Anexo Share Discussion Threads

[balcony] 15/12/2022 12:29

First sign of blue,just been three trades of one share?

[rimau1] 14/12/2022 07:20

Same here Carcosa!

[carcosa] 14/12/2022 06:57

"Clearly we are priced for the above and delays in the litigation so hopefully £1 provides support and the risk is to the upside."

Well, lets hope so. This is the largest paperloss in my portfolio by far in 2022! Looking forward to updates from Anexo especially on their housing disrepair business.

[rimau1] 14/12/2022 06:46

Carcosa, its clear that debt and doubts around FCF are weighing on the share price. Its also clear that only a settlement from VW will help to deleverage in the short term. Your attempts to project a significant ramp up in debt with rising base rates needs to be taken with a large pinch of salt however. Firstly “commentators” are no longer expecting base rates to rise anywhere near 5.4%, 4% is the base case now. You only need to look at 10 year gilt yields to see this. Secondly its too simplistic to try to back calculate a weighted average rate, Anexo actually give you the details of the different debt facilities and their respective rates. For example the trade finance with Secure Trust Bank is base rate+ whilst the litigation funding is 10% but repayable upon a successful conclusion.
Clearly we are priced for the above and delays in the litigation so hopefully £1 provides support and the risk is to the upside.

[carcosa] 13/12/2022 11:39

Interest was £2.4m on £58m interest debt = 4.1% when base rate was effectively zero.

With commentators expecting base rate to peak 5.4% then interest on debt will be 9.5% i.e. £5.5m an increase of +130%. However debt is forecast to grow by 9m so debt servicing is likely £6.4m or an increase of 165%

And that forecast debt probably included an assumption of cash coming in from the VW case which may not be the case.

The other problem, as I've mentioned before, is that the days of having positive FCF is being continually pushed back.

As regards my views on the VW settlement; I have no informed opinion. Only speculation. I hope VW will not take it to court but I can see why they would. Even if they lost then the award could be reasonably expected to be no more than previous out of court settlement yet they could conceivably have a lower payout and merely by delaying eventual payment via the courts it would be better financially for VW (pay later rather than pay now).

[shbgetreal] 12/12/2022 11:22

I imagine what you are missing is the propensity to judge a company by its SP, rather than its operations...

[jm6783] 10/12/2022 16:09

Thanks for your response carcosa.

On the debt point, even if rates paid were 3% above current levels - which is conservative - with 75m debt, that would cut 2.25m from pre-tax profit, which is less than 10% of last year’s level and below 10% of forecasted levels for this year.

And on the vw point, do you believe the likely settlement will be significantly below previously mentioned forecasts - 20-25m - or just that it will be delayed ?

Either way, we are still talking about a company trading significantly below tangible book value - which looks conservatively calculated. Even without vw and other cases producing anything and assuming debt costs rise significantly, this looks extremely cheap to me.

What am I missing here ?

[carcosa] 10/12/2022 12:17

At this rate DBAY might come back to the table.

Some possibility the VW case will go to court next month but I understand the legal situation has changed since the previous award to other claimants earlier in the year (related to EU/UK law effectiveness) so would not be surprised if VW will request a delay in the January 2023 proceedings for several months. I was expecting some settlement by now...

Given the high debt servicing levels (base rate increases) debt cost may triple by the end of the cycle and any glimmer of some FCF from this year has been shot to pieces IMO.

Having said all that, everything has a price and the current share price seems to somewhat attractive.

[jm6783] 09/12/2022 16:39

What is going on with this? 5x earnings, strong embedded value and enormous upside?

[hpcg] 24/11/2022 15:18

Not a lot of volume today. Only 16, 17, 21 of November have provided much volume validation for price.

[rimau1] 24/11/2022 11:47

The market doesn’t believe we are going to improve our H2 cash generation it seems. I would have thought all divisions would be performing ok in this environment especially social housing albeit this is the smallest part of the business. With an update on the VW case at some point as well, I have had a top up at £1.06. Surely upside risk from here……

[rivaldo] 08/11/2022 14:57

Hope so hpcg. Interesting new article here - there's a long way to go with Dieselgate, targeting "Mercedes-Benz, BMW, Fiat, Hyundai, Kia and even American stalwart Ford Motors":

[hpcg] 08/11/2022 13:45

I've added a lot with spreadbets today on this interest the market is signalling. I'd hazard a guess an emissions settlement is coming over the horizon. We've had a month and a half of decent consolidation. Clearly on what investors know today there are no sellers at 100.

[rivaldo] 08/11/2022 12:32

Good to see the Chairman buying another £100,000 of shares at 127.7p reported whilst I was on hols recently (bit of an admin disclosure delay there!):



Hopefully the recent bounce will continue back up to 140p-150p for starters.

[carcosa] 06/10/2022 13:38

hxxps://www.gearrice.com/update/porsche-se-vws-main-investor-on-trial-after-a-lawsuit-by-its-shareholders-for-the-dieselgate/

"The Stuttgart Higher Regional Court ruled on Wednesday that the lawsuit in Porsche Automobil Holding’s hometown can continue. The justice plans to question the company’s former CEO, Wendelin Wiedeking, and former CFO, Holger Haerter, at a hearing on December 7. The ruling comes a day before Volkswagen is to include sports car maker Porsche in a $9.4 billion initial public offering..."

[rivaldo] 20/9/2022 11:16

It's worth noting that Arden have maintained their 300p price target.

They forecast 18.3p EPS this year, rising to 19.6p EPS, with 1.5p dividends.

The concern over the credit hire business is overdone imho. As stated above by hpcg, this can be a very good steady state money-earner, especially with cash flows due to improve this H2 given the specific strategies being adopted by ANX.

Then when combined with the fast-growing (and much quicker-paying) Housing Disrepair and Motorcycle revenues - plus the transformational potential from Emissions - one can see that the analysts' target prices are not so ambitious.

I note also that Arden believe ANX can mitigate higher interest costs by charging higher rates to customers.

[hpcg] 20/9/2022 10:04

carcosa - I agree with the Arden note, growth at any price is simply not a good business. This is not a model that produces exponential scaling, it is just linear with costs. At some point you reach a good enough run rate, stop expanding, and make good money. This is not a high growth business, it simply can't be, but there is a place in everyone's portfolios for something that makes a steady profit that it returns to shareholders through dividends and buybacks. Or should I say buybacks and dividends, with emphasis on the former. Until that happens there is always a doubt it can happen.

[rivaldo] 20/9/2022 09:52

WH Ireland retain their 263p per share price target.

They've adjusted their forecast for this year slightly to 18.4p EPS to account for a higher interest charge, rising to 18.9p EPS next year and then 21.9p EPS.

With a 1.7p dividend, rising to 1.8p then 2p.

They forecast this H2 to actually be cash-generative, due to the transition to much faster cash-generating activities like Housing Disrepair and Motorcycles.

Plus of course there's the likelihood of an immediate £20m-£25m cash inflow from the VW case in the next few months.

WH Ireland describe the potential from the additional emissions cases as a "multi-billion opportunity".

[carcosa] 20/9/2022 09:41

gusrezo, I think your comments have merit in explaining investors hesitancy over ANX. Arden (ex-NOMAD) put out a note this morning discussing this very issue.

They commented "The market hasn’t rewarded Anexo’s earnings growth because it hasn’t translated into cash. However, the paradox of the core business today is that it can only report higher profits by putting more vehicles on the road, but to grow, the group has to invest in working capital. The only way to turn FCF positive is to tune the business down a bit and run it flat. This is what Anexo has been doing, albeit there is a lag here. However, we think receivables has likely now peaked, with credit hire generating cash in H2 (and going forward)."


I have quoted some of their other comments here

along with some analyst links

[hpcg] 20/9/2022 09:23

gusrezo - I'd agree with that. It's the emissions cases that keep me here as they'll provide a spring board. I do like the housing cases too, and I think that can do a lot of societal good as much as anything.

[gusrezo] 20/9/2022 09:05

but the company is still in the same path: burning cash (about 10,5M: cash flow from ops + investing + lease payments) thus debt keeps on growing; the gap between cases funded and cases settled keeps on increasing, that means the backlog of pending cases keeps on growing .... I think as far as these metrics are not reversed there's a lack of trust on the ability of the company to self-sustain growth and whether some of the cases a recoverable...

[rimau1] 20/9/2022 07:29

Agree with that Rivaldo. Growth in net debt i think is the reason for the derating in the context of an uncertain economic environment. However we can clearly see a slowdown in net debt from H1’21 v H2’21 v H1’22 so i am happy. Deep value situations usually make me nervous but not in this case, i have pencilled in around 19p eps FY forecast. Housing looks a phenomenal business and we should now begin to get the operational leverage from the fee earner lockdown hiring spree

[rivaldo] 20/9/2022 07:00

The H1 results look very good at first glance, with 9.3p basic EPS and confirmation that expectations of 19.3p EPS will be met.

Housing disrepair growth in particular is terrific, and extremely profitable with £2.4m profit already.

Net debt is obviously up due to the strong growth, as are cash collections, and it's good to hear about the increased focus on cash collections in H2.

The share price has dropped to deep value levels here for no reason and should rebound nicely.

[hsduk101] 01/9/2022 08:14

What a drop off. No stability in the small aim/ftse markets at all