Braemar Share Discussion Threads

[deanowls] 29/11/2023 15:25

They need to look more at the fact it’s five months on from half year. Why the wait?

[hyden] 29/11/2023 14:39

That's poor form imo. The Finance team seems to be scoring a lot of unnecessary own goals. And Company Secretariat should also have checked imo, not to mention the PR team. They need to double down and work to restore market confidence and avoid such silly mistakes in future. Rant over, sorry :-)

[grahamburn] 29/11/2023 11:12

Reckon the dividend payment date is incorrect as 29 March is Good Friday.

[rimau1] 29/11/2023 07:47

I have eps of 42p for FY24 and a net cash position of £13m trading on 7x FY24 and 6x FY25. Too cheap

[harry davis] 29/11/2023 07:33

Which fine fellow downvoted me! I am on the Braemar side but 2024 is more to look forward to than today

Cavendish today

Following the very recent (delayed) FY23 results on 16 November [download], we have not made any changes to forecasts following these interim results. We had been expecting an increase in operating costs following the expansion of the business operations (acquisition and teams added) and believe our current forecasts are conservative.

£151m of revenue and 38p of EPS

as I expected the weak dry cargo market was in the first half but smart folk will be looking at the baltic dry index which has been soaring right on cue from the second half which means cavendish forecasts look too low
hxxps://tradingeconomics.com/commodity/baltic

[pireric] 29/11/2023 07:08

Takeaways
- Revenue growth better than anticipated at +8% to £74.9m
- Operating profit on a constant currency basis slightly better than the trading update at £7.5m vs the at least £7m talked about. On a reported currency basis £6.7m
- Underlying EPS 17.43p in the first half
- Prior year acquisitions performing ahead of revenue expectations
- Trading well in the second half so far

On track to deliver market expectations for the current year (Edison a good barometer) and £18m sustainably from FY25. My best guess is it pares back towards 275p today.

Eric

[harry davis] 28/11/2023 18:22

I would suggest that there is not too much to be excited about tomorrow because the first half profit numbers will be down on last year like Braemar have told us many times already as they invest for future growth so £7m excluding currency movements is down a few million on last year. I would posit that any dip is to be bought as they reiterate £18m next year



I wrote this on Clarkson

--- The China stimulus package and what is happening in the panama canal (look it up!) is causing a big improvement in time charter rates. Look at the Baltic Dry Index last week and since September. Containerships is the weak area and that will stay the same next year, but tanker and dry cargo are great places to be and they are much bigger share of seaborne trade

Clarkson et al. are going to have a good next 12-18 months. I would position long the shipbrokers for the foreseeable future.

If anything happens to the Suez Canal trade route then shipping rates could completely skyrocket. I hope that does not happen for inflation's sake but the market is blissfully unaware of what could happen. ---



2024 will be a good year and I expect this to hit £4 then. I am writing up a big long piece on Braemar that I will publish on my substack within the next 3 weeks at maximum. It is already at 1500 words and it will be much longer than that. I am very positive on 2024. I am lower than broker average forecasts this year but higher over the next few years

I will post the link here but if you would like to get the email notification when my Braemar dissertation publishes you may join the email list

[masurenguy] 28/11/2023 16:03

Thanks for that link Riv. The interims are due tomorrow and in the delayed finals for last year, published just a couple of weeks ago, they stated that the current trading and outlook was as follows.

"The Group expects to build on FY23's exceptional performance and continues to trade well in FY24, remaining on track to deliver underlying operating profit of not less than £18m from FY25 onwards. The Group's forward order book continues to strengthen, standing at $65.6m as at 31 October 2023, 17% higher than $56.2m as at 28 February 2023."

The 2 projections by Cavendish & Edison, in that Masterinvestor analysis, were also exremely positive.

"For the year to end February 2024 analyst Ian McInally at Cavendish Capital estimated that revenues will be fairly steady year-on-year looking for £151.0m, while anticipating adjusted pre-tax profit to come in at £16.0m, worth 38p per share in adjusted earnings. In the coming year he has pencilled in £154.4m sales, £16.2m profits and 36.5p of earnings. His Price Objective on the shares is 385p.

Over at Edison Investment Research their analyst Andy Murphy is very much more bullish on his valuation, suggesting 520p as his Price Aim. For this year and next he is viewing £15.0m then £15.6m in normalised pre-tax profit, generating earnings of 40.5p then 39.9p respectively for 2024 and 2025."

Having taken an initial position @270p last week, I topped up earlier today.

[rivaldo] 28/11/2023 12:45

Nice summary on Master Investor overnight:

[studentinvestor13] 22/11/2023 08:35

Yes but you still get a 13p dividend forecast this year ;^). 27.95p of underlying eps in fiscal year 22 when the operating profit was GBP10.1m and they will do GBP18m from next year onwards. Do the math!

[hpcg] 22/11/2023 05:23

R.e. corporate actions. We know the new strategy, which is to concentrate on core services such as broking and to expand the coverage. There will be bolt on acquisitions, thank god, so we are invested in a growing company, not a sclerotic dividend payer like so many UK investors seem to favour.

[pireric] 21/11/2023 21:35

For what it's worth, the last bit of research I've done today:

Braemar traded on an average forward (rolling 12 months) basic EPS P/E of 11 to 14x between 2015-2020. In the years still impacted by covid and business model restructuring and deleverage it was on
- 10x in 2021
- 11x in 2022

So at 7.6x we are well below historical levels and amongst the cheapest cohort in the market (especially for non-consumer facing businesses), and the balance sheet and strategy is in much better shape to drive growth (something that was pretty lacking in the past). The company was arguably running a weak balance sheet across much of 2018-2021, the expansion strategy was pretty murky, and both of those things were a big negative. If they execute well, maybe this can be back into that 11-14x range within a couple of years maybe doing sustainable EPS of say 35-40p.

Small steps either way, but still think this should have a £3 handle on the share price again.

Eric

[drectly] 21/11/2023 18:34

Yes, good that it is back being traded. A long way to go until it is back to the level I bought at, attention drawn to it by John Lee in the FT. It looks OK, some cash in the bank and good ongoing cash generation. Starting to pay a reasonable divi, as long as they can avoid doing any daft purchases, it looks a fairly safe option medium term. It may bounce about a bit short term. As a very small holding, one to forget for a while and do nothing for me. Good luck holders.

[1pvh] 21/11/2023 18:08

Totally agree. Been a frustrating few months but everything has turned out well. Clean set of books and money in the bank and focused now totally on the shipbroking sector.Withstanding any shocks 12 x earnings going forward will still be relatively cheap.Large holding for me looking forward to the next couple of years!

[pireric] 21/11/2023 17:21

The stock closed at 280p, given a market cap of £83.8m (share count - ESOP).

What do we know about the first half results (to the end of September) next week?
1) Adjusted EBIT excluding FX movements to be at least £7.0m (vs. £8.9m ex FX movements and £10.9m headline in the same period last year, helped significantly by shipping rates)
2) Revenue to be "moderately higher" I'm guessing this means 3-5%?
3) There is a net cash balance at the half years to be reported next week of £5.3m (some usual drain through payment of year end bonuses, and investigation expenses etc).
4) Strong double-digit y/y total order book growth, to $65m at the end of September

I'm guessing first half headline EPS maybe of 12 to 13p but mat be swung by taxes or interest or what not.

Consensus forecast 36p of earnings here this year with £17m average of adjusted EBIT. The company continues to look for at least £18m from next year.

So the headline current year P/E is a meagre 7.4x, which drops to 6.9x ex net cash.

For me, that second point was very important, as it shows the business is gaining market share and is showing underlying growth as it is obvious some major shipping rate channels were abnormally high in 2022. That the management team are confident here that this can be an £18m operating profit business moving forwards irrespective of the shipping market backdrop is important. They have a lot of ability to flex costs in the second half for broker commissions which should also help on reaching this year's target.

The soft narrative the company is painting in their FY results and around it is certainly one that the business has a lot of operating momentum in it. And that the business is now in much sharper shape than it has been in a long-time.

I still see little reason why that headline forward P/E couldn't at bare minimum be closer to 10x on a 1 year view. They seem very confident £18m is the new cycle platform from next financial year starting next March; maybe let us handicap that to £17m. £84m - £5m = £79m EV vs. their expectations of £18m moving forwards = only 4.6x EV/EBIT. I'm guessing by year-end the net cash pile ought to be closer to £10m.

Eric

[masurenguy] 21/11/2023 16:04

Major Shareholders in BMS

Braemar Seascope ESOP: 3,959,630. 12.00%
Hargreaves Lansdown Asset Management Ltd: 2,561,280. 7.78%
Chelverton Asset Management Ltd: 1,925,000. 5.85%
Quentin B. Soanes: 1,334,490. 4.05%
Barclays Bank Plc (Private Banking): 1,318,533. 4.00%
National Financial Services LLC (Broker): 897,000. 2.72%
J. M. Finn & Co. Ltd: 860,000. 2.61%
James Gundy: 772,156. 2.35%
Rodney Leslie North: 469,000. 1.42%
Downing Ventures: 466,000. 1.41%

The top ten shareholders collectively control circa 44% of the stock.

[tomps2] 21/11/2023 14:12

Braemar (BSM) FY23 results & H124 webinar

Friday, 1 December, 1:00pm

James Grundy, CEO, Tristram Simmonds, COO and Grant Foley, CFO will present FY23 results and give an update on trading in H124.

Register here: bit.ly/BMS_FY23_webinar

[pireric] 21/11/2023 12:44

You realise you just made a case for 25p downside compared to 175p upside and are not keen to buy the stock

Eric

Separate note - it will be worth tracking this index. This has been strengthening notably recently if you pan it back to a 10-year horizon:

[dan_the_epic] 21/11/2023 11:54

My summary. This is not a stock for me but

FRP taking so long to check everything was in check was incredibly boring and annoying. Thumbs up for using FRP as I have a small holding in FRP ;)

I like Nigel Payne

Good business economics

They need to show they are on top of everything next week at first half results and state they will make £18M ebit again

Shipping markets seem still favouring them. VLCC rates trending up over past weeks. Containers have bottomed

They need to prove better corporate governance. Get some diversity onto the board

Approved the 12p of dividends

No more cavalier acquisitions like in the past into stupid areas of the market. Stick to what you know do broking

Directors need to buy some stock. Gundy and co need to be on the best behaviour

How long is the tail of small brokers in broking to mop up?

If they do all that then this could be at 450p in a year or two. If they mess up again then it will stay at 250p.

[masurenguy] 21/11/2023 11:42

Took an initial position here today following their relisting.

[dan_the_epic] 21/11/2023 10:13

hxxps://www.tradewindsnews.com/shipbroking/braemar-hails-virtuous-circle-of-recruitment-as-broker-numbers-jump-6-/2-1-1555632

Payne argues that this success means “the Braemar brand continues to rise”.

“This is now beginning to create a virtuous circle, in which, as our reputation grows, we are better able to attract high performers, who further enhance Braemar’s performance, working environment, brand and overall client offering to the benefit of all stakeholders,” he said.

[greybroath] 21/11/2023 10:08

It's back!

[dan_the_epic] 21/11/2023 10:08

don't worry about me. I am merely a watcher

[pireric] 21/11/2023 09:20

Agree broadly, although we know they won't kitchen sink FY24 given they are already over halfway through and is underpinning that consensus eps for 36p this year. Its not the sort of business model where you can kitchen sink, e.g. because you have fixed price contracts or some other flexibility that allows you to do so.

Re the minimum £18m of EBIT from next year (£17m ex costs). They finally have the balance sheet and core focus on shupbroking again to hopefully execute. As they point out, it's a very fragmented market. If they can reliably become a towards 40p EPS business, then it seems logical to think this could trade above £4 and potentially towards £5 a share given this is a capex light business model. The group generated £18m of free cash flow last year. £5 would be a Clarkson multiple today. Clarkson should trade at a premium to Braemar but Clarkson itself has tended to be more of a high teens P/E business over time

In terms of shipping markets, a lot of the energy and related markets are in a good position. Containerships (BMS is underweight here IIRC) has normalised after all of the pandemic rally, and dry cargo is at the bottom of the cycle and probably improves from here.

Certainly at £2.65, the balance of upsides against downsides feels very attractive.

Eric

[rimau1] 21/11/2023 08:38

Indeed Pireric BMS is very cheap on every metric (price/book, xearnings, cash adjusted etc). For balance my bear case points are (1) with my CEO hat on I would kitchen sink y/e Mar'24 and focus on hitting FY25 expectations - which i have personally priced in (2) external markets / shipping downturn. Thats all i have.Dan the epic - i just re-read your recent posts/views on BMS, hope you were not on the wrong side of the trade.