Anexo Share Discussion Threads

[74tom] 10/9/2019 09:10

Classic post results drop, caused primarily by 2 x 10k sells just after 8. Let’s see how the rest of the week plays out...

[ronwilkes123] 10/9/2019 08:21

Cash outflow looks like it's going to be higher/flat on last year. So whilst it's generating profits, it's not actually at the min generating free cash. Hence the market being passive here. Fully expect it to come back at bit on the cash flow figure.

[74tom] 10/9/2019 08:04

Fantastic results! There are so many positives, I’ll make a list later but safe to say this is heading for mid cap status if growth maintains its current trajectory. Once they have enough lawyers onboard to collect more fees than they invest in cases, this will become a cash generating machine. This should happen at the end of this year!

[dan de lion] 09/9/2019 14:53

Only 14 million of 110 million shares in free issue, rest held by management and II`s.

[74tom] 06/9/2019 19:23

A good end to the week - I would expect Monday to be more of the same in advance of results - should hit at least £2 at open on Tuesday!

[74tom] 06/9/2019 11:06

It’s just people putting 2 & 2 together ahead of the results, there is a clear valuation gap here both versus peers and the wider market.

[ronwilkes123] 06/9/2019 09:21

Something leaked Tom?

[74tom] 05/9/2019 20:21

Example 1:



Manolete’s current market cap is £177m

Their profit before tax for 2018 was £6.8m

Investment in cases up 72% to GBP18.2m (FY18: GBP10.6m)
-- Case gross cash inflow of GBP8.8m up 48% in FY19 (FY18: GBP5.9m

So a cash outflow of £9.4m on cases. Around the same cash outflow overall as per their cash flow statement.

Manolete’s EPS was reported at 12.7p

So they have a PE of 32 at present.

Example 2:

Keystone Law is another legal listing with a high PE.



They generated cash of £4.6m last year & have a PE of nearly 40...

So a comparable cash generator has a PE of 40 and a comparable non cash generator has a PE of 32. Anexo with its PE of less than 10 seems hugely undervalued vs it’s peers!

[74tom] 05/9/2019 19:49

I wouldn’t call it an issue per say, Burford, Litigation Capital & Manolete all burn cash as it’s the only way to grow the business until you get enough scale.

Not sure if you’ve seen the below quote from April’s investors chronicle?

“Management believes that the fourth quarter of 2019 will mark an “inflection point”. It expects to settle more cases than it takes on and transitioning from “a cash absorber to a cash generator”.



We already know that July was a record month for cash collection, and as they only recognise revenue when cases are settled this must also mean that the P&L is benefitting. Hence the ‘significantly above expectations” comment.

I wouldn’t be surprised if they end up with > £25m PBT this year, and if cash starts to pile up then we’ll reach the £3.45 Arden target sooner rather than later.

[ronwilkes123] 05/9/2019 15:12

Free cash flow is an issue Tom as atmIt doesn't generate any. Though indications it's going to generate fcf shortly would be v positive.

[74tom] 05/9/2019 14:14

Moving up with every buy on low volume...having read the prospectus in more detail last night, it is l quite obvious where this company is going IMO

1. There was a backlog of 18000 cases when they listed
2. This backlog increased by around 2000 cases last year
3. The average revenue per case is around £11k
4. There new Bolton office has allowed them to increase lawyer numbers, resulting in more cases being dealt with.
5. They could feasibly double closed cases this year and still not reduce the backlog
6. 20000 open cases * £11k revenue per case = £220m. Operating profit margin around 30%, so £66m of profit to collect.
7. They will reinvest the resultant cash flow in more lawyers, sales staff & marketing to continue growing the business organically, whilst paying a growing dividend.

It may not play out in such a straightforward manner, but on paper this looks like a cracking investment at present.

[74tom] 04/9/2019 20:53

Bought in today for the interims next week, first time I can recall reading the phrase ‘significantly ahead of expectations’ in a while. Hit 196p on the 6th Aug trading update, nothing has changed in the meantime but the share price has fallen by 10%. With more clarity on profit before tax, should see £2+ in the coming weeks.

Arden also upped their target price last month from £3 to £3.45, having initiated coverage at £2.35 at the end of March.

[ronwilkes123] 02/9/2019 10:39

Few sellers this morning week before results

[ronwilkes123] 28/8/2019 12:08

Strange share - why you'd sell two and a half weeks before record profits rns and most probably a share price at least 5-10% higher is beyond me

[dan de lion] 22/8/2019 11:07

Analysts tend to err on the cautious side.

[ronwilkes123] 19/8/2019 09:53

The broker though highly positive taking into consideration record cash collections - fcf is expected next year. You can get the analyst report via the website.This won't go far without fcf especially in troubled markets

[dan de lion] 19/8/2019 08:36

added.


Given this statement in the trading update:- "The Board is pleased to announce that the increased capacity generated by its expansion has achieved a record level of cash collection for the month of July 2019."

Assuming that this is not just a one off, then it could easily put them into Free Cash Flow this current trading year.

[ronwilkes123] 18/8/2019 18:10

I think it needs to show it can generate fcf before it goes any higher. Analyst has it fcf positive yield next year so for me this remains on watch list

[dan de lion] 15/8/2019 14:38

Just bought in.

[ronwilkes123] 15/8/2019 14:38

What you guys think of the trade receivables here - high with a high provision for debtsAny reason why it's so high

[aishah] 15/8/2019 14:16

Indeed. Looking to top up.

[silverfern] 15/8/2019 13:45

As opposed to where? BUying opp inmho

[ronwilkes123] 15/8/2019 13:22

Nasty here today

[ron manager] 06/8/2019 15:49

Interesting to see that you can now access the Arden Partners research on Anexo, which is really helpful. Visit the link below and then just register at the Arden research portal. Easy and there is a new note relating to today's trading update.