Close Brothers Share Discussion Threads

[chriss911911] 10/10/2024 12:42

When your into NAV valuations, it's a sign of no confidence in business, and if highly discounted, should be a big red flag, not something to celebrate. If it's NAV representing cash going to FCA or intangibles which will never be cash, then it's not NAV investor will ever see in cash, what remains is a promise to pay asset (loan book), with a weaker covenant.

The value is in what those assets can earn or not once it's clear what cash you do or don't have. The 2024 full year statutory EPS, includes income from business now sold, so take that off, and also the OCI hedging loss of £25m, so ongoing comprehensive earnings, were just 35p, per latest annual report, I think there is a risk there could be a corresponding credit in other income which rises inconsistently without explanation, either way, does not change the factual comprehensive earnings per share.

The 2024 reported net interest income was lower, by 1m fact. With admin costs rising fast +10% also fact, explains how underlying earnings have moved, they said so themselves, underlying profit falls from last year so how can that be good results. There is top line growth resulting in more risk assets and lower tier 1, for less money/lower margin, with rising admin costs and "an uncertain market".

As for putting cash on balance sheet for FCA, they describe as significant progress, so in other words not finished, until the story is more finished, not investable. Does not help the last days SWAP rates moving negatively, this will not help sentiment in this space and more practically the interest margin for lenders. Don't see moody's negative outlook changing any time soon, they downgraded close for second time this year in Aug, and that like it did in Feb, seem to create an inevitable slide in the SP, perhaps coincidental, certainly not a scratch head moment, the reaction made perfect sense to me at least.

[jonnybig] 10/10/2024 06:47

CBG is not a dog and has been around for decades, even surviving the financial crash. Like has been mentioned, the market cap is at a huge discount to the NAV. A massive bargain to be had at this share price

spud

[suetballs] 10/10/2024 04:47

Pleased that somebody else is talking about a takeover - for me cbg has had its day and I don’t think the management are up to taking the company forward and reviving it to its former status.
Shame but that’s my view.
Suet

[popit] 10/10/2024 03:05

CBG has a NAV of £11 and is now trading at a price NAV ratio of only 0.3 and that is unsustainably cheap for a UK bank

Lloyds and NatWest for example have a price NAV ratio of 0.8

NAV here is £11 and that is why a return to about £7 or £8 is very likely within the next few months

Also a very good chance of a takeover here as CBG and OSB are about the only mid size banks left remaining in the UK

A takeover of CBG would probably need to be at about £10 and nearer to NAV

[popit] 10/10/2024 02:15

J2M

What you say does not make much sense

You said you do not understand why it has fallen so far from £8

Then you say that it may go lower

Then you say you would buy at a price that is much higher than the price you expect it to go to

[chriss911911] 09/10/2024 14:08

J2M, more recalibrating, as statutory EPS was 23% below analyst estimates, take off the business they sold, leaves 51p earnings, a multiple of 6x (peers with no FCA issue) makes it £3.00 a share, if you imagine they provided enough for FCA claim, or less than £3 if you think the FCA liability will be worse.

Close disclosed statutory earnings result has fallen to a third of where they were 3 years ago, Close is still valued higher than peers relatively speaking, but carry's more risk to FCA relatively speaking. The price is more about sentiment of the past, than reflection on the present valuation, performance, and risks, so very fragile, open to speculation with not much to support a case for much higher than where it is, so will probably just drift until next year, or retest the lows again.

The Finch down grade in Feb, with negative outlook, was the catalyst for the test to sub £3, not a lot has changed since then, save the risk is higher and trading performance worse than expected, earnings continuing to fall, and costs are running +10% far above inflation. Their latest full year results, show a decline in profitability of over 20%, with net income from loans flat on last year, despite headline growth in loan book.

Too racy for me, until more is clear, such a good day on markets for almost all stocks, yet no interest in this stock, says it all really will be one of few stocks flat to down on the day.

[j2m] 08/10/2024 18:55

Yep, think it's going to take a look at its low of 300 in Feb 24. Does not stack up for me why such a beating so am topping up on anything under 350.

[stoopid] 06/10/2024 12:06

Karv, I'm with you, I reckon maybe 500m at worst, between 150m and 400m is market/broker consensus. At the end of the day, the FCA doesn't want to bankrupt anyone. Just get a free payout for idiots that took out car loans at exorbitant APRs. Even with 400m write off, CBG are worth double the current share price.If they do rebase the divi, even half of the most recent divi is 30p+ per share, so, not too shabby, a yield of about 7%/8%For me, this is still an 800+ share, though it may take 12/24 months to get back there depending on the FCA findings. And people are forgetting that I believe it was Royal London Asset management that bought approx 8 million shares or 5.3% of CBG on the 19/02/2024.So, i would have more trust in their team to have run the slide rule over this than residents of this board posting of catastrophic losses. Saying that, there is a chance it could be worse than expected for CBG, the findings could be terrible and catastrophic for the share price, requiring a deep rights issue to save them. As I said before, Pays your money, Takes your chances....

[jsg123] 04/10/2024 08:31

This is corruption at its most blatant.
The way they play with this is unbelievable

[stoopid] 04/10/2024 08:12

What annoys me about all this is whenever you signed on the dotted line with these car loans/finance, you could patently see the mark ups and outrageous APRs that the brokers/companies were charging. I mean, who the hell takes out a car loan for say £20k over 5 years at 12.9% APR when you could go to the bank and get it for 5/6% APR.If you were stupid enough to take it out, why should you get a payout for being, essentially stupid?

[j2m] 03/10/2024 17:46

Had a sizable (by my standards) buy in place today at 350 but never quite made it! Sold a few other shares today so will be ready with a war chest(again by my humble standards:)) for another opportunity for a top up. Then plan to hold and see what May 2025 brings.

[jsg123] 03/10/2024 12:56

These mms are taking the absolute p.
Just raised the offer to 365 on 2k sell.

[jonnybig] 03/10/2024 12:40

A pack of cards time, margin calls and stop losses getting taken out. Rinse and repeat from earlier this year
I was recently 20% up now 20% down. Will learn my lesson after the next rally.

spud

[jsg123] 03/10/2024 12:10

Isn't this now trading at about 25% of book value, even considering the debt?

[tsmith2] 03/10/2024 11:56

yes, agreed. Totally irrational.wonder if we are being set up to be taken out on the cheap

[popit] 03/10/2024 11:17

The fall in share price here is beginning to look a bit absurd now

The most likely estimates for the final FCA liability according to analysts and for the expected CBG share price :

0-£150 million FCA liability
40% probability
Expected share price £8+

150 - £300 million FCA liability
40% probability
Expected share price £7+

300 - £450 million FCA liability
15% probability
Expected share price £6+

450 - £600 million FCA liability
4% probability
Expected share price £5+

over £600 million FCA liability
1% probability
Expected share price £4+

So the current share price seems to be pricing in by far the most pessimistic outcome

I think the final liability will be about £150 million and so I would expect a share price of over £8 after the FCA gives their decision

[chriss911911] 03/10/2024 07:05

diku, no idea what you just said, all I know is there have been several ugly closing positions where someone is bidding down, because I suspect there is a large market order to sell which is causing the price to fall, even with a lot of buying it's not enough, and we see the realities bid now falling further 364...ugly...

[diku] 02/10/2024 21:57

Generally the UT trade fall off tends to be marked up in the morning following day...close to the last trade price transaction before the bell...

[chriss911911] 02/10/2024 21:34

diku, it does not distort anything someone dumping 0.2m as they did below bid is a fair reflection of where the price is now if you want to sell and not enough buyers so selling well below bid in volume, has happened now several times, with inevitable slide further south.

Good learning experience this, but better to learn without having to pay for the experience.

[neilyb675] 02/10/2024 18:41

zero confidence

you don't sell your own company

[karv1] 02/10/2024 18:13

Simon Jacobs, Group Chief Operating Officer of Close Brothers Group PLC, engaged in financial transactions involving the exercise of 44,742 nil-cost options and the subsequent sale of 21,103 of those shares at £4.45 each. Jacobs retained 23,639 shares post-transaction, all of which occurred on the London Stock Exchange on July 3, 2024. These moves reflect active managerial participation in the company’s stock options and trading.......

So I am guessing he sold the rest 23,639

[diku] 02/10/2024 17:56

That Ut trade distorts the closing price...farcical market...

[neilyb675] 02/10/2024 17:42

"smallish"

[karv1] 02/10/2024 17:38

He sold on the 27th I think and since then the share price has dropped like a rock, these things are meant to be kept secret but it does make the old conspiracy part of me think did people know, some times it just pot luck. on the plus side he got a good price, this company need all the confidence it can get at the moment and that smallish sell is not going to help.