Cvs Share Discussion Threads

[undervaluedassets] 19/12/2009 18:11

I will not buy here until I see the next set of results

improving balance sheet and stunning cashflows is what I will be looking for

I remain cautious to the point of suspicion

[jl9] 02/12/2009 12:44

Yes, this was revved up big time ahead of the float.

[undervaluedassets] 02/12/2009 12:08

The ones who have really had the value out of this are the private equity bods who made 10 times their investment on flotation.

You have to ask the question how much did they leave behind for the private investor.

This company is massively in debt due to supercharged aquisition strategy.

I will wait for next results to see just how well this is paying off and whether that debt is being paid down

I do not like the fact that so many directors have been big sellers of late either.

Why sell so much if you are so confident about the future of your operation? Why ? you hold if the future is going to be brilliant don't you? Surely?

[hootster] 19/10/2009 15:24

Even a triple bottom ;-))
Don't think these are just ripe for take over just yet only penertrated the potential market by some 6.5% so plently more Acquisitions and upside from their growing cash pile.

This one reminds me of Oasis Healthcare which grew a Substantial dentistry group and then was taken out at massive premium to share price.

As always DYOR Etc.

REGARDS THE HOOT......

[2magpies] 19/10/2009 13:49

Hi Hootster

Chart: That's a tiple-bottom if ever I saw one. Supposed to be one of the most bullish/reliable signals.

Also, the list of major shareholders is rather illustrious, don't you think?

Who knows, they themselves might get taken over!!

[hootster] 19/10/2009 11:05

Looks like the market were not too bothered the FD selling some stock last week and Cazenove Capital Management Limited were there sweeping up. Chart looks strong for continued break out ;-))

REGARDS THE HOOT........

[jl9] 09/10/2009 18:10

The reason I mentioned price rises is that somebody on another board spoke about it as fact and was worried. But you are right. The hub and spoke model and regional concentration is partly about building local monopoly power... including, of course, the power to raise prices.

[serotine] 09/10/2009 16:50

That's the strength of consolidators (unless you are a pet owner!) - if they can secure key vetinary practices in an area then they can put up prices without fear of losing customers (where else can customers go?). 90% of vets' fees come from unavoidable operations so pet owners have little choice.

Their AIM submission statement stated they had no intention of raising money from placings so I think it unlikely.

[jl9] 09/10/2009 15:24

Serotine, I also bought at 122p and have taken some profits. A rights issue would seem logical. I'm wondering if Innes sold recently so he would have funds to subscribe! I'm a bit cynical and don't like directors' body language. When they talk about sales stabilising I wonder if they have just put up prices as a quick fix.

[serotine] 09/10/2009 14:41

I agree about the pace of consolidation and feel that a placing/rights issue would be the way to go as they have demonstrated they can get good returns on investments (don't want them to increase debt as interest rates could be sky high in 2-3 years from now). I can't see them spending more than 4-5 million each year from profits as they are paying off capital. I'm unclear how they will make a bullet repayment of 29.766 million between 4th/5th years.

I was a bit lucky and got some at 122p and have banked some profits but am happy to let the rest ride for the moment - I'm really after a juicy dividend in 4-5 years time for my old age!

[lomax99] 09/10/2009 13:06

I would have done, had I not sold down a reasonable part of my holding to make a foray into property stocks (CAL, QED ,IERE & TEF) - I guess with the recent, somewhat surprising, rise in CVS (£1.20 - £1.70) I am about breakeven on that foray.

I bought some more about CVS about £1.50, and would probably like the opportunity to add a few more sub £1.60. My view has not changed on CVSG, I very much view it as a LTBH, but on a relatively slow burn - some frustration was creeping in however as I thought there were better short-term gains to be had elsewhere.

The debt they were loaded with is a problem, not in terms of servicing it but in terms of markedly slowing the pace of consolidation - I almost wish they would take on some more of it, or give existing holders the opportunity to increase their existing investment.

I do not particularly like the fact that they have been silent with regards to their intentions for 'servicing', rather than necessarily replacing, the Ops Directors role, it would appear that 'streamlining' operations/maximising synergies following acquisitions are absolutely key to improving margins to provide them with the cash to keep acquiring.

[serotine] 09/10/2009 10:39

Hi Lomax - you must be feeling a bit cheerier after the recent rise. Hope they can get those like for like sales up to 4% pdq cos they'll need the cash for expansion

[lomax99] 07/10/2009 23:25

Questor tip:

Vet group CVS's cash generation makes it top dog
There is no question that British people really love their pets. Recession or not, if a pampered pooch or beloved cat falls ill, it will definitely be taken to the vet.

By Garry White, Questor Editor
Published: 4:56PM BST 05 Oct 2009

CVS Group

170p +3


Related Articles
CVS Group: shares, charts, data Questor says BUY

This fact has helped veterinary surgery business CVS Group weather the downturn very well – and its future growth profile, underpinned by a good business model, looks very promising.

CVS operates 61 small animal veterinary practices across the country. It employs 368 vets, as well as operating six diagnostic laboratories and one crematorium and pet cemetery in Rossendale, Lancashire.

Its recent full-year results were excellent. They underscored the resilience of the group's business in a recession, the cash-generative nature of the operation and the value the company can add.

All three units – veterinary practice, diagnostics and crematorium – remain profitable. As of June 30, the end of the last financial year, the group had £2.8m in cash in the bank. In the two months between the end of the year of the year and the results announcement, cash balances had swollen to £4.8m, even after the group shelled out £300,000 to purchase a new surgery in Newbury.

In the year to June 30, pre-tax profits jumped from £124,000 to £4.4m, but a number of writedowns were made last year, which hit the pre-tax figure. On the operating level, profits jumped 72pc to £7m on revenues that were 23pc ahead at £76.6m.

On a like-for-like basis, revenues increased 2pc, below the more normal 4pc-5pc in better economic times, but this should move back to the high level as economic prospects improve.

Talking to Paul Coxon, CVS's finance director, about the group's business model Questor was struck by the similarity to that of another company which is highly rated by this column: Dignity. It therefore came as no surprise that Richard Connell is chairman of CVS. Mr Connell was previously chairman of Dignity.

The company's main business is in the consolidation of the veterinary surgery sector, which remains highly fragmented. Even as the country's market leader, the company only has a 7pc – 8pc penetration into this market. Typically, the group buys practices from vets in their 50s who wish to crystalise the capital in their business, but still want to carry on working.

One way in which the company increases the profitability of individual surgeries is from the centralisation of administration functions. Taking this burden away from vets allows them to carry on providing front-line services to animals, while giving up the dreary side of their business. Also, CVS can get better deals on the purchase of veterinary supplies because it buys in bulk.

The shares have jumped following the results and are now trading on a June 2010 earnings multiple of 11 times, falling to 9.5 next year. This does not look expensive taking a sensible time frame. Questor does not expect the shares to leap ahead in short shrift, but slow and steady growth is likely.

Because of the group's stage of development, it is not yet paying a dividend, so it is not suitable for income seekers. But for those with an eye to future growth, shares in CVS Group are a buy because of its sound strategy and impressive cash generation.

[ukinvestor220] 01/10/2009 14:38

aha - thanks :)

[serotine] 30/9/2009 13:49

ukinvestor -lol..its very near the end of the report under section 8.


8.Borrowings (continued)


Bank loans
The repayment profile of the bank loans is as follows:
+------------------------------------------------+----------+-----------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+------------------------------------------------+----------+-----------+
| Within one year or on demand | 1,915 | 20 |
+------------------------------------------------+----------+-----------+
| Between one and two years | 5,081 | 1,913 |
+------------------------------------------------+----------+-----------+
| Between two and three years | 3,956 | 4,386 |
+------------------------------------------------+----------+-----------+
| Between three and four years | 2,831 | 3,599 |
+------------------------------------------------+----------+-----------+
| Between four and five years | 29,776 | 2,812 |
+------------------------------------------------+----------+-----------+
| After five years | - | 27,683 |
+------------------------------------------------+----------+-----------+
| | 43,559 | 40,413 |
+------------------------------------------------+----------+-----------+

[hootster] 30/9/2009 13:36

Chart Breakout and loose Sellers out the way could see this hit £2.00 Very Quickly IMHO....


REGARDS

THE HOOT.........

[ukinvestor220] 30/9/2009 13:01

serotine - 28 Sep'09 - 09:55 - 131 of 136 -"1) Over the next 4 years they will pay back debt of 13.78 million at an average of 3.44 million/year. So after 4 years the company is worth 13.78 million more than this year. "

serotine can i ask where you saw this information - ive been back and forth thru the statement and am now dizzy !!
Many thanks

[5dma] 30/9/2009 12:15

Clear skies to £2.15....

[hootster] 30/9/2009 09:20

20k on the Bid Someone Chasing the Stock Bad ;-))


REGARDS THE HOOT........

[hootster] 29/9/2009 11:44

Looks like someone is not that put out with the recent Director sell, 100K Buy at the offer :-))

Agree bit off putting to see him unload at these levels but as always could be a genuine reason.

From the recent update the business looks on course and plenty of upside!!


BEST REGARDS


THE HOOT.........

[serotine] 28/9/2009 11:13

its never nice to see a Director make a big sell. If some of the other Directors sell significant amounts I would be concerned.

I think it was a bit underhand to release the RNS at 5pm on a Friday though

[undervaluedassets] 28/9/2009 10:08

serotine

I think you make some very interesting points

still puzzled by massive sell by ceo sale under the ipo price. does not inspire I must say.

[serotine] 28/9/2009 09:55

undervaluedasets - I think you are being a little harsh on them.

1) Over the next 4 years they will pay back debt of 13.78 million at an average of 3.44 million/year. So after 4 years the company is worth 13.78 million more than this year. The interest they pay is capped so there are no future suprises

2) They generated cash of 12.38 million in 2009 and this is easily enough to cover the proposed capital repayments and interest.

3) They've demonstrated that their business is pretty robust in the midst of a full-blown recession with their like for like sales only falling from 4-5% to 2% this year (compare that with the fall in sales for general retailers). As the recession retreats then like for like sales should start increasing again. They haven't had to make cuts in order to improve profits unlike many other companies

4) To me the above means that they are at low risk of failing or breaching debt covenants as their operating profit will increase year-on-year.

5) The purchase of the Rossendale crematorium creates strong synergies i.e. if 8% of vets are CVSG employees and they all send dead pets to CVSG crematoriums then the CVSG group is getting 2 payments - this could be a strong growth area in future.

[5dma] 28/9/2009 08:18

Im sure your right I only trade charts so have no real insight into the company if your long I will keep holding with a stop at £1.57, all the moving averages are turning positive including the 200ma. My price target is around £2.10 next level of resistance.

[undervaluedassets] 28/9/2009 07:54

5dma,

long term though this needs to be run prudently.

I get the impression that Mr Innes and his cronies have the ability to kill this. They want their plunder and care not a jot about the business of running a vetinary practice.

why is he selling now BELOW the IPO price that is what I want to know? not a very big display of confidence in long term future i must say. Surely at this price he should be buying.

And whichever way you look at it debt is horrible and growing (There is no shareholder equity in this business folks)

Strip out intangibles and this business is in the hole to the tune of £41 million.

YET THE DIRECTORS DOUBLED THEIR REMUNERATION LAST YEAR. prudence dictates that at this delicate stage in business development they should be taking less out of the business not more. (Severfield Rowen directors all voted themselves a pay cut of 20% and that is a brilliant proven business of the very first calibre)

I know Panmure are bullish - but they are the house broker - gonna be are'nt they.

on the evidence presented I would say that the private equity firm sovreign capital have had the fat off this one (was it 11 times their investment).

and that the directors are trying to carve themselves another slice and that there is a real risk that private investors may get well and truly shafted.

It is all such a shame as vets are such great businesses