Ashley House Share Discussion Threads

[microscope] 31/1/2018 22:07

Think we need to understand that any caveats are typical of the cautious management that long term followers will easily recognize. They are simply saying these things can take time. Nowhere do they say there will be delays. It's just being sensible!Topvest your first sentence with respect I can't see the point of it. The rationale for the investment for I think all of us is the MS agreement. The agreement is there, why say 'well if it wasn't....' ...If Chelsea hadn't signed Giroud they wouldn't have Giroud.And yes it will be the reason they make a sustained profit going forward imho. Ireland's forecast, while it looks toppy to me for this year, looks similarly modest for next. I thought the outlook was very positive, just intelligent and realistic with regards to the fine tuning of its timing

[topvest] 31/1/2018 21:29

Think you are overlooking the fact that the profit forecast includes the profit on disposal of the 50% to Morgan Sindall. Without that there is obviously no profit at all for this year. There is too much delay on everything for my liking. Numbers were as expected. Outlook was a little negative. Still think i did the right thing selling as this is still a long haul to sustained profitability, albeit it seems to be heading in the right direction.

[greedfear] 31/1/2018 18:49

It's overlooked and undervalued. Exactly what I like. If the share price goes south (not too much) I'll add. No doubt. If it goes north I'll be a happy puppy as ASH is currently the largest holding in my portfolio.

For excitement I've got my biotech holdings. This one (ASH) is probably going to do a lot better than my biotechs. It looks as if it's dull to have a position in ASH. But I feel it's going to be great: they're operational in all the right places. This IS the time to buy. Really. Anyway, BOL (future) holders!

[cockerhoop] 31/1/2018 17:12

WHI Forecasts updated this morning

2018 £18.7m Rev £1.8m 3.0p EPS -£1.7m Net Debt

2019 £19.4m Rev £2.0m 3.5p EPS -£1.2m Net Debt

[yump] 31/1/2018 16:54

Yes, I thought I saw 'still make a profit' somewhere.

[microscope] 31/1/2018 16:50

Thought year end targets had been changed to just above break even? That's what I would anticipate.Whole bunch of 'round number' trades inside ten minutes earlier. Think about 190k were offloaded. Probably just one seller. That's more of a threat short term to the share price than business prospects!

[yump] 31/1/2018 16:48

I'm ignoring the brokers. ASH just say 'should achieve its profit expectations for the full year'. So not sure exactly what that means and not that bothered - its the news in the next 6 months.

[cockerhoop] 31/1/2018 14:31

First_things,

I can't see 2018 targets being achieved. FY18 PBT of £1.8m implies £3.6m PBT in H218 of which only 3 months remains.

[first_things] 31/1/2018 13:55

There is only 3 months left of the financial year, so the full year financial results could be a pivotal moment. The board stated they are confident the company should achieve its profit expectations. I guess the "profit expectations" are the brokers forecast of a PTB of £1.8 million and EPS of 3p. They also say they expect to get an additional £1.5 million from Morgan Sindall in "the next few weeks" which will strengthen their balance sheet. If this is achieved by the business a fair profit multiple could be between 8-12, which would therefore give a short-term price range of 24p - 36p. The current share price has not discounted this news which I guess is a factor of under delivering in the past. If they achieve what they say they are expecting it will be a massive turnaround which can be attributed to the change in government policy and Morgan Sindall Partnership. Ashley House may also start to attract institutional interest as the investment case and prospects have changed. The upside could be 100/150% in the next 3-6 months with this investment thesis. I think some patience is required at this stage although it is never easy to predict when the market would re-rate a share such as Ashley House. Interested to get the thoughts of others and if what I have outlined is using the correct assumptions.

[cockerhoop] 31/1/2018 13:31

Scrubs,

Good points, my understanding is that ASH generally don't fund the development themselves, either the end client funds development or specific development funding is used - the latter case with ASH picking up the interest tab but with the loan being off the balance sheet.
So whilst they often purchase the land and have some upfront costs it's not as capital intensive as if funding the full development phase.

Net debt forecasts going forward suggest ASH will repay some rather than all the current debt.

I think in time the £4m investment from MS will be considered very shrewd and potentially highlight that ASH's bargaining position was weak due to their financial plight last Autumn.

[yump] 31/1/2018 12:59

Isn't the point of an LLP for a (smallish) developer, the access to finance and having the financial security of someone else's balance sheet who is in the LLP, if funding is needed from outside the LLP ?

That is a massively different situation from previously, its not just a technicality.

Every share in theory has a 100% downside risk - I don't see its any more relevant here than anywhere else.

Anyway, some more shares were available earlier, which is nice.

[greedfear] 31/1/2018 12:36

Fair enough.

[scburbs] 31/1/2018 12:23

I completely agree the 100% downside risk has been very substantially reduced by the MS deal and the substantial increase in share price is well justified.

However, given most of the cash inflow is going to repay debt I don't see it how it can be nil or negligible given the future cash requirements to build out the pipeline are unknown.

There is the potential of MS stepping in if there are problems. However, if it ever got to the stage where MS needed to step in I wouldn't necessarily see ASH shareholders being a beneficiary of that.

[greedfear] 31/1/2018 12:15

I guess people lack patience. It's a less risky investment then it was and the prospects are outstanding imo. It will multi bag within a year. No ramping intended.

[dave4545] 31/1/2018 11:47

microscope

I thought the same about that point. It's a win win situation.

What happened 30 mins ago, it was going along just nicely then everybody decided
to sell ?

[sikhthetech] 31/1/2018 11:28

scrubs makes good valid points...

The 2 big changes - the JV with MS and the government's relaxation of LHA cap derisks the potential 100% downside.... if anything, I think MS will step in before that happens...

[microscope] 31/1/2018 11:25

Dibs no offence and appreciate your contribution to the board always, but I don't find the comments useful atall. So let's assume the closures happen just after year end instead of before. All it means is that this year's numbers will miss.........And next year's will be massive!

[yump] 31/1/2018 11:16

The risk of the 100% downside has been reduced dramatically, so I just don't get those comments. They were more applicable at lower prices, so it would be a raging sell then, if its a sell now.

Completely understand that cashing in a profit makes sense if you think the share price has got ahead of itself.

[microscope] 31/1/2018 10:44

Quite happy to put my neck on the line here. The chance of 100% downside is so negligible in my view as in effect to be nil. The company have made it abundantly clear this morning that the benefits are 'when not if'. In their 25+ years in business the company have ably demonstrated an ability to overcome the tough times with nimble management and prudent policies. Even if we have to wait slightly longer than anticipated, I have no doubt that with the 2.5 million recently banked from the MS partnership and another 1.5 million imminent, they will have no trouble whatsoever in managing the transition period successfully.

[dibs61] 31/1/2018 10:41

scburbs - well done you played a blinder with that exit price. That’s also an excellent post. A great contribution to the board, thanks

[nextlink] 31/1/2018 10:27

Interesting viewpoint, particularly valid, the comment on public bodies.
However there is not one Publicly Quoted Company listed that does not have a
potential 100% downside.
On the recent news of a backer with deep pockets, if you listed companies
in order of risk of faliure, i believe Ashley would be in a favorable position.

[scburbs] 31/1/2018 10:19

Just in time with the MS JV as TNAV has hit nil (i.e. remove £1.4m deferred tax asset and £415k goodwill and adjusted NAV is £30k), so JV sale will be a timely boost to restore TNAV to a positive number.

As a long standing holder I was happy to sell final shares at 14.85p on December spike. There is clearly a massive opportunity here and the shares could easily multi-bag from here, but that has always been the case and it is not entirely clear what the JV does to pipeline delivery pace.

Three things for holders to be wary of:

"This joint venture, whilst it will take time to evolve, provides a real impetus to the delivery of the current pipeline and establishes a significant platform for our future development and growth capabilities."

A slow start for the JV is the last thing they need. This pipeline has been sitting around for a while so they really need the JV to hit the ground running rather than taking time to evolve.

"The board remains confident that the Company should achieve its profit expectations for the full year. However risk still remains on the timing of closing of the schemes due to the inherent difficulties of dealing with public bodies."

Historically this sort of comment is followed by an indication that insufficient schemes have been closed. Given there is only 3 months to year end the risk seems high despite the confidence of the board.

Thirdly, a lot of the cash inflow from MS will go to repay debt. The funding requirements to build out the pipeline are not clear in terms of debt funding vs grants vs funding required from MS and ASH. If any material funding is required from ASH then they will only be able to build out the pipeline slowly (or risk getting diluted by MS). If the JV doesn't need much funding from ASH then the prospects are substantially greater.

The potential upside here is massive, but there are still very material risks to the delivery of that upside and downside remains 100% IMV. For investors who are comfortable with multi-bagging upside and 100% downside it is certainly an interesting investment.

[dave4545] 31/1/2018 09:56

Nothing left to gobble up atm, 3 x 25k buys not long ago have left the mm's offering just 10,000 online at 12.44p

[yump] 31/1/2018 09:47

Anyway - back to ASH.

After the JV was announced I looked up LLP's and found that the distribution of profits doesn't necessarily follow the proportion of shares, unless of course the profits are all distributed as dividends. Apparently the profit distribution depends on the JV terms.

The ASH joint venture has 50/50 ownership, so I checked with them just in case and the whole thing is 50/50 including the profit share.

So the implications are correct that if MS were willing to pay £4mln, then they expect to get more than that back and therefore so do ASH.

So now I'm trying to decide whether to just gobble up as many shares as I can, in the hope that I might not just be able to retire, but to retire with racing car, yacht etc. etc. in a few years ;-)

[dave4545] 31/1/2018 09:27

Tbh I just sit here and know in theory I could make money on a trade then I realise
I will not be able to buy at the low or sell at the high because the mm's will not let us trade so I do not even try these days. When I was younger I put the effort in but now I cannot be bothered because I know it will flash up "no online quote" all the time.

Look at ASH they dropped it to 11p but had no intentions of offering a bean online so why the hell do it in the first place. Well they thought some idiots would panic sell at 10.8p on that update when infact the update was quite positive. You have to give them credit for trying. They would take your last pound off you even if it meant you living on the streets. I'm not a fan of them because of past shannigans but I will not go into that.