Cenkos Securities Share Discussion Threads

[cwa1] 06/3/2019 20:55

A lot of good points you've left there QP

[topvest] 06/3/2019 20:54

Put him on filter like me.

[lord gnome] 06/3/2019 09:02

I can read rather well actually QP. My comments were addressed to speedsgh who I respect as a poster. You do seem to take umbrage rather too quickly. No need to.

[lord gnome] 06/3/2019 08:34

Please don't stop speedsgh. QP isn't the only one here. I often post on boards where I have no holding but where the stocks are on my watch list. Good and continuing research is essential to spot opportunities, otherwise how does anyone invest as opposed to gamble?

[speedsgh] 05/3/2019 23:10

Nothing curious about it. Ongoing research of this sector is a part of my day job so it has only seemed natural to share on here any company/sector news (positive or negative) I have come across. If you would prefer, I will stop.

[speedsgh] 05/3/2019 12:12

QP - Yes, I didn't include the whole of the Numis statement as I have been trying to assess the market conditions for the sector, both backward-looking but more importantly the outlook going forward. The bit I left out did not provide any relevant info in this regard (whilst potentially positive for company if they then look to raise funds, winning new clients says nothing about the market conditions in the sector).

In relation to where Cenkos sits in relation to peers, I would say that Cenkos fall somewhere in the middle ground between WH Ireland & Numis, but they would appear to be somewhat closer to WHI than NUM, especially since CNKS appear to have lost a number of their 'better quality' clients over the past 12 months or so which have not been replaced with clients of a similar quality. The following is a comparison. I was going to include WHI but there last reporting period was for 16 months so decided against it, but safe to say that they sit a rung or two further down the quality ladder than Cenkos.

All Numis figures are for 12 months to 30/9/2018; all Cenkos figures are for 12 months to 31/12/2017:

REVENUE - Numis £136.0m; Cenkos £59.5m
PROFIT BEFORE TAX - Numis £31.6m; Cenkos £10.0m
EPS - Numis 25.1p; Cenkos 15.0p
CASH - Numis £111.7m; Cenkos £36.8m
NET ASSETS - Numis £143.1m; Cenkos £29.7m
CORPORATE CLIENTS - Numis 210; Cenkos 117
AVERAGE MKT CAP OF CLIENTS - Numis £829m; Cenkos undisclosed

Discl: I do not hold CNKS, NUM or WHI.

[lord gnome] 05/3/2019 10:23

Hopefully by next month the future may be a little clearer and allow UK plc to plan with some confidence. What we don't need is for the purgatory of Brexit to be delayed for another couple of months. I continue to hold CNKS more in hope than expectation.

[speedsgh] 05/3/2019 10:10

Hi QP. I am not qualified to make a qualitative comparison between WHI & CNKS. However the CNKS TU of 19/12 was backward-looking (and I am guessing largely as a result of the fees earned on the ESUR takeover which completed in Dec) whereas the WHI statement today is forward-looking so of potential relevance to all sector peers.

AFAICT CNKS have been involved in just 2 fundraisings in Jan/Feb 2019: a £1.15m subscription for Personal Group (PGH) & a £21m placing/open offer for Kromek Group (KMK).

Whilst 2 months does not make a year, it is interesting to compare Jan/Feb performance to recent years (based on fundraisings announced):

Jan/Feb 2016: £270m
Jan/Feb 2017: £163m
Jan/Feb 2018: £54m
Jan/Feb 2019: £22.15m

Numis AGM Update on 5/2/19:
"Since the start of the financial year [on 1/10/2018], UK equity indices have suffered material declines and the domestic political situation has significantly impacted investor sentiment in the UK. As a result the market backdrop has been particularly challenging for our corporate and institutional clients, which has ultimately impacted our trading performance in the first four months of the year...

... We have a good pipeline of opportunities, and would expect to see a meaningful increase in revenue, as and when there is greater clarity regarding the UK macro-economic and political landscape."

All this would suggest that times are tough for the sector.

AFAICS possible short-term drivers of CNKs share price:
> Corporate action
> Removal of Brexit uncertainty allowing UK plc to start investing again which would be beneficial for the sector

AIMHO

[speedsgh] 05/3/2019 08:52

from update on current trading contained within the Placing announcement this morning by sector peer, WH Ireland (WHI)...



Following the announcement on 6 February 2019 (the "Trading Update"), trading conditions have remained challenging for both divisions and the Directors do not believe that there will be any improvement before the end of the financial year or in the immediate future. The Board now believes that operating losses will be substantially higher in the second half of the year when compared to the first six months.

[speedsgh] 21/2/2019 17:56

QP - My post is admittedly not exhaustive. As suggested I was just really thinking out loud trying to get my head around the current situation.

Although not mentioned in my post, I had considered the 'ahead of expectations' Trading Update on 19/12/18 and concluded that this was probably as a result of the completion of the ESUR takeover on 17/12 which would presumably have enabled Cenkos to book the fees earned in relation to this in FY18. A nice boost to the FY18 figures and possibly the level of dividend to be paid but will presumably not feature in the market's view looking forward.

Equally I do not see the EBT share purchase plan as a major factor when assessing the longer term prospects/investment case or trying to working out the end game here, whether that be the Board's plan or Crystal Amber's.

Just trying to work out the longer term opportunity here. In that sense I can see both bull & bear cases and as yet am undecided. But there certainly remains some intriguing unanswered questions over recent events/announcements.

[speedsgh] 21/2/2019 16:48

Just some thinking out loud...

Intriguing situation with Cenkos. Activist investor, Crystal Amber (CRS), notified Cenkos that it held 7.14% of the company in Feb 2018. No further update in their holding has been made since so one assumes they hold around the same level today (the Monthly NAV release for Dec 2018 on the CRS website actually shows them as owning 6.9% of Cenkos share capital). In their final results released on 7/9/18, Crystal Amber made the following comment:

"The Fund has been a shareholder in Cenkos since late 2010 and increased its holding significantly during January 2018 at a share price which we believe ascribes little probability to the company being able to secure any further exceptionally large deals. Given the pressing need to deal with forthcoming retirement/succession issues relating to a number of Cenkos’s founders and the evident strategic interest in this sector (2017 takeover of Panmure Gordon and 2016 Kuwaiti investment in WH Ireland), we have now proposed to the board that it undertakes a strategic review of the company."

Following this:

CNKS rns dd 9/10/18 - CEO Anthony Hotson to stand down from the Board on 31/10/18 but remain an employee until 31/12/18.
CNKS rns dd 31/10/18 - Anthony Hotson to remain an executive director & CEO until his successor has received FCA regulatory approval.
CNKS rns dd 5/11/18 - Former CEO, Jim Durkin, to be appointed executive director & CEO upon receipt of regulatory approval; Antony Hotson to remain CEO in the interim.
CNKS rns dd 12/12/18 - CFO Philip Anderson (appointed by Anthony Hotson in Jan 2018) to step down from the Board & leave Cenkos on 31/3/19.

Anthony Hotson is still interim CEO today & regulatory approval of Jim Durkin remains outstanding. By way of comparison Anthony Hotson was announced as CEO on 5/7/17 subject to regulatory approval which was subsequently received less than a month later on 2/8/17. Regulatory approval of Jim Durkin's reappointment as CEO would therefore seem to be taking some time i.e. more than 3 months so far. I believe another poster has previously suggested that they have been unable to find evidence of Jim Durkin's application having been lodged with the FCA. If this is correct, what (if anything), does this indicate?

Cenkos have lost their position as broker to no less than 10 clients since Aug 2018. AA (AA.), Michelmersh Brick Holdings (MBH), IG Design Group (IGR), Restore (RST), Comptoir Group (COM), Mercia Technologies (MERC), Science in Sport (SIS), Verseon Corporation (VSN), CML Microsystems (CML), Frontier IP Group (FIPP). Some of these would appear to be from the 'better quality' end of the Cenkos client portfolio.

Over the same period Cenkos have independently acquired 3 new clients - Falcon Oil & Gas Ltd (FOG), Venture Life Group (VLG), Landore Resources Ltd (LND) - as well as the 12 Smith & Williamson clients upon completion of the acquisition of its Nomad & Corporate Broker business in Dec 2018. Clients acquired would appear to be lower quality than those lost.

Crystal Amber "increased its holding significantly during January 2018 at a share price which we believe ascribes little probability to the company being able to secure any further exceptionally large deals." The share price in Jan 2018 was north of 100p so one would assume that they are not overly happy with the current share price. Having said that their stats as an activist investor would suggest that they have a plan in place & will be actively engaging with the Cenkos board in order to create longer term value so they may be less concerned over the share price in the short term. Whether the objectives/strategy of the Cenkos board aligns with those of Crystal Amber remains to be seen.

Notwithstanding their involvement as adviser to esure Group (ESUR) in their £1.2bn takeover by Bain Capital (first announced in Aug 2018 & completed in Dec 2018), Cenkos fundraising activity would appear to have been pretty thin on the ground since Sept 2018. How much of this is company specific remains to be seen, although it is without doubt that the handling of the Brexit process by UK parliament, the uncertainty that this has created and consequent postponement of investment decisions by UK PLC has been unhelpful to the UK fundraising market in general.

It will be interesting to note any commentary on Cenkos by Crystal Amber in their Interim Results which are scheduled to be released on or after 7/3/19.

[speedsgh] 21/2/2019 07:46

Loss of mandate. Shore Capital have replaced Cenkos as joint broker to CML Microsystems (CML)...

[albert zog] 18/2/2019 15:13

5m Takeover of StockDale by Shore Capital implies value of c90k per corporate client, in terms of deal multiple. What does that imply for Cenkos ? How many clients they have ? About 80 ? Been going down I think

You would have to add in the cash as well I suppose - for the overall value

[speedsgh] 11/2/2019 10:08

Another loss of mandate. Peel Hunt have replaced Cenkos as Nomad/sole broker to Restore (RST)...

[speedsgh] 09/2/2019 20:10

Superdry co-founder cuts ties with broker Cenkos -

The co-founder of Superdry has parted company with Cenkos Securities, the stockbroker, as he tries to return to the fashion chain he started.

Julian Dunkerton, who left last March after disagreeing with the company’s new strategy under Euan Sutherland, its chief executive, hired the broker to try to help him to persuade the retailer’s shareholders to reinstall him.

Mr Dunkerton, 53, the largest shareholder, is unhappy about the collapse in the company’s share price over the past year and believes that he needs to return to restore its fortunes. The Times understands that he and Cenkos did not agree on the approach he should take when contacting shareholders, none of whom have backed him publicly.

Mr Dunkerton has not appointed a new broker, but has held talks with Liberum Capital...

[speedsgh] 07/2/2019 08:19

Yes, it does seem the lights are at least still on at the Cenkos offices. They are acting as Nomad/sole broker on Kromek's £21m fundraising (£20m placing, up to £1m open offer).



Cenkos Securities, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser and broker to the Company and no-one else in connection with the Placing, the Open Offer and Admission...

[jemt0703] 06/2/2019 22:39

Let me try to break this negative news flow...

Cenkos appear to be advising on this £3M takeover;

www.personalgroup.com/resources/investor-news/press-release-06-february-2019

[speedsgh] 06/2/2019 10:43

Cenkos missed out on the recent £2.4m placing for Cloudcall Group (CALL); Arden Partners acted as sole broker/sole bookrunner on the fundraising. Cenkos remain Nomad/joint broker.