Chesnara Share Discussion Threads

[cwa1] 15/5/2014 09:52

Think it might be rude to not have a few at 319.....

[gostevie63] 15/5/2014 09:08

There seems to be a big seller offloading multiple chunks of £60,000 (18464 shares at £3.25). Nine such trades went through at the 08:00 opening.

[retsius] 15/5/2014 08:51

Price drop today.any info?

[topvest] 18/4/2014 20:45

Yes, I don't think the time is right at the moment. 2/3 years down the road, it could be an option though.

[retsius] 18/4/2014 19:13

Pvb
Many thanks for your tip.

[pvb] 18/4/2014 18:50

You can't remove it completely, but can edit down to (almost) nothing. But you do need to leave just one character in, a full stop or SPACE.

[retsius] 18/4/2014 18:46

Apologies for duplication.This an annoying feature that has occurred before... You can't edit it it out and you end up being a right........

[topvest] 18/4/2014 18:19

I wonder whether they have thought about demerging Movestic now that it is doing much better...would this be value enhancing?

[hieronymous1] 17/4/2014 12:58

Skinny

Thanks for that. Sadly no spare cash and nothing I am inclined to sell. N&P seems a good share news aggregator. I have bookmarked it.

[skinny] 17/4/2014 11:38

Hieronymous1 - PHNX do get some coverage - latest today -

[retsius] 17/4/2014 11:18

Big buy or sell just gone through,1m. Shares.

[aleman] 17/4/2014 10:42

Insurers doing well today. Any news out there besides Barclays saying RSL fall overdone?

[cwa1] 11/4/2014 17:15

And you Squire, and you :-)

[fangorn2] 11/4/2014 16:56

haha no biggie CWA1. Didn't take it that way....

Have a good weekend. :)

[cwa1] 11/4/2014 16:51

Sorry Fang, tongue was half in cheek. I've already seen it in a couple of places and thought the first person that posted it all was a bit cheeky! I know you're just re-posting what is already fairly common currency ;-)

[fangorn2] 11/4/2014 16:33

CWA1,

Didn't get it from IC. Found it in my inbox.
Hardly earth shattering though. And I'd definitely prefer Chesnara. UT closing in on 325.

I can edit if required.

[cwa1] 11/4/2014 16:28

Ahem, thanks for that, short, copyright sympathetic, snippet from the IC piece Fang :-)

[fangorn2] 11/4/2014 16:09

Apparently Phoenix Grp are an IC tip fyi


"Phoenix Group Holdings
Thu 10 April 2014

A A A
Recommendation type: Income

John Adams
Shares in the life assurance sector's closed-life companies tumbled heavily late last month after news emerged that the Financial Conduct Authority (FCA) was planning to probe that market. Phoenix (PHNX) wasn't spared any of that slide in sentiment the closed-life specialist's shares tumbled 12 per cent on the back of the news. But clarification from the FCA suggests that its planned investigation is unlikely to represent quite the threat that investors had originally feared, leaving the share price derating looking overdone. Moreover, Phoenix's impressive cash generation supports an impressive dividend yield.

Specifically, Phoenix's shares slipped after news reports suggesting that the FCA planned a review of life and pensions policies sold between the 1970s and 2000, covering some 30 million customers - driving fears that another large-scale mis-selling type probe might be under way. But the FCA's clarification statement some hours later suggested a more benign agenda - focused on "fair treatment" of long-standing customers and which specifically excluded "a review of sales practices for these legacy customers". The probe - which won't even begin for another three months - will focus on service levels provided to clients with policies held in closed books. Analysts think cross subsidisation, in particular, is likely to face scrutiny - whereby closed books might be disproportionately charged to support new business generation.


But such a regulatory agenda is unlikely to represent much threat to Phoenix. To begin with, it writes very little new business - it only sells some annuities to existing maturing customers - so fears that it may be unfairly charging closed book customers to support news business isn't really relevant. Moreover, analysts at broker Canaccord Genuity are confident that Phoenix's existing administration charges "will not be deemed 'rip-off' charges" by the FCA. True, the small amount of new annuity business that Phoenix does currently write could be affected by the Budget day decision to axe compulsory annuity purchases. But here, too, the impact is likely to be modest - analysts at Deutcshe Bank believe this activity generates just 1 per cent of its profit.

PHOENIX (PHNX)

ORD PRICE: 654.5p MARKET VALUE: £1.47bn
TOUCH: 653.5-654.5p 12-MONTH HIGH: 810p LOW: 562p
FORWARD DIVIDEND YIELD: 9.1% FORWARD PE RATIO: 14
NET ASSET VALUE: 849p EMBEDDED VALUE: 1,058p
Year to 31 Dec Gross premiums (£bn) Operating profit (£m) Earnings per share (p)* Dividend per share (p)
2011 1.47 387 -76.2 42.0
2012 1.61 429 227 47.7
2013 1.33 439 68.2 53.4
2014* na 282 47.0 56.1
2015* 258 48.0 59.5
% change - -9 +2 +6
*JPMorgan Cazenove estimates, adjusted EPS

Normal market size: 3,000

Matched bargain trading

Beta: 0.90

Of more importance is Phoenix's impressive cash generation. That reflects the fact that Phoenix doesn't need to allocate much capital to support new business, so capital requirements for operating its closed book decline as policies mature. This in turn boosts cash flow and, in 2013, it generated £817m in cash - significantly beating its £650m-£750m target. It now expects cumulative cash flow from operations for 2014-19 to reach £2.8bn. That's great news for the dividend and the shares already boast a prospective yield of 8.6 per cent in 2014 rising to over 9 per cent in 2015 - the best yield in the UK life assurance sector.

Of course, without new acquisitions, the business will eventually run down to nothing - so some of that cash must be used to buy up additional closed books. Acquisition prospects, however, haven't looked so good lately - not only did talks in November regarding Swiss Re's closed-life business come to nothing, but the group's debt burden has also looked like a constraint. That situation, however, improved significantly last month after agreeing to sell its Ignis asset management arm to Standard Life (SL.) for £390m. Those proceeds will bring the gearing ratio to below 40 per cent - a level that management feels sufficiently comfortable with to push ahead with further deals. Moreover, with around £200bn of assets within closed-life funds in the UK - mainly in large UK life players, foreign insurers and UK banks - management believes targets won't be hard to find.

Share tip summary

Phoenix's shares now trade at a chunky discount to reported embedded value (net asset value, plus the profit stream from life policies), yet those of most life assurers trade at modest premiums. With the FCA's probe unlikely to represent the threat that was originally feared, and with acquisition-driven growth back on the agenda, that's unsustainably cheap. Indeed, the yield alone leaves Phoenix's shares worth snapping up. Buy.

Last IC view: Buy, 738p, 26 Mar 2014

[hieronymous1] 10/4/2014 16:13

Speedsgh. Thanks for updating me. I will amend my watch list notes accordingly.

[speedsgh] 10/4/2014 14:24

Hieronymous1 - Weren't the PHNX dividend restrictions relaxed following the early repayment + re-terming of the Impala debt facilities in Feb 2013?

Debt Re-Term, Equity Raise & Increased Dividend -

Debt prepayment and re-terming
-- Early repayment of GBP450 million of Impala bank debt facilities expected to be made within two business days following completion of the equity raising, reducing total bank debt from GBP2,369 million as at 30 June 2012 to GBP1,857 million (including mandatory amortisation of GBP62.5 million in H2 2012).
-- Extension of the maturity of the Impala bank debt facilities to 30 June 2019.

Dividends
-- The revised bank debt facility allows for future growth in the Group's dividend. The Board believes that, subject to the Group remaining on track to achieve its financial targets, shareholders will be able to participate in any future outperformance of the business.

[fenners66] 10/4/2014 14:23

I have both, but overloaded with Phoenix.
Whilst Phoenix has great cash generation their EPS is not so great.

[hieronymous1] 10/4/2014 14:20

The last was going off my watch list notes. There has been an IC update since then. It is an income buy from them as it has sold off a fund management subsidiary for £390 million which may be used for acquisitions. The article does not say whether that might be further closed life books or not.

The long term charts for both show vastly superior share price performance from Chesnara. Chesnara is a buy tip of the year from the IC.

[hieronymous1] 10/4/2014 14:12

Phoenix has debt covenants which mean they can't raise the dividend until debt is reduced. So higher yield now versus the prospect of growth. Chesnara is rated consensus buy whereas Phoenix has no broker coverage.

Also Chesnara has some growth and diversification from the Swedish subsidiary.