the £30 million margin call could not be met. To me that sends up red flags as to risk management. However who would have thought that the Norwegian Krona could depreciated against the dollar by 15% in a few days. In 2008 it was just 5%, I believe, at the worst.

I wish I had been aboard for the run up.

[longshanks] 21/4/2020 10:14

If they had dispatched their COO, it would have been "with immediate effect". The COO has tendered his notice to leave in October which may or may not be a reason for concern but from my perspective he has done the job he came in to do and the business is now a very different beast to the one he helped build. The business has not disappointed me.

[konradpuss] 21/4/2020 08:12

Carson, I am referring to the RNS which highlighted the £30 million un-paid margin call. That bomb shell was disseminated in the fourth paragraph from memory - it should have been the first thing they were telling you. That is a little disingenuous in my view. What else are they not telling the poor old shareholder, which as an aside I am not.

Any how, yesterday they got rid of the chief operating officer - straight out the door - bang!. Well I am sure everything will be just fine now!

[carsonblocked] 15/4/2020 14:14

@Toffeeman thank you for your post. And @Konradpuss thank you for your post.

Firstly, @Toffeeman, I interpreted that as the Food Producer exported globally in US Denominated contracts, and then when it comes to repatriating its profits, it has to Sell USD and Buy NOK?

Secondly, @konradpuss, I am unclear how your post helps - I am not being facetious. To clarify which RNS are you referring to and what point are you making?

Thanks to both in advance.

[konradpuss] 15/4/2020 13:59

And Alfa FX decided to make that the fourth paragraph in the RNS.

[toffeeman] 15/4/2020 13:45

From this I assumed it was a UK company exporting to NorwayThe GBP30.2m owed to Alpha is derived from the Group's largest forward contract client, a global exporter of food produce, previously representing approximately 15% of the Group's forward book. This client held a number of sizeable forward contracts with the Group, primarily selling US Dollars to buy Norwegian Krone ('USDNOK'). In the week commencing 16 March, the Norwegian Krone fell as much as 15.9% against the US Dollar: the largest weekly move in the currency pair's history and nearly three times its previous largest fall of 6.4%, recorded during the 2008 financial crisis. Whilst the client continued to settle their obligations on time as the NOK depreciated over 15% from 1 January to 16 March, the size and speed of a further 15.9% fall caused by the acceleration of COVID-19 in the period following, meant the client subsequently became unable to pay the full margin owed on its forward contracts when due. These contracts were therefore cancelled, leaving GBP30.2m owed by the client to Alpha.

[carsonblocked] 15/4/2020 13:25

Good point @Toffeeman, but how many 'Global Supermarkets' are in Norway? My understanding was AFX's client was a Norwegian based Food Producer, exporting to Global Supermarkets? Can you explain your contrary rationale? Thanks

[toffeeman] 15/4/2020 12:48

I understood it was a UK company exporting to Norway

[carsonblocked] 15/4/2020 12:10

Tine?

Tine's internationally known products are Jarlsberg cheese, Snøfrisk goat cheese, Heidal cheese, Ridder cheese, and Ski-Queen (geitost). Tine is the most dominant of the thirteen agricultural cooperatives in Norway.

Wiki:

[toffeeman] 14/4/2020 15:01

please can you tell me earwacks? PM if you like

[earwacks] 14/4/2020 14:10

The company which has not been named is a wholesale global supplier to supermarkets.

[toffeeman] 14/4/2020 12:13

Can't be Nomad - surely they are too big?

[konradpuss] 14/4/2020 12:03

Captain Birdseye!

[toffeeman] 14/4/2020 10:52

So come on guys and gals - WHICH SI their biggest customer??

[earwacks] 14/4/2020 10:50

Konrad. I think the main things to remember about the £30 million dent are firstly it is being repaid at the rate of £266,000 per week. Secondly this is their biggest customer providing 15% of their business. Most of their other customers each provide around 1% of their business. The recent placing got away easily at £6.80. Lastly this stock is currently rated a Buffetesque type growth stock by Stokopedia.

[2toptrader] 13/4/2020 20:54

If you've not seen the bottom yet:

[konradpuss] 13/4/2020 19:53

One wonders if there are any more Norwegian sea food companies or similar that will give these fellows problems?

O.K. the Norwegian Krona only depreciated 5% in 2008, 15% is a 'black swan' event.

It has been a great growth story with a resultant sky high rating.

Oh! do I see another 'black swan'? I certainly hope not.

[stur7672] 10/4/2020 08:24

(i) The period of two months preceding the publication of an AIM company's annual results (or, if shorter, the period from its financial year end to the time of publication); and? if it reports only half-yearly, the period of two months immediately preceding the notification of its half-yearly report or, if shorter, the period from the relevant financial period end up to and including the time of the notification; or? if it reports on a quarterly basis, the period of one month immediately preceding the notification of its quarterly results or, if shorter, the period from the relevant financial period end up to and including the time of the notification;(ii) any other period when the AIM company is in possession of unpublished price sensitive information; or(iii) any time it has become reasonably probable that such information will be required by these rules to be notified.