Arrow Global Share Discussion Threads

[revoman] 04/3/2014 12:30

Panmure Gordon:

FY13 results
The results were overall a little better than expected, though the IPO was very
recent. The outlook is for further growth in the debt purchase market and
investment. The shares remain attractively valued versus our price target of
335p, with the short term overhang from the 29% held by an RBS fund
(unlocks in April).
Adjusted post-tax profit was £25.2m (£11.2m) with EPS of 16p (7.2p) versus our
forecast of 14.2p. No dividend has been paid for FY13 as guided (initial one at interims
this year). The underlying ROE was 26.5% (13.9%). The IRR was virtually unchanged at
22% for 2013 (23% historically).
Purchases of loan portfolios in FY13 totalled £101.3m in line with guidance (£83.9m)
with a face value of £1,370m and total face value of loans increased to £7.2bn, and
including external assets to £9.6bn. 84 month ERC rose to £564m (£464m). Owned
customer accounts increased to 5.1m (3.6m).
Core cash collections were in line at £127.8m (£88.7m) +44% representing 103% of
plan, adjusted EBITDA £89.6m (£61.9m) +44% with an adjusted EBITDA margin of
70% unchanged. The cost to collect ratio was unchanged at 22%.
The company expects to grow investments at or in excess of the market rate in the
current year, weighted to the second half. They feel well prepared for the FCA takeover
of regulation in April. For FY14 we are looking for new investments of £115m and 84
month ERC of £700m. There is potential for earnings upgrades over time.
The shares were priced at IPO at 205p, rising to the 250p level before tracking the
overall market recently. We value them at 335p on a FY15 basis. There is a short term
overhang from the RBS Special Opportunities fund with 29% which on a 6 month lock
in to 6 April.

[nurdin] 04/3/2014 12:20

If what you say is correct,and I have no reason to doubt it,then I am surprised they are even considering paying out dividends.Something somewhere is not right

[stemis] 04/3/2014 11:51

I didn't say I thought it was worth 65p but I have none to sell anyway (and I'm not really someone who takes short positions). I think the issue for ARW is when it uses up all the proceeds from the IPO. Cash flow alone isn't going to be sufficient to grow the loan book significantly.

[cestnous] 04/3/2014 11:17

So if you think it's only worth 65p stem, best sell it. LOL!

[aishah] 04/3/2014 10:38

Haven't seen the Jefferies note yet.

Canaccord Genuity,Buy, target price=309.00,Reiterates

[stemis] 04/3/2014 10:28

Based on what AISHAH? How do they calculate 330p?

[stemis] 04/3/2014 10:27

Some interesting comments in the results. Anyone got any views?

"As at 31 December 2013, we estimate the amount we would need to invest over the next year to maintain our current ERC level is circa £47 million."

The running costs of the business were around £69m (£42m opex, £19m interest and £8m tax). Collections in the year were £128m, so net £59m.

"At the 31 December 2013, the directors calculated the fair value of portfolios and loan notes under IFRS 13 to be £281,386,000, which is £7,454,000 higher than the carrying value. The directors applied a discount rate of 20% net of cash flows, which was calculated using a consistent methodology as at 31 December 2012.

Applying this to NAV would give 65p a share.

[aishah] 04/3/2014 10:21

Arrow Global Group PLC (LON:ARW)'s stock had its "buy" rating reiterated by investment analysts at Jefferies Group in a note issued to investors on Tuesday, Analyst Ratings News reports. They currently have a GBX 330 ($5.52) target price on the stock. Jefferies Group's price target points to a potential upside of 28.40% from the company's current price.

[stemis] 04/3/2014 10:15

Is there much different from these results to get excited about than was shown in the 9 months?

10 Yr ERC less debt has gone up from 266p/share to 274p/share. If you deduct future collection costs its gone up from 184p/share to 194p/share. Steady progress. Cannaccord forecast year end ERC of £650m, they achieved £650.3m (hardly 'smashed'). Looks like they should be able to make the 2015 ERC target of £750m if they spend all their cash and their collections.

[cestnous] 04/3/2014 10:09

Can't believe this is still under the radar. Fully loaded from 240 so not buying any more atm. Disappointing reaction but those figures were amazing. There has to be a few tips and upgrades after such good results. Surely the instis have done the comparisons with US equivalent companies and can seen the cash generating abilities. Apparently not just yet. It's bound to come, just need patience.

[rampmeister] 04/3/2014 09:50

Just added a few more - great opportunity whilst share price remains static but beginning to build a head of steam now.

RM

[nw99] 04/3/2014 08:40

Gs agreed we are starting to see higher bids now and the sizes are small could be almost done

[gswredland] 04/3/2014 08:29

let that seller work through and we should be off!

[nw99] 04/3/2014 08:29

Fund managers will be getting in and buying it was over the day once they have the presentation

[nw99] 04/3/2014 08:28

Montynj .. You are right never mind they have gone in the long term account now !

[montynj] 04/3/2014 08:19

Nw99 yeah but you are not Standard Life so you are not a massive mover of stocks even though you u think u are

[montynj] 04/3/2014 08:18

Phenomenal results...

[cestnous] 04/3/2014 08:12

Excellent. A cash machine in the making, with a maiden divi. on its way later this year.

[nw99] 04/3/2014 08:09

You are right there is I made a good size purchase of 10k shs and price didn't move

[lennonsalive] 04/3/2014 08:07

Personally, I think there's a seller. Once they've gone, with a rerating this should move upwards.

[nw99] 04/3/2014 08:06

Added more anyway let's see

[nw99] 04/3/2014 08:01

Surprised at the open being so low

[lennonsalive] 04/3/2014 07:38

Fantastic results

[nw99] 04/3/2014 07:29

"With industry regulation set to migrate to the FCA on 1 April, we should see greater consistency for customers as buyers join creditors in the same regulatory regime. I am pleased to report that Arrow is well progressed in our preparation for this important change.

[miti 1000] 04/3/2014 07:27

Yes, excellent results ....cost/collection going down and smashed their debt acquistion targets.