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Share Name Share Symbol Market Type Share ISIN Share Description
Cello Health Plc LSE:CLL London Ordinary Share GB00B0310763 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 115.50 112.00 119.00 115.50 115.50 115.50 48,681 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Media 166.8 7.1 -0.9 - 123

Cello Health Share Discussion Threads

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DateSubjectAuthorDiscuss
25/3/2011
19:25
Stock to Watch: Cello Group Fri, 25/03/2011 - 00:00 | Edmond Jackson This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. Since I drew attention to AIM-listed marketing services group Cello (CLL) in January 2010, its shares doubled from a 30p range and now settled back at 55p range as the company has just increased its shares in issue by 11.1 million to 72.8 million in order to finance a US acquisition. This small cap sub-sector is unfashionable (hardly any brokers cover it), yet Cello merits renewed attention. It is a firm with a solid underlying financial record; a strategy to diversify its earnings intelligently abroad; and while investors may need patience its risk/reward profile looks favourable. The development has encouraged small cap funds such as Ennismore European, which has a good long-term record, to increase its exposure above 6% of Cello shares. Although only involving a modest £2.4 million exposure, this is a relatively illiquid share, hence the move demonstrates confidence to become "locked in" like this. The investment rationale might be summarised "top down" as marketing services being a cyclical play on global recovery, with a strong exposure to healthcare/pharmaceuticals possibly mitigating downside risk; and "bottom up" as scope for improvement in a forward price-earnings multiple of just seven times. Although the yield is nothing special, less than 3%, there is a consistent record of dividend payments; it is not as if a low P/E is warranted by periods of financial distress. US expansion eyed The 15 March prelims showed a £0.8 million exceptional charge related to downsizing the business serving the public sector, with strategy prioritising growth abroad - targeting multinationals outside the relatively mature UK market which represented over three-quarters of 2009 group revenue. International now accounts for 40% of revenue on the main research and consulting side. Medergy HealthGroup Inc, a Pennsylvania/London based company in healthcare communications, is being acquired for an initial £6.2 million equivalent, split between shares and cash, with a £2.1 million equivalent earn-out. It is a relatively small deal in context of Cello's £39 million capitalisation, if one that builds exposure to healthcare and the US. In 2010, 75% of group revenue was UK-derived, with continental Europe about 15% and the US less than 10%. From cellogroup.co.uk you can see a spread of industry client exposure. A placing to raise £2.8 million was struck at 52.5p a share so it is quite likely, the price consolidates here until there is new information on progress. This could be a long-term buying opportunity after the price otherwise reached 62p in January. The 2010 results need deciphering however since Cello's flat overall revenue shows the need to bolster performance - such as via acquisitions. Management will need to show it can offset the dilution with better top-line performance. Highlights emphasise headline operating profit up 21% to £7.3 million and reported operating profit of £5.7 million against a prior year loss of £4.9 million; however revenue rose just 1% near £125 million and the profit "turnaround" largely results from a near £9 million goodwill impairment charge taken in 2009 also nearly £2 million in restructuring. These are main reasons why 2010 administrative expenses fell by over 15% to £54.5 million. Earnings per share worked out at about 5.5p, hence a price-earnings multiple of 10 times currently. This is a tad below Cello's normalised EPS figure of about 7.5p since 2007, with a resumption projected for 2011-12. Alium Securities, the company broker, projects £7.6 million pre-tax profit this year, rising to £8.5 million in 2012, earnings per share rising more modestly from 7.3p to 7.5p as a result of extra shares issued. The implied, lowly P/E multiple of seven times, looks to pretty fully factor in the risks. Company REFS shows an average P/E close to 20 times during 2007, then down below five in 2009 and 2010. Such volatility often typifies small cap cyclicals and can offer long-term trading opportunities. Pallid recovery looms Caution probably results from wariness over UK economic prospects which are in focus again after a difficult Budget with little room for manoeuvre. Recovery here may be anaemic, unlike from previous recessions in the early 1980s/90s. Even so, management's outlook statement is robust: "optimistic that the higher levels of client activity, particularly in the research sector, seen in the last quarter of 2010 and so far in 2011, will continue." On the main research and consulting side, Cello's New York office "has performed strongly and is expanding rapidly" and there is intent to expand the US West Coast office more aggressively this year amid new client wins. A small office has also been opened in Switzerland serving pharmaceutical clients and 2011 marks a concerted effort to expand into Asia. The operating review cites a 27% rise in operating profit "reflecting continued strong spending patterns by our broad international blue-chip client base", especially in the second half, although I stand by my remarks regarding the drop in admin expenses turning around group operating profit. In communications (the fourth-largest direct marketing company in the UK), profit was overall stable and a Beijing office is being opened also to serve as a hub for Research and Consulting. As to be expected from a "people business" the balance sheet is goodwill-heavy with £71.2 million goodwill in context of £58.2 million net assets. Net debt has fallen from £11.5 million to £8.8 million as post-tax net cash flow from operations rose from £4.6 million to £7.1 million. This reduction should help the income statement as a net interest charge around £0.8 million has tended to clip operating profit by about 15%. In conclusion, Cello is the kind of small cap cyclical that tends to get overlooked in challenging times; yet is repositioning itself well having taken necessary charges and dilution to address international opportunities - prudently, without a step too far. If management can show it can get EPS back to 7p with scope to build further, the rating ought to improve such that it becomes possible to target a 70p range for the shares. This implies about 50% upside, if still below Cello's 115p to 155p trading range before the recession. Meanwhile, the downside risk from 55p should be limited.
welsheagle
16/3/2011
07:12
Good astute use of placing IMO, keeps balance sheet under leveraged which is no bad thing, deal still earnings enhancing, boosts scale overseas.
qs9
15/3/2011
23:27
Investors Chronicle comment, found from another BB. Cello changing its tune Created: 15 March 2011 Written by: Malar Velaigam Cello continues to drive its research and consulting (R&C) business as it moves away from traditional direct marketing. This area of the business increased like-for-like profits by 27 per cent to £6.9m on flat revenues, mainly because operating margins improved 3.4 percentage points to 18.8 per cent as trading conditions normalised. The group's healthcare sector focus helped to maintain sales levels in the R&C unit at £59.9m despite the slump in public sector spending. Encouragingly, the public sector now accounts for only 6 per cent of the unit's revenues, down from 20 per cent 18 months ago. This should shrink further as, alongside the results, Cello announced the acquisition of US-based healthcare consulting group MedErgy, which boasts Johnson & Johnson and Pfizer as clients. Chief executive Mark Scott says MedErgy will help drive growth in both overseas markets and the pharmaceutical sector - two key areas for Cello. Communications business, Tangible, generated a fifth of revenue from R&C which helped increase the unit's operating margins to 9.4 per cent from 8.1 per cent last year. Altium are expecting 2011 adjusted EPS of 7.3p (2010: 7.2p), rising to 7.5p in 2012. CELLO (CLL) ORD PRICE: 55p MARKET VALUE: £33.9m TOUCH: 54.5-56p 12-MONTH HIGH: 62p LOW: 27.5p DIVIDEND YIELD: 2.6% PE RATIO: 9 NET ASSET VALUE: 95p* NET DEBT: 15% Year to 31 Dec Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p) 2006 75 3.50 7.4 1.00 2007 108 4.60 8.40 1.20 2008 138 4.20 6.5 1.25 2009 124 -5.75 -11.3 1.30 2010 125 4.93 5.9 1.43 % change +1 - - +10 Ex-div: 10 Jun Payment: 8 Jul *Includes intangible assets of £72.3m, or 118p per share Aim: media More analysis of company results More share tips and updates.. . TIP UPDATE: Buy Cello is transforming itself into a niche international media business, which should bolster margins, and shield revenues. The shares have gained 49 per cent since our buy tip (37p, 29 July 201037p, 29 July 2010) and, rated on 7.5 times 2011 earnings estimates, they remain a buy. Last IC view: Buy, 46p, 14 September 2010
interceptor2
15/3/2011
08:05
Agreed Coop
santangello
15/3/2011
08:03
Also worth noting that Alan Rich the Chairman, who's down a fortune buying in £1.20-£1.40 range, is picking up 400k more of new shares. Exciting times.
coopstock
15/3/2011
07:58
Outstanding performance. Institutions onboard. Acquisition earnings enhancing immediately.
santangello
15/3/2011
07:55
Good results beating forecasts and a shrewd looking acquisition and placing, which will increase business in the USA where the growth is. ic2..........
interceptor2
15/3/2011
07:51
I couldn't work out why there wasn't more institutional buying. Now we know. 5m+ new shares placed at 52.5p. Quite a vote of confidence.
coopstock
14/3/2011
09:49
One year chart is a classic example of base building consolidation before a major advance with 3 distinct bases. Mid April 2010 to Mid 2010 before major break out. October 2010 to end of December 2010 then another break out. Mid January 2011 to now with a break out target at 63p. If tomorrows results are as good as indicated in the last trading statement which was about the strongest I have seen this year. It should see another major advance. Regards ic2......
interceptor2
13/3/2011
01:05
Thanks Santangello I will take a look at STF if you think they are worth some research. My main holdings are LOQ,NPE,TFW and RGD. The first three I have held for five years each at least. What is it you like at STF ?
davidosh
12/3/2011
22:34
Cheers dd.....30p was an astute purchase.........(as ever). I am averaging from 44p upwards. Here's to Tuesday. May I ask dd, are you in STF?
santangello
11/3/2011
23:27
I do not think we want to hear that they may take it private as that often means a delisting these days. Anyway the results will show the progress that is being made and having invested heavily at 30p when they did not seem to budge for months and months and nobody was interested in Cello I think I can cope with 60p for a little while longer !
davidosh
11/3/2011
23:18
Stonking performance today....all things considered.... Results on Tuesday...... With a strong finish by the Dow, these should easily move up on Monday...MMs were keen to do that today............ s/p way too low for me (and the Directors, who may take the company private?)
santangello
09/3/2011
16:47
Looks that way ed....... Cannot wait for them too..........
santangello
09/3/2011
14:34
run into results just starting? Numbers due 15 March
edcrane
21/2/2011
21:31
CLL for me dnfa, but CRE are a credible consideration after them. I would perhaps invest 75%/25% accordingly. 60p for CLL will look ridiculous soon......imho.
santangello
21/2/2011
19:28
PE for CLL is 8.1, both companies have recently had very strong trading updates, such a strong sector imo. I put CRE on my watchlist after the last update.
interceptor2
21/2/2011
19:19
which to buy - cello (PE 10) or creston (Pe 5)?
dnfa1975
21/2/2011
18:55
Yes looking forward to CLL results, even after an 80% increase since last May. They are still only on a forward per of 8 which is based on very stingy forecasts imo. The reason I say stingy is that after a very bullish ahead of expectation and net debt lower than expected, for the trading statement in January. Altium moved forecasts up with PBIT from £6.1m to £6.3m and EPS from 7.2p to 7.3p. £6.71m and 8.0p looks like a sensible upgrade to me. We will just have to wait and find out. Regards ic2........
interceptor2
21/2/2011
16:40
CLL soon to fire up again hopefully.
owenski
13/2/2011
22:30
Hybridan small cap view 25th Jan. AIM listed marketing group has announced strong profit growth backed by good cash conversion. The board expects that the full year headline pre tax profits will be ahead of expectations and net debt will be better than expected at less than £9m. The group's market research and consulting business experienced a strong second half with robust like for like revenue growth. Operating profits are expected to have risen by more than 20 percent. This is reflected by continuing strong spending patterns, a growing international blue chip client base (due to significant gains in their blue chip client wins in 2010, the group intend to expand its US West Coast office more aggressively in 2011) and improving operating margins. Performance has been particularly strong in the pharmaceutical and health related client sector which now constitute the primary area of the group's research and consulting activity. The group is carrying a forward healthy pipeline of activity into 2011, a good investment.
interceptor2
09/2/2011
18:27
Nice wave of buying today, and more than justified.....bouncing nicely of its base, and now ready for the next comfortable leg to 75p? Results Tuesday, 15 March.......so time to beat the T+20 traders and top up over the next week or so......just like I did today (swore I already had MORE than enough lol). Exciting times ahead.
santangello
01/2/2011
17:25
See the traders have nearly all gone..... Time to snaffle more before the excellent results are unveiled in a few weeks time.....
santangello
27/1/2011
10:23
Mark Scott is going round telling anyone who'll listen that the numbers are 'stellar', so could be something beyond even revised expectations.If it's anywhere near £7m then, given reduced debt, short term upside should put this over 100p. Another pointer is that since the share price started to recover there has been very little selling by Cello people, most of whom hold between 100k-1m. They're expecting the good news to continue. I'd like to see a nice little acquisition to bolster the US pharma story - would bring the institutions and the likes of WPP sniffing around the stock. Personally I'm amazed that they've ridden out the freeze on government spending, which made up a large part of their 'Tangential' business.
coopstock
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