Ashley House Share Discussion Threads

[cockerhoop] 16/1/2018 20:31

SM

I'm not sure if we're talking at crossed purposes here?

Are your questions related to the Ashley House Extra Care business where they design and manage the build of supported housing projects for their clients.

Or the F1 modular business which as the name suggest provides factory built accommodation for a variety of uses?

Elited10,

The 2 supported housing schemes have not been announced yet, 1 is traditional build, 1 is modular build. Suspect 1 may be in Scarborough and 1 in York but could be wrong on that.

Certainly the earn out on the purchase of F1 suggests it could be valuable in time. 24% of the enlarged modular business reverts to original investors if profits are above £4m in the 3 years from acquisition.

[shrewdmole] 16/1/2018 19:23

Ps I'd want to know which housing associations and do the deals include the land value?
I could actually give them about £100m of build per year myself from our contracted land deals if they can answer the questions on Cml etc

[elited10] 16/1/2018 14:18

Has anyone got any detailed info on F1 Modular? Late last year ASH (according to their update on the 24/11) were due to close on two housing schemes. If the news did come I've missed it. They have however done a rather natty deal with Morgan Sindall, who in turn, are owners of Morgan Lovell...about to start completing 20homes a week down in Salisbury. 20 a week is pretty pokey. I'm just sniffing around trying to put any sort of value on F1. Also it would appear they have an option on their manufacturing premises in Powys? If anyone has any more detail on F1...gratefully received.

[microscope] 16/1/2018 13:38

Suggest you give them a call TT, sure that type of information isn't price sensitive, in the public domain somewhere and they could tell you very quickly.

[cockerhoop] 16/1/2018 13:26

ASH's Customers for Extra Care properties tend to be Local Authorities, Housing Associations etc and the individual units are then rented to the occupants so mortgages not applicable.

[trotterstrading] 16/1/2018 13:09

Hi all, I'm doing my DD on ASH, I had a couple of legislative questions, does anyone know if their product is cml approved (council of mortgage lenders) as shared ownership still requires mortgages. And is it insurance backed eg nhbc? I assume they are but I can't see it anywhere!

[yump] 16/1/2018 00:13

Is there going to be cheap modular housing right next to the HS2 route ? Only travellers could then knock off the hour it takes to get to and from the stations to get on the train to save the hour between London and Edinburgh or wherever.

[microscope] 15/1/2018 20:13

Shocked by the demise of Carillion, and while it's never nice to look at possible knock-ons, there's no doubt Morgan Sindall are well placed to pick up some of their business. If they do and any of it is in the social housing arena, I'm sure Ashley House would be a willing partner!

[qackers] 15/1/2018 11:57

Last years interims released 26th Jan so hopefully we should get some movement ahead of this years announcement.

[yump] 15/1/2018 11:01

Pretty much summarises everything thanks.

Especially this bit which really puts things in context:

"At 7p it was priced on the basis that the pipeline (with schemes amounting to nearly £200 million, with current m/c just £7 million) could not be unlocked due to a Govt cap".

ie. pretty much gloom and doubt at 7p and probably disbelief that the cap would ever be removed.

Given the significant changes and the pipeline and a general following wind in their market, if this isn't a really good investment at this level, I don't know what is.

There's also a potentially quite high level of positive news flow, which should bring it to the attention of the wider market.

[yasx] 14/1/2018 18:19

The market has completely missed the substantial changes in the last quarter that leave ASH substantially undervalued. I elsewhere have for a while pointed out the merits of the bull case, it has doubled but there is such a long, long way to go yet. At 7p it was priced on the basis that the pipeline (with schemes amounting to nearly £200 million, with current m/c just £7 million) could not be unlocked due to a Govt cap. PM May has recently agreed to change that, & they have also announced the Morgan Sindall cash deal since (MS giving them 4 million cash for just 50% of the Housing division only).

Shares are 50% owned by Board and institutions, so plenty of skin in the game - solid PI hands too.

*Pipeline of 23 appointed schemes with £197.9m of revenue anticipated

*Morgan Sindall to pay 4 million in cash (2 mln received,rest coming in Jan) for 50% of just the Housing division (F1 Modular Ltd and Health property development divisions are unaffected)

*m/c just 7mln.

Re director sale. Not a concern. This is the wife of a non-exec & she previously sold at considerably lower than the current price. The basis for that sale was the fact that she provided the loan facility to the Co for refinancing the debt and this loan ran for specific timelines, upon expiry she sold the shares-this time she has offloaded presumably for personal reasons but still has significant amount, but the Head Honcho has far more.

*profit margins on the pipeline are double digits-the JV partner MS is very well respected in the industry, and provides access to things Ash alone could not achieve.

* I reckon fye Apr 19 £40m with EPS at least 4p on low double digit forward earnings multiple easily achieved * Am therefore very confident of my 50p target being met.

Note re my forecasts - obviously, goes without saying that adjustment will have to be made for the 50% going to MS (but, they are getting 4 million in cash immediately so offsets that to some degree).

Ash is targeting financial close on two housing schemes in the next few weeks. One is a traditional build and the other is modular, to be constructed through its subsidiary F1 Modular, commencing build phase in the early New Year.
From Dec: Five suppliers of modular buildings (one of which is ASH) have been selected by the Football Foundation for a framework worth £150m to supply changing rooms-this has been procured by the Football Foundation & its partners, including the English Sports Council & FA

Summary: The Board hold 20pc...it really ticks all the boxes. Has to be the smallcap share of 2018-not one of these speculative tiddlers built on sand.

Only risk I saw recently after piling in a couple of months ago was the prospect of a placing-but the Morgan Sindall deal has got rid of that and now they are on a very firm footing. Tightly held, try buying when this gets tipped.

Expect broker note in January to likely exceed my forecasts below: * I reckon fye Apr 19 £40m with EPS at least 4p on low double digit forward earnings multiple easily achieved *

*Here is the options kicker: "Options representing 9.95% of the current issued share capital have an exercise price of 9.75p but will not be exercisable unless and until the shares price exceed 37p for at least 90 consecutive days.." The Board have a great incentive here!

Another thing to note is that the JV with Morgan Sindall will also enable them secure synergies and leverage elsewhere-thus, I expect the pipeline of £200 million to grow markedly as a result. This really is a nil brainer.

*Recent prelims noted: "once the housing pipeline is fully unlocked there is expectation that the business will grow rapidly" * Guess what chaps-unlocking of the pipeline was subject to Govt changing LHA plans, which, in the last Quarter PM May confirmed is going ahead

My target price is 50p- fully funded, JV partner Morgan Sindall on board, Govt changes unlocking 197mln of pipeline, other divisions still owned by the Co, tiny market cap. Very very cheap indeed. Solid Company. Fully expect this to be at 50p in 2018.

dyor

[yump] 09/1/2018 12:22

Thanks for that, I looked back but not far enough. So it looks like that at the least on a 2 year view, the current share price gives a p/e of less than 10. Then if the signs are that profits start growing rapidly, that rating should jump.

Think I might have a few more. It might drop back a bit, but there must be a fair few positive announcements of various sorts yet to come.

[norbert colon] 09/1/2018 11:49

Also the 37p required for the executive share option scheme would imply EPS of say 4p which in turn would require PAT of say £2.4m based on 60m shares in circulation. Current 2019 PTP forecast is £2m - looking forward to seeing the new broker note for clarity.

[norbert colon] 09/1/2018 11:41

As the Mark Twain saying goes "history doesn't repeat itself, but it does rhyme". For a clue to the potential from Ashley House investors need to look back to 2006-2009 when they were successfully rolling out their GP surgeries. In '08 and '09 they made >£5m PTP with EPS of 10p.I am not going to second guess the detail of the upcoming broker note but if you look ahead to future years (forget 2018) they should be able to deliver £100m of turnover per annum from which their 50% of profits should be back in excess of £5m with double digit EPS. Margins should also be double figures. The JV needs time to ramp up over the next 12 months and investors with a long term time horizon should be rewarded.

[microscope] 09/1/2018 10:46

500k would be far below my 2018-19 expectations. There is no way Morgan Sindall are paying 4 million for 50% up front and thinking they'll take eight years to get their money back!
Even if Ashley House end up with slightly less than 50% as per the small print we speculated about, they are going to make more than 500,000 a year imho. Probably a minimum of 1 million, on a 12 month 50-50ish basis.

And that is without any consideration for Ashley House's other projects.

[yump] 08/1/2018 20:52

Can't remember if I did this earlier, but just reflecting on what would be needed to justify various share prices, as at the moment we don't really know what sort of profit might drop out from the JV...

If they made £1mln pre tax profit in a year, that would be about 1.7p per share, so that's about a p/e of 8.5 at current price.

So the key question is how likely is say a pre-tax (forecast) of over £500K in the next year or so ?

500K would result from the JV doing 20mln of schemes in a year at 5% pretax. ie. ASH get 2.5%, if you assume that there aren't going to be hidden profits in the costs billed to the JV.

In the past they've got between 5-10% of revenue as pretax profit, but housebuilders are currently getting 20%+, but that's unusual.

Has anyone any knowledge about the likely range of profit % from revenue, as I'm just knocking randomish figures around atm ?

However it does feel likely that £500K++ should be easy one way or another, given the pipeline size, otherwise its generally not a very worthwhile business to be in !

[topvest] 08/1/2018 20:42

Surely the sale of the 50% stake is the vast majority of any H2 profit? Otherwise, probably loss making given no work started on live schemes yet. Will continue to watch.

[cockerhoop] 08/1/2018 19:31

Not sure that logic quite follows through microscope. The 2 projects on the verge of being signed off will be 100% ASH whilst the remaining pipeline will be only 50%. Saying that if they complete 10 project per year via the joint venture as suggested complimented by some health projects and modular becomes profitable the share price will certainly be above 13.5p.

[microscope] 08/1/2018 19:07

Header belatedly updated with Morgan Sindall agreement link added.

Incidentally it occurred to me that if they are forecasting a 3p loss for the first half but a small overall profit for the full year, then 3p+ in the second half implies potentially 6p for the full following year... Against a share price of 13.5p tonight!

PS: Whoever voted the thread header down, thanks, now if you care to suggest additions/amendments... :))

[norbert colon] 08/1/2018 18:43

More press coverage on modular housing:https://www.theguardian.com/business/2017/dec/31/uk-housebuilders-factories-prefabricating-homes

[yump] 06/1/2018 16:34

I don't get topvest at all. If the stockopedia assessment didn't give the right quality business, what on earth was the interest in the first place ? By that measure its been not the right quality for years.

The difference is that now there has been a step change in prospects driven by the cap. removal and the MS venture.

So imo if anything really interesting is going to happen it will be from now on.

Same with OMIP as it happens.

I think if anyone is punting on smaller shares, then the riskiest thing is to sell at the point of a material change. Surely the point of holding (not trading) smaller share is the hope of a material change in the case of a share not doing very well, or an upward revenue or contract surprise in the case of a share that is just trundling along with reasonable but not exciting profits.

I can totally understand selling out to limit loss on a share that is unlikely to fly. For instance I'm nursing a loss on Centrica and its never going to grow fast, so I'll be selling when/if it recovers to an upper trendline, because its very unlikely to carry on.

The problem with smaller shares like this, is that given the recent positive changes, it might only take a few announcements of pipeline conversions to make it fly, at which point it won't look back.

[microscope] 06/1/2018 14:54

Some quite unusual looking trading patterns on Friday morning. Four buys in under three minutes around 9.45, totalling 67,500; and four 10,000 buys in a similar timeframe almost exactly an hour later.

Perhaps people having trouble getting quantity, or maybe result of a tip somewhere... James, you're the expert, any thoughts? :)

[norbert colon] 05/1/2018 22:06

Topvest - sorry to hear you are no longer invested. Out of interest, EPS forecasts on Sharescope mirror their house broker namely 3p and 3.5p. Clearly 3p for 2018 is very unlikely.

[norbert colon] 05/1/2018 20:17

https://www.karbonhomes.co.uk/news/category/development/new-life-for-lock-ups.htmProvided by F1 Modular.