Begbies Traynor Share Discussion Threads

[aleman] 20/9/2018 07:52

I'm glad I did not go to the AGM on Tuesday. It's today! I picked up the 11:00am Sept 18th deadline for the proxy forms in error. I do apologise.

[runthejoules] 19/9/2018 18:04

I had a note on my whiteboard that says 'buy more when near 65p'. Should have kept a closer eye on that, oh well! :0)

[aleman] 19/9/2018 13:24

I was too busy with other things to go to the AGM. It looks like something has come from that. There has been a run of buying since yesterday afternoon that has now started to lift the share price a little. Office numbers have risen. Perhaps, the AGM has given a broker the confidence to increase their predicted numbers slightly?

[aleman] 11/9/2018 12:38

Don't know.

Individual and Corporate insolvency trends seem to have been quite similar to the Claimant Count trend in recent years. The Claimant Count looks to be accelerating upwards - up 15% in the 12 months to August 2018 from 3.3% 12m to Aug 2017 and -1.3% 12m to Aug 2016 :

[norbert colon] 08/9/2018 19:12

Thanks Aleman - are you attending the AGM?

[aleman] 07/9/2018 23:00

Another office - now 54. (Feb 2017 was 44.) And Sheffield moved to larger premises.



Kris Wigfield, managing partner at Begbies Traynor, said: "Our move to Westfield House comes at a time of active expansion with a number of recent recruitments at Begbies Traynor.

[aleman] 01/8/2018 12:13

They've opened another office somewhere - now 53.

[aleman] 01/8/2018 11:48

That's a very shallow view. Business recovery specialists save many companies from exinction. Suspending creditors rights temporarily can save jobs while refinancing and rescue deals are arranged. Would you rather more people lost jobs? Renegotiating creditor rights can leave them with more money than a straight liquidation. Would you rather creditors lost more money? Distasteful? Sometimes, maybe - but everyone would be worse off without them.

Would you class undertakers as distasteful for making their trade from people dying?

[mr macgregor] 01/8/2018 11:10

A company that wants the UK to do badly. Somewhat distasteful.

[aleman] 28/7/2018 09:19

Underlying number of corporate insolvencies in England and Wales rose at an annual rate of 12.6% in Q2. Individual insolvencies in Q2 rose 27.3% on a year ago to reach a 6+ year high.



The last time corporate and individual insolvencies were this high and rising was Q2/2008 and BEG shares were on their way from 120p to 200p, before massive rate cuts from the B of E and QE rescued things. It will be impossible to replicate the magnitude of those rate cuts. So does anyone think the B of E should raise next week?

[aleman] 17/7/2018 14:22

UK Claimant Count continues to trend gradually up with +8k to 898.7k (+0.9%) for June M-o-M. +97.4k (+12.2%) M-o-Y. That's up 17.9% from the Feb 2016 low of 762.2k.

[norbert colon] 12/7/2018 21:31

https://www.investorschronicle.co.uk/tips-ideas/2018/07/10/begbies-dividend-rises/ Buy reiterated

[walbrock82] 11/7/2018 12:57

Has valuation priced the optimism for Begbies? Read about it here

[edmundshaw] 10/7/2018 22:44

All very sensible. I still hold a fair number, and will add back on weakness; in agreement with most of the comments above.

The wait for a downturn has been protracted, but will not last forever...

[lefrene] 10/7/2018 21:45

What a pleasure to read such erudite arguments from both sides. On balance I see it as a hold, there seems a tightening of purse strings across the bulk of ordinary working people as they get squeezed by creeping costs of utilities, my business friends in retail are giving up on it.

[topvest] 10/7/2018 21:25

I'm happy to hold these, as they are a good countercyclical hedge. Even if a recession doesn't happen in the medium term, which is unlikely, they should still do reasonably well.

[aleman] 10/7/2018 16:02

I'd put the emphasis slightly differently - the company comfortably beat forecasts based on previous conservative outlook statements. Turnover, EPS, cashflow and dividend grew respectably in a not much better than stagnant UK economy but could grow very quickly indeed if and when the much expected downturn arrives after a very long bull market made up more of ratings increases than profits increases, and funded by debt-driven buy-backs and savings reductions. The 3.5%+ yield is useful compensation while one waits and the share acts as a very useful countercyclical hedge in a typical portfolio.

Does anybody really expect the economy to pick up again when banks are tightening up on credit, consumer savings rates have collapsed so low that they can't go much lower, and there are so many political hurdles of late? When the downturn comes, will they just cut Bank Rate by another 5% again to dig us out of the hole? :-o

[speedsgh] 10/7/2018 15:18

Nice balanced write up on the results in Stocko's SCVR report by Graham Neary today...



This insolvency practitioner has enjoyed a big re-rating higher over the past year. Investors are preparing for interest rate hikes and for zombie companies to start throwing in the towel en masse, driving up the demand for Begbies' services.

Results for the year to April 2018 are moving in the right direction.

The company made small acquisitions in February and March, and they will have contributed a sliver of the above revenues.

Its financial position has improved: net debt is at its lowest level since 2007, and the total dividend has increased for the first time since 2011.

Outlook

Given the valuation now attached to these shares, I'm a bit surprised that the outlook statement isn't more bullish.

Conditions are described as "stable". Expectations are unchanged, with continued growth to be seen from the pair of acquisitions and from organic investments being made:
"Any further growth in earnings in the new financial year could be generated from a faster return on the investments we have made or an overall improvement in our counter-cyclical market conditions."

Corporate insolvencies fell slightly in 2017, according to statistics quoted by the company. Q1 2018 saw them ticking back up, but the company offers the appropriate caution:
"any sustained increase is likely to be as a result of either a marked change in interest rates or a change in the economic environment".

My view

I have mixed views on this one. I can see the argument for it playing a counter-cyclical role in a portfolio, and I agree with that.

On a standalone basis, however, it's another labour-intensive professional services outfit and its margins reflect this. The operating margin in today's income statement is a lukewarm 5.3%, an improvement compared to last year's lacklustre 3.3%.

Also, considering it purely on a standalone basis, higher insolvencies still haven't materialised yet. After such a long wait, there is still no guarantee that this will be occurring any time soon.

While I said at the top of this report that investors should try not to place too much emphasis on macro forecasts, Begbies is an example of a stock which is heavily influenced by economic conditions.

Apparently, the prospects of a rate hike at the Bank of England's next meeting have fallen from 69% to 62% in recent days. I would expect the Begbies share price to retreat, if interest rates do not rise soon.

But I can see why the share has attracted some interest. Probably the main attraction for some will be the 3.5% yield, with prospects for this to improve as Begbies continues to grow market share.

[aleman] 10/7/2018 12:03

Expanding in Manchester and on the acquisition trail:

[ironstorm] 10/7/2018 08:07

Good set of results. Outlook great with the potentials or considerable out performance is my assessment. Suspect we won't here on that part till the year end.

But nice divi increase for us.

[aleman] 10/7/2018 07:45

Good results, conservatively reported, as usual. After adjusted earnings rose from 2.0p to 2.2p in H1, they rose from 1.3p to 1.8p in H2, suggesting increasing momentum. That and the increase in the workforce and number of offices through the year suggest further improvement is expected, which is reinforced by the dividend increase from 2.2p to 2.4p.

Economic news suggests that the global economy is beginning to deteriorate to add to the already weakish UK economy so business levels are likely to be at least steady, but further growth looks more likely.

Forecasts were already looking moderately strong and might be upgraded on these good results. The shares seem to have largely discounted this already, though remain a good strategic hold in times of increasing political and economic uncertainty around the world.

Existing forecast to be reviewed:

Year Ending Revenue
(£m) Pre-tax
(£m) EPS P/E PEG EPS Growth Div Yield
2018-04-30 51.95 5.60 3.55p 19.7 2.6 8% 2.35p 3.4%
2019-04-30 54.60 6.45 4.10p 17.1 1.1 15% 2.50p 3.6%
2020-04-30 56.80 7.35 4.60p 15.2 1.2 12% 2.65p 3.8%