Andrews Sykes Share Discussion Threads

[horndean eagle] 15/8/2018 13:33

In the background we are getting European expansion. Thats what could trigger off the re-rating. If you get decent earnings growth tied in with all the exceptional cashflow, roce etc then it deserves a racy multiple. Plenty of companies in a similar position trading mid 20s multiple.

[keithfox] 15/8/2018 12:38

I don't think so, but who knows? On the working week theme, they have made it plain they only hire to companies and not for domestic use (only sales). Most companies are 'working week' mainly so most of ASY's business will be during the working week. OK, some emergency work outside and hires for events/marquees and the like. Very important to get the heat/cold early in the week so that potential hirers have some incentive to hire. If it happens late in the week then it's so much easier to last out another day.

Things have changed a bit over the years though as it's much easier to get 5 to 10 days weather forecasts now whereas that was unheard of 10-20 yrs ago. Not sure what effect that has really but I would imagine it would have helped demand during the long hot spell (as well as the media of course!) as the 10 days forecast was going for 27 to 33 most of the time, even near the end.

[tiswas] 15/8/2018 12:18

Yes, thanks Keith. You obviously know the business/industry very well.

Can I just ask is there any obvious buyer out there for them, if they did decide to sell up?

[rhomboid] 15/8/2018 11:15

Thanks for the excellent post Keith..long but good...I think what you have done...holding for years is exactly the righ approach here...the long term growth has been & continues to be v good whilst the quality of earnings & cash flow continues to be excellent..my guess is cash generated in the current period will be sufficient to either prompt a rise in the payout...or more likely a special dividend.

The shares have been range bound for a year...I can see them breaking decisively higher if either occurs..or just if the results are as good as they seem likely to be

[keithfox] 15/8/2018 11:01

Sorry that was a bit long.

[keithfox] 15/8/2018 11:01

Been looking at the relationship between the weather and their share price/results for 20 years now. Their share price has been very undervalued for a long time so it's hard to compare things over the years but there are some interesting factors I've noticed (and been told by employees). Firstly, the working week is important. As we know, long cold spells/hot spells are fairly unusual but shorter ones are much more common. If a cold snap started Wed/Thurs and ended on a Monday it would have much less impact on demand than one that started Sun/Mon. Also, British Gas has done a lot of work on weather/demand and it's fairly well known that a marked change of weather takes about 24 to 36 hrs to really have an impact on habits i.e. home power use/central heating.
Also, just quoting statistics month by month does not tell the whole story. An average month of UK rainfall may not tell the full story if one particular area gets flooded. With this summer's hot spell, even during periods when things have cooled down further north, London and the southeast (and Europe!) have stayed hot. Also, the longer the heat lasts, the better it is as more and more gear gets hired out, hence they have near enough stopped selling units online and have added £200 to the cheapest one. Also London and the southeast is by far the most important area as far as demand.
Lastly, they do occasionally have a moan about the weather but I've never known them say helpful weather is unlikely to be repeated. Who knows, it may be? The world is getting warmer all of the time so these hot spells may become more frequent but I'm pretty sure they won't say it's unlikely to be repeated. However, I am interested to see how they will play the statement in September.
None of this helps with the likely share price though! Who knows? What I do know is that I've had these shares for 21 yrs and have no reason to complain. Managed to have several new cars and a house extension out of them and still have the shares.

[tiswas] 15/8/2018 10:15

Must admit I am no longer tempted to add at this price but do I sell?

Interims should be excellent but how much already anticipated in sp? What if cautious statement "conditions unlikely to be repeated".

Trade sale, delisting, return of cash? Who knows.

Excellent roce, roe, op margin and cast iron balance sheet but a big rerating since early 2016 meaning div yield now a lot lower.

Hire fleet in books at £16m after depreciation of £40m so no idea whether this understates value.

Double top on chart, fwiw!

Tough call.

[pireric] 14/8/2018 20:39

*Statistics for this year so far....

January- temperature pretty in line with average. Rainfall 110% of average. Overall meh.
February - cold with temperatures below average. Rainfall lower at 73% of average. Average temp below 2.5C, the 4th time in the last 25 years.
March - cold with temperatures below average. some snow(!). Rainfall 110% of average. Wettest March in a decade. Beast from the East!
April - Cold and wet, with some snow in early April. Quickly shifted. Brief 3 day hot spell. Temperatures eventually slightly above average. Rainfall 119% of average.
May - Warm. Rainfall 69% of average. Meh though still the sunniest and warmest on record
June - V warm. Rainfall 48% of average. In UK's top 5 warmest Junes since 1910.
July - V warm! Rainfall 71% of average. Second warmest July since 2010

9% organic growth last year without any extremes....

[thorpematt] 14/8/2018 20:16

Keith,

"they don't grow old in this family, they get ancient"

I like that, made me smile.

M. Murray is as you know something of a legend in his own lifetime and long may that continue.

[pireric] 14/8/2018 20:06

3) Gives marketplace credibility

My expectation would be that if ASY ever did want to delist, then they would simply buyout the remaining holders at a decent premium (given the cash outlay is not large), as a reward for holding the stock. To illustrate the point, ASY still periodically buy back shares.

In reality, I think you're overegging the costs of keeping this listed. With no broker research to pay for etc and hardly any news releases, I'd be very surprised if the all in cost extended to 7 digits (mid 6s would be my guess).

Cast our minds back to keith in 2010 :0)

"Just hope there is no thought of delisting. In fact, can somebody tell me why he doesn't delist? Seems daft trying to buy all the shares out there....what makes him want to stay on the stockmarket when winterflood is determoned to keep the share price low and nobody will touch a company with a 90% shareholder boss? Lots of analysts love the company but cannot recommend it because of the share set-up"

This is just a very well run business with an equitable family at the helm! Mr Murray has done incredibly well for himself and is a billionaire so not sure cash is an issue :0)

Ironically, his other business, London Security PLC is also still listed and that's even more illiquid :0)

[bscuit] 14/8/2018 16:56

Might what happened at BPM happen here? Do we know who is beneficially interested in the trusts and taxation implication on Centenarian’s death.

[keithfox] 14/8/2018 16:28

Now, now. In fact, they don't grow old in this family, they get ancient as he is near enough 100. They were listed on the main market but decided to cut costs a bit. I suppose there could be a change in the way the company is run when the boss finally hands it over but at the moment it's run in a very fair way with the shareholders being looked after (and of course, the major shareholder!). Has been for the last 30yrs but as you say, it may all change when they sons get hold of things.

[tiswas] 14/8/2018 12:44

Yes, there have been loads of insider sells over the last 10 years - not.

[fangorn2] 14/8/2018 11:58

Presumably so those who want to buy the stock(when insiders sell chunks) have a recognisable marker place to do so.

Have you tried dealing in a stock that delists?

[tiswas] 14/8/2018 09:30

Why do they need all the costs associated with a listing when only circa 10% is in public hands?

Probably a very old question but I have only been a shareholder for 2 months!

[ignoble] 08/8/2018 16:34

Never have done
Always been positive but certainly do not raise anyone's expectations too far.

[cockerhoop] 08/8/2018 16:08

I wasn't being very fair to ASY there has been further detail in the Outlook statements but they certainly haven't over promised in the past.

[pireric] 08/8/2018 15:02

:0) OK fine! Anything to suggest that the period between July and the release had been good, and a "reasonable performance" over the rest of the year (i.e. October to December) will be fine

[cockerhoop] 08/8/2018 14:40

Last sentence of previous 8 Interim outlook statements:

2010
Overall, the board is cautiously anticipating a reasonable performance for the rest of 2010.

2011
Overall the Board is cautiously anticipating a reasonable performance for the rest of 2011.

2012
Overall the Board is cautiously anticipating a reasonable performance for the rest of 2012.

2013
Overall, however, the Board is cautiously anticipating a reasonable performance for the remainder of 2013.

2014
The board remains cautiously optimistic that the group will return a satisfactory performance for the remainder of 2014.

2015
The board remains cautiously optimistic that the group will return an improved performance for the full year.

2016
The board remains cautiously optimistic that the group will return an improved performance for the full year.

2017
The board remains cautiously optimistic that the group will have further success in the remainder of the year.

Not sure the outlook statement will be as revealing as you imagine pireric unless of course they remove the word 'cautiously' :-)

[ignoble] 08/8/2018 11:46

Had to laugh
Daily Express speculating that August could be the wettest on record !
Maybe the pumps will fill the void during the easing off of temperatures before the next hot spell

[ignoble] 08/8/2018 11:42

I have had worse days
Lol

[pireric] 08/8/2018 11:18

:0). Wake me up at 680p on the ask at some point in the next 12 months (say 660p mid). Expect the current price action to ease back a bit. My core estimate for this FY is 38p. That could be conservative given operational gearing but need to see how winter pans out. I think the start of this year would have been great for the heating business. It was freezing until April and there was snow in March!

At 680p ask that would be a PE of 17.9x current year. That would be a market cap of £287m minus lets say £25m of net funds at year end. £262m net of cash is 620p excluding cash equals PE of 16.3x. Which sounds pretty fair for a high quality long term compounder IMO.

Wouldn't mind if the directors eventually take this private and just buy out the remaining minority holders. Wouldn't have to pay that much given most of the shares already out of free float and hopefully would be a nice premium to reward shareholders

Given most of the hot weather came in the second half expect it will be the later results that will be the more impressive (Though h1 I still think would have been very good). Outlook statement at h1 key

[keithfox] 08/8/2018 10:57

Yes, this European hot spell has been going on for quite some while and there are quite a few depots over there now.

[pireric] 08/8/2018 10:27

European expansion is a bit underappreciated medium term IMO. Bearing in mind the UK is still a big bulk, but they have locations in the Netherlands, Belgium, Luxembourg, Italy, France and Switzerland now