Countryside Partnerships Investors - CSP

Countryside Partnerships Investors - CSP

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Stock Name Stock Symbol Market Stock Type
Countryside Partnerships Plc CSP London Ordinary Share
  Price Change Price Change % Stock Price Last Trade
-10.80 -3.98% 260.40 16:35:27
Open Price Low Price High Price Close Price Previous Close
269.80 259.20 269.80 260.40 271.20
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Top Investor Posts

medieval blacksmith: So quiet with the news out this morning.
hbuilder: Surely value isn’t trashed by 25% just by CEO leaving abs trading below expectations? The activist investors will be buying more shares at this price and pushing it back up one way or another! Dyor but I imagine in the next year or so this will recover.
bogdan branislov: Can't be specific, I think that awareness of CSP and the attractions of its partnership business model has been steadily growing over the past year, the fact that Woodford offloaded easily without a price dive suggested a lot of underlying support and interest in CSP. Last but not least, many if not most private investors have been hanging back in cash until after the election, they are now buying in, CSP is at the top of a lot of private investors' buy lists, this should go on for weeks, not quite like today obviously, but more steady gains to come I suspect. Whilst the right thing to do was to stay invested during the election, the next best things is to build a position now asap. But investors don't tend to think like that, they don't like to buy straight after a 5% or 10% gain, so they wait for a dip, they feel better buying into a dip even if the wait for the dip takes a while and they end up paying more by waiting. Consequently, every short dip in CSP's share price will likely be followed by aggressive buying, probably well into the new year. If you had the foresight to spot CSP's value before now and the patience and fortitude to sit tight during the politcal and market uncertainty, then you have earned your gains, they are fully deserved, don't sell yourself short by selling too quickly. I have this suspicion that CSP will become a popular highly priced stock in time, at this point I will exit of course. I will no doubt top slice a little when we reach a fair price, perhaps 70% up from where we are now - i.e. about 70% up from the current price of c465p, but I will allow a portion of my holding to run on onto more expensive territory - probably well over 1,000p, before exiting fully. Bogdan
bogdan branislov: minerve - just as background, over the past 10.5 years my SIPP is 11x up, c26% average annual growth compounding, so I am no investing numpty. You say it is indefensible. CSP have their way of calculating ROCE, they say there is no standard way, that it is not a statutory or absolutely defined method. On this CSP are correct, but I happen to disagree with them, I think that they should use the standardised approach that most others adopt. But CSP are not trying to deceive here, they are quite open about their approach. My company analysis is now very thorough, not much now tends to get past me. I could find some fault with every listed company. When I discuss a company, even one where I have a multiple six figure holding such as CSP, I like to post objectively, a warts and all approach, not just using the platform to promote in a one sided way. A key skill in investing is knowing what to overlook, if I chose to overlook nothing, I would invest in nothing. If any of the statutory figures were incorrect, that would be very difficult to hide from me, there is nearly always a trail, a crossover into different parts of the financial statements. CSP is a strong company, the statutory reporting solid, the business model protectively positioned and the growth prospects look excellent. CSP is a very low risk business for investors, with considerable upside potential. If you want to go safer than CSP then you need to research for the best building society account, don't hod you breath for the upside there though!
blueclyde: However, we are fully reserved for private sales for the full year and fully sold for both PRS and Affordable homes. With build programmes on track, our focus now continues to be one of converting our private for sale reservations into completions in the fourth quarter.I am not sure the market managed to pick up just how good the trading update was. I am not sure what the full year expectations for there year are EPS wise but it looks like they will be hit. Also does anyone have a link to the presentation the did a month or so back at the investor day?
bogdan branislov: I think that the statement is okay actually. Bear in mind that the first half of the year was well ahead of the previous year and the construction schedule suggests that the final quarter should be well ahead also. Woodford is likely to have to unload, but it may well be another block transfer to another fund(s). The profit growth for this year is forecast to be decent, but there is a lot going on with the business and the full extent of CSP's profit growth and the underlying balance sheet equity growth won't be fully clear until the year end results. Seeing the year end results linked to a clearer outcome timetable for Brexit and the resolution of the Woodford holdings would clear the way for CSP to re-rate significantly. All should become clear over the next few months. In the meantime, CSP is selling very cheaply relative to its growth projection, giving investors a considerable margin of safety. The recovery in the share price, will happen at some point and is likely to rapid when it does. Those waiting on the sidelines are likely to lose out. Remember that share prices climb the 'wall of worry'. By the time all factors becomes fully clear, the share price could easily be twice the current level and not at such a great entry point. Bogdan
bogdan branislov: The CSP growth rate is extraordinary, but very much in line with the growth in Partnership build agreements. Given that margins are expected to hold, the profits for this year look like being way ahead of the forecast - under promise and over deliver, this intentionally seems to be the approach. CSP is my largest holding by some way now, nothing else out there compares, even comparing hypothetically to the 2009 market, when bargains were more common, CSP at this price relative to earnings and earnings growth would have been a stand out opportunity. The former CFO's move to COO did surprise me at the time, ops director people just tend to be very different in personality type to financial directors. There was that slightly strange issue to do with CSP's ROCE calculation for the last full years results. There is no statutory approach, but IC strongly felt that not including the intangibles in their ROCE calculation, which lifted the ROCE from about 25% to a slightly daft 37%, was not in line with the way the sector would normally make the calculation. CSP were very open about how they did this, there was nothing clandestine at all, CSP are very conservative in their forecasts and their is no statutory method for calculating ROCE, so not a big deal at all in the scheme of things. But CSP did take some sharp criticism from a large private investor about their ROCE approach. The criticism was along the lines of given how strong CSP's results, growth and overall statutory financials are, why on earth did they feel the need to 'torture' the ROCE data in that way, it was so unnecessary. The response was prompt and considered and came back from Director level. Probably no connection here, but who knows. For every company, if you look hard enough, you will find something that you would prefer had been done slightly differently. Part of the skill is knowing what to overlook and what not to. Often the willingness and promptness of the company to discuss and engage with the issue is very telling. Bogdan
bogdan branislov: The results, particularly cash build up in light of the growth rate, are compelling - growth usually drains cash. It is not just PE value but growth and quality and bid pipeline. The near 30% ROCE means that they can grow and acquire without balance sheet pressure, a very rare thing. Sometimes sentiment diverges from reality and fundamentals like this, but not for long I suspect. This is when the true investors are revealed, those who ignore the sentiment and place their confidence in the fundamentals, which could not be better. Bogdan
wonder boy: What does the company do? Crown Sports plc owns and operates 22 mid-sized health and fitness clubs across the UK trading under the Dragons name, it also oversees a further 27 health and fitness clubs based in Europe and the Middle East on a contract management basis. The company is now focused entirely on these core businesses following the disposal of the golf, sports publishing and sports betting businesses during 2003. How much is the company valued at? With 291 million shares in issue and a current share price of 6.375p, CSP is valued at £18.55 million. What is the Net Asset Value (NAV)? Net assets at 31 December 2002 were £51.12 million. Since this date the company has disposed of Crown Golf, the Winning Line and Crown Content decreasing NAV by £17.2 million. Current NAV is therefore £33.92 million (or 11.66p per share). Approximately 93% of assets are good quality tangible assets including 11 health and fitness club freeholds and 7 long leaseholds (i.e. greater than 50 years). These clubs are typically based in the Home Counties around London and with property prices booming in the last few years they could be worth considerably more than their book value (I intend to do more research here). Are revenues growing? Turnover at the core business was £28.1 million in 2002 (2001: £21.6 million), an increase of 30% on the year. I expect further revenue growth this year as the company benefits from having fully integrated the 7 health and fitness clubs acquired in 2001 and completed major refurbishment works on 5 further clubs. What about costs? Management implemented a major cost reduction programme mid-2002 the results of which will only be fully reflected in the 2003 accounts. Costs reduction measures include elimination of layers of management, reducing central overheads and improving buying terms. Exceptional costs of £8.4million in 2002 relate almost entirely to bid defence costs, acquisition/disposal costs and impairment of fixed assets relating to the disposed businesses only i.e. they truly are exceptional costs and will not be repeated in 2003. Will improved revenue and costs translate to profits and cash flow? The group made an operating profit before exceptional items of £4.3 million in 2002, after exceptionals (which I stress again relate almost entirely to the businesses disposed of in 2003 and are not repeatable) the company made a £6.2 million loss. Stripping out the revenues and costs of the disposed businesses, subtracting the exceptional items and assuming constant costs and revenues in the core businesses (remember costs should be substantially lower in 2003), operating profit for 2003 will be about £6 million. This puts CSP on a prospective P/E of just 3! Negative cash flow of £2.3 million in 2002 should be reversed this year because of substantially reduced debt financing requirements and a reduced need for refurbishment and integration works. What are the prospects for growth? CSP has a reputation for growth via acquisition. The reduction in debt (see below) means that CSP is again in a position to grow its business. I believe the health and fitness industry has solid long-term growth prospects and CSP has the management to exploit this (they previously turned Sportsmedia from a £20 million operation into a FTSE 350 company). In addition CSP is in talks with several companies about managing their gyms on a contract basis, an area in which CSP is considered the industry leader. Any potential issues with the company / industry? Not really. The disposal programme is now complete and has allowed the company to reduce debt from £60.2 million at 31 December 2001 to approximately £15 million now. The company has banking facilities totalling £53 million including a £40 million loan repayable over 7 years – this company is not going into liquidation in the foreseeable future. The health and fitness market is maturing in the UK but CSP is expanding into Europe and the Middle East via contract management. Margins may have come under pressure but management have acted quickly to reduce costs. One potential issue is that approximately 84% of shares are held by just 6 shareholders. However, these investors appear to be in for the long haul, and if that proves to be correct the share price should benefit from the limited free float through gearing (i.e. small increase in demand for shares will result in large price increase because of restricted supply). Conclusion: The company has been undervalued in recent years because of worries about high debt levels and a somewhat confusing 'sports conglomerate' strategy. The completion of the disposal programme has resolved these issues and the company is ripe for a re-rating. CSP is a much leaner and more focused company. It has a solid asset base and good growth prospects. Do your own research and be happy with your findings.
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