Begbies Traynor Share Discussion Threads

[nw99] 10/7/2013 09:32

Beg strong again today

[checkers2] 06/7/2013 15:10

From the IC, commentary on recent results:

Hold: Begbies Traynor (BEG)
Costs and debt are down and the fat dividend payout has been maintained, writes Jonas Crosland. But Begbies' trading isn't likely to improve much until interest rates start rising and prospects for a clear uplift in the current year are limited. Still, with the shares now trading at half the net asset value, that outlook appears factored in.
With UK corporate insolvencies having fallen by 10 per cent last year, Begbies Traynor – the UK's leading independent recovery practice – was always going to struggle. However, the fall in the group's full-year headline profits paints an unduly pessimistic picture. Add back one-off costs and adjusted pre-tax profit fell by more manageable 9 per cent year on year to £6.7m.
Most of those exceptional items related to a continued drive to lower the cost base, with a reduction of £8m already achieved since 2011, and a further £2m of savings expected in the current year. Management reckons the current low interest environment has kept many companies afloat that would otherwise have gone bust and, ironically, any economic improvement that drives up interest rates could well will prompt an increase in insolvencies.
The group has also positioned itself to exploit any acquisition opportunities with a refinancing package that provides a £30m funding line and a £5m overdraft facility. After a fall in net debt from £20.1m to £17.2m, that leaves headroom of around £17.9m.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £5.8m, giving adjusted earnings per share of 4.5p (from £6.7m and 5.3p in 2012).

[topvest] 05/7/2013 16:06

The dividend cover is still 2 on these downgraded forecasts which I would agree with- that was the hint from the results, more from what they didn't say than what they did say.

[asagi] 05/7/2013 15:57

mathewawood - I'd say something similar to danewoodydynamo. Canaccord were perhaps basing their 2014 forecast on expecations of the insolvency market picking up. There was no sign of this in Begbies' results (now more than two months into the year) so they have cut.

Asagi (long BEG)

[daneswooddynamo] 05/7/2013 15:42

its a combination of factors..insolvency numbers continuing to decline, global risk partners turning from profit to loss, increased borrowing costs up by a percent or so...hence the downgrade to profits. The market is starting to look through this and thinking that it is only a matter of time for insolvencies to rise hence the slightly positive share price reaction.

Rest assured when the canaccord analyst starts upgrading the shares will already have moved ahead very sharply

[mathewawood] 05/7/2013 15:16

Norbert - the 5.5p is out of date. This is from TDInvesting. These were the forcasts:

The day before the results 2nd July Canaccord (Main broker)
2013 PBT 6.7 EPS 5.3
2014 PBT 7.2 EPS 5.5

Actual Results
2013 PBT 6.7 EPS 5.3 (Canaccord spot on)

2 days after the results 5th July
2014 PBT 5.8 EPS 4.5 (Canaccord downgrade)
2015 PBT 6.1 EPS 4.7

Notice the change for 2014. I can only think that in the presentation at some point the board said something to make the analysts downgrade for 2014 and 2015. Because that's what there calling.
Im not talking the share price down or anything. I hold shares. I just want to know why the downgrade. Im guessing some new news regarding the insolvency market being forecast to be even more depressed must have been mentioned. (Nothing like that mentioned in the RNS results)

Trust me when analysts downgrade its important.

[topvest] 05/7/2013 11:13

Absolutely, this will fly like 4/5 years ago when the insolvency market expands again. Until that time, it's a waiting game and taking a nice dividend.

[norbert colon] 05/7/2013 10:44

5.5p of EPS for 2014 puts them on PE of 5.8. Book Value 64p (double current share price). I hold.

[topvest] 05/7/2013 10:40

I don't think that's a surprise as insolvency rates are lower. 2013/14 should be the low point. Thereafter, as QE stalls and conditions start to normalise the market should pick up. The current dividend is still affordable.

[mathewawood] 05/7/2013 09:58

I was going to get stuck into this one until I saw the new earnings forecasts. Their broker Canaccord expect 15% drop for 2014 (Milkstone even worse). I was gob smacked.
I could of sworn BEG was at the bottom of the cycle and could only go up from here.
The analysts agreed with me cause up until the results they were both predicting small growth. Something must been said in the analysts presentation thats not in the RNS Full Results announcement.
Don't suppose any of you guys were there?

[topvest] 04/7/2013 08:00

It will be viewed as a growth stock when insolvencies rise, as they are sure to do at some point. It's a cyclical business and we are near or at the bottom of the cycle. Hopefully they can hold the dividend in 13/14 and the things will improve the following year.

[dashton42] 04/7/2013 07:10

rotors, there was an article on the IC website yesterday saying that the rules on holding AIM stocks in ISAs were to be relaxed from THIS autumn, which was sooner than I expected:

[bottomfisher] 03/7/2013 23:56

The FT comment on Begbies' results is more upbeat than the IC's. Referring to Ric Traynor, the FT says in its comment, "He has hunkered down, hoping he has pared the group back to the point that it can withstand whatever happens next. It is not a growth story. That said, the debt has been reduced, the cash is coming in and the dividends are being paid out. The shares do not deserve to be rated at only 7 times next year's earnings.

[rotors] 03/7/2013 21:53

I also thought the results were OK; this looks to me an ideal ISA stock for when the rules change in 2014.

EDIT:
Thanks dashton42! Make that Autumn 2013. Thought it would have been from tax year start....

[topvest] 03/7/2013 21:32

I think these results were ok. The market will come back at some point and they will then be very well placed. They are quite well positioned.

[dashton42] 03/7/2013 14:06

IC rates the shares a hold on these results, citing the fact that the subdued market is priced in, and the shares are trading at half nav of 64p:

[bottomfisher] 03/7/2013 12:35

Nothing much wrong with these figures given the continuing weak insolvency market. Dividend held, debt down, and margins and market share also maintained in an extremely tough operating environment. My one concern is the more than one fifth increase in effective financing cost of BEG's new banking facilities from 4.6% to around 5.6%. It is said to reflect "current market rates" but seems a rather large increase.

Hard to see the circumstances in which the UK insolvency market could face another substantial contraction from its current depressed levels. So given BEG's success in cutting its operating costs to match its reduced revenue base, 2012/13 should mark a low point in its profit cycle.

Unless I am missing something BEG's current valuation ( a historical p/e of under 6 and a yield of 7%) looks well out of kilter with the rest of the market.

Perhaps Rick Traynor and his managers should think of taking the company private if the market continues to refuse to rate this company more highly?

[c1d] 03/7/2013 08:52

Dashton42,
I don't think Begbies record on big acquisitions is that great. I would be happy for them to do some small infill acquisitions of local firms to add to their network if they have gaps but really would prefer them to stay focused and grow organically rather than by acquisition.

[dashton42] 03/7/2013 08:30

Very relieved, having taken the plunge into BEG, that the divi was maintained...

The results mention the the headroom available for "...organic investment and selective acquisitions". Does anyone know of companies operating within the insolvency field who could possibly be in the frame?

Presumably, now's a good time for strategic, bolt-on acquisitions, with the market still in a depressed state, and share prices languishing as a result.

[daneswooddynamo] 03/7/2013 08:07

bouncing along the bottom with a 7% yield

[c1d] 03/7/2013 08:04

I thought the results were good. Made a profit even after right sizing the business for the depressed insolvency market. I think that they are like a coiled spring that will do v well when the insolvency market returns to even average levels of business. Pleased that the dividend was maintained and the balance sheet looks very solid to me.

[asagi] 03/7/2013 07:20

Final results here:



most important for me : dividend held.

Turnover down
EPS down
dividend held
net debt down

trading environment 'orrible.

Asagi (long BEG)

[nw99] 03/7/2013 07:11

Debt down good for the shares today I think

[dashton42] 01/7/2013 08:05

More on the same theme in today's City AM:



I checked the FRP Advisory website, but couldn't find a particularly up to date news release that the City AM article is referring to.

Anyway, all good stuff for BEG, if not for the zombie companies concerned.

[nw99] 01/7/2013 07:42

Yes at article good for Begbies