Close Brothers Share Discussion Threads

[tomboyb] 25/10/2024 11:20

can't believe it -

wth are they doing -

[timmy11] 25/10/2024 11:00

this country is really the pits, intent on destroying itself

[mustau] 25/10/2024 10:58

Can’t see 3 holding, untouchable, too much uncertainty going forward.

[suetballs] 25/10/2024 10:48

Hopefully we'll still stay above 300p.
I need lloy to come and take me out.
Suet

[suetballs] 25/10/2024 10:45

Martin Lewis is sharpening his pencil - imo there will be some form of market settlement. Surely the FCA can't just ignore their own rules which were in place when these contracts were signed. But what do I know!
Suet

[suetballs] 25/10/2024 10:40

Look at the RNS issued at 11.27am.
cbg are going to appeal - but it could mean very material liabilities.
Seems the benefit of hindsight is being used rather than the rules and regulations in place at the time!
Could be a USA court!!
Suet

[tsmith2] 25/10/2024 10:34

have you link

[chriss911911] 16/10/2024 19:27

flyfisher, more accurately described as no view, I'm staring at the same wall,and prefer more of a matt finish, than gloss.

[stoopid] 16/10/2024 08:24

So, from motor finance online. This is a case separate from and do not involve the Financial Ombidusman Service and the cases have been proceeded with independently i.e. privately.And I quote, "The case against Close Brothers was dismissed by Kingston Upon Hull combined court last year""All three cases cases were granted permission to appeal in March 2024. The court will examine the duty, if any, owed when a commission is paid to a dealership that arranges a finance agreement for its customer with a finance company. It will also consider the application of laws regarding secret and half disclosed commissions to motor finance commission payments."

[suetballs] 15/10/2024 19:19

I did Google Hopcraft and wish I hadn’t!!
It’s bloody complicated.
Suet

[flyfisher] 15/10/2024 17:49

It seems that Hopcroft vs Close Bros is one of the test cases at issue.

Google ' Hopcroft appeals' for more info.

Search extract ''They are awaiting guidance from the Court of Appeal when it hands down its judgement in Johnson, Wrench and Hopcraft -v- Firstrand Bank and Close Brothers (expected in October this year) which deals exclusively with Fixed Fee commissions.''

[stoopid] 14/10/2024 19:47

Yes, I see it, but that's a one off deductible item that's accounted for in the figures AFTER tax.For instance, CBG made a 17.6m profit on hedging last year and not a single analyst noted it because it's accounted for after profit is taxed. It's a cash flow hedge, so doesnt really matter. It's not like it was a derivatives hedge that cost CBG hundreds of millions?So you can't suddenly and arbitrairily deduct losses from a hedge that went slightly wrong from taxable profits and EPS? And you can't also deduct CBAMs contribution to the EPS and P/E on a forward basis just because it's been sold? A forward P/E uses future guidance on earnings, not arbitrary figures guesstimated by you because part of the business has been sold?

[chriss911911] 14/10/2024 17:24

stoopid, on page 193, there is a line for losses incurred, of 29.8m cashflow "hedge loss", so the resulting earnings which include profit from the now sold business falls to just 65m, that can be attributed to shares holders which appears at the bottom of that page, so take off the profit from sold business, divide it by 150m share in issues = 35p comprehensive earnings.

Note also, there are convertibles attributing equity to debt holders (not ordinary shareholders), amounting to 11m (nothing previously).

They have not yet booked any losses for FCA.

[stoopid] 14/10/2024 17:00

Hedge Loss? What hedge loss? There is no mention of any hedge loss?Page 192 and 193 in the annual report is the Consolidated Income statement?

[chriss911911] 14/10/2024 15:45

Stoopid, just using the figures they reported for latest financial year to Jul-24, page 193 showing earnings, at 43p comprehensive earnings, not headline reported EPS. Then take off the profit for the business they sold gets to 35p, so PE of over 10.3x, based on price at £3.60, so substantially overvalued compared to other banks, being a factual statement.

You may debate using the OCI statement on page 193, but judging by the their interest margin, the hedge loss is only timing before it becomes income relevant, either way I use OCI statement for other banks so the comparison is same, for instance OSB comes out on sames basis 5.8x, and is not so heavily exposed to FCA and fitch has a "stable" outlook on it. Almost all the banks are on big discounts to NAV so what ?

In the end you need the earnings to justify the assets, Close profitability is very poor for the loan book it has, just compare the loan book of Barclays and what it earns from it, relative to that, and then do same for Close, very different levels of profitability and risk, with Close's latest results to end of July24 growing the loan book again with no improvement in net interest margin, a big red flag in my book.

[stoopid] 14/10/2024 14:38

So, you are saying that CBG has an EPS of approx 55p of which you have deducted an arbitrary 20p for the sale of CBAM/Winterflood. They only made 16m in profits last year if my memory serves me, so I fail to see how you get a 20p reduction in EPS. The fact still remains you are using last year's figure which was also hit by a 100m paper writedown for Novitas.This is 76.1p which gives a PE of 4.79 at current share price. This is also distorted by extra costs due to the FCA investigation and various other factors. EPS for 2021 and 2022 was 140.4 and 115.5.The loan book is high quality and margins are around 7%NAV - attributable to shareholders in July 2024 was £1.84 Bln pounds which with 150m shares in circulation suggests a value of approx £12.2 per share. This is without the money from the sale of CBAM.It's also without any liabilities from the FCA enquiry, say on the high side 500m. Still suggests a NAV of anywhere between 1.2Bln and 1.6Bln once the extra 200m from the sale of CBAM is taken in suggesting a share price on NAV alone of 7 to 10 quid a share. On top of this you have a bank With high quality assets making from 100m to 250m a year profit and revenues of almost 1bln a year? And you reckon 500m isn't undervalued?? Lol?

[chriss911911] 11/10/2024 08:27

Popit, there is no doubt credit rating is everything when it comes to banks, it's the very essence of what they sell and history of failed banks tells us that the credit rating gave the clues to avoid a mistake, the analysts did not, investing is as much about understanding the past as the future. Take OSB, stable outlook, I get it, cheap as chips, not the same here.

If the analysts earnings estimates about what might happen in the future are right, in isolation, then potentially it's undervalued, on future earnings, but it does not address the credit risk.

I just spell out what Close reported in their comprehensive income statement for FY24 and it's 35p, it's not speculation, it is what they did, I include the hedge loss in OCI statement since it affected share holder equity, and the removal of the business earnings they have now sold, not what might happen in future to improve it or make it worse. The valuation on comprehensive earnings of OSB v Close are very different, have you established that ? or does this not matter what they actually achieved, just what analysts imagine might change in future ?


So, look at the OCI page on Close and shows clearly 65m attributable to shareholders, there are 150m shares in issue, take off the lost earnings for business sold / 150m shares in issue gives 35p, or 10.5x ,multiple, same maths for OSB gives sub 5.8x, so which one is more expensive ? on actual earnings ? and which one has more risk exposure to FCA ? there is a lot of risk in the price after those results which obviously I did not like.

[popit] 10/10/2024 20:48

Your forecasts have no connection to the general consensus of analysts and brokers

Market Screener has an average analyst consensus eps for CBG of 80p for 2026 and 90p for 2027

And an average analyst consensus dividend for CBG of 30p for 2026 and 45p for 2027

So CBG has an average forecast PE from analysts of only 4

And an average forecast dividend yield of over 12%

I think most investors here will be more likely to follow the consensus of various analysts and brokers rather than your own forecast

According to all of these valuation measures :

70% discount to a NAV of £11
forecast earnings per share of 90p and a PE of only 4
forecast dividend yield of over 12%

CBG shares are extremely undervalued

[j2m] 10/10/2024 16:50

Popit

Agree, my post doesn't make sense when you add your own quotes into it. I've never mentioned £8 so not sure what you are on about. I have said I see it going lower and may challenge the low of 3.00 seen back in Feb. I have also said I would start to top up at anything under 3.50. But, of course, I bow to your superior knowledge and apologise for having an opinion.