Duke Capital Share Discussion Threads

[btgman] 02/8/2021 11:07

This is now pointing to an increase in dividends for the next quarter. Duke are doing exactly what they set out to do. They have a good track record with their investments

AIMHO
GLA
BTG

[igbertsponk] 02/8/2021 10:31

Canadians invented the business. Neil learnt the trade there and came to UK to replicate. Quite amusing he's now gone back there to steal deals from the established operators!

[melody9999] 02/8/2021 10:28

Creo - given Neil Johnson is Canadian, I suspect he likely knows these guys very well. Worth asking the question when we get chance.

Whilst Creo is a new holding company, I note the 1st 2 acquisitions have "longstanding operations and predictable revenue streams".

So whilst I'm always concerned that EPC companies can suffer losses on projects, the 2 acquisitions have been trading for 18 and 25 years.

[carcosa] 26/7/2021 08:01

Seems to me they are only 5% short of total contracted income. Excellent news.
The £3.2m also assumes no further business in Q2; which seems somewhat unlikely.

Good progress.

[bwm2] 26/7/2021 07:27

Excellent trading update particularly of Q2 prediction and pipeline

[bwm2] 22/7/2021 20:45

This holding is one to lock up and forget, but.... it is getting interesting and I am enjoying the Journey

[swiss paul] 22/7/2021 19:47

Nope cos not everyone is tuned it at that time and sometimes it does not show
BTG - have a rec

[piedro] 22/7/2021 11:59

btgman,

I think that the majority of investors interested in DUKE would have read the RNS at 7:00 a.m. this morning.

Repeating it at 8:51 only clogs up the thread.

AIMHO.

[carcosa] 22/7/2021 09:41

So this £3.7m short of expectations but I guess they are hoping to make up for that in follow on investments.

If DUKE signs up the Agreement with Canadian Engineering company before end of month then that will make a nice end for the month

SP of 50p? Max you can reasonably expect is x1.4 NAV IMO. Hope you are right though

[johnroger] 06/7/2021 12:52

Simon Thompson
Duke Royalty (DUKE:40p), an Aim-traded company that makes its money by providing capital to companies in exchange for rights to a small percentage of their future revenues, is putting to good use the £35m proceeds from April’s oversubscribed equity placing (at 35p a share) and an increased revolving credit facility of £35m.

A new €10m (£8.6m) royalty agreement with Fairmed Healthcare gives Duke exposure to a company operating in well-established markets that have strong underlying demographic growth prospects. Fairmed is a provider of high quality generic prescription medicines, over-the-counter pharmaceuticals, and dietary supplements in various EU countries. It is majority owned by a subsidiary of Strides Pharma Science (STAR:NSI), a £681m market capitalisation Indian listed pharmaceutical company. Structured as a senior secured loan, the 30-year royalty agreement sits within Duke’s typical investment terms (12 to 15 per cent annual royalty) as well as diversifying Duke’s portfolio.

House broker Cenkos Securities is maintaining adjusted pre-tax profit estimates of £8.6m for the financial year to 31 March 2022, up from £5.2m in 2020/21, but analyst James Fletcher notes that Fairmed is “an additional investment above and beyond those we expected….and should further deployments [into new royalty partners] occur as expected, we would upwardly revise forecasts.”

To put the scale of potential upgrades into perspective, Duke’s pipeline of deals includes an £11m investment in an IT managed solutions business, £7.5m funding to a Canadian engineering and construction business, and £3.8m of funding to an existing royalty partner to facilitate the acquisition of a profitable company. Cumulatively, these three deals alone could generate £3m of annualised cash receipts in addition to £1.1m from the Fairmed deal, a hefty sum in relation to Cenkos’ £12.7m cash receipt forecast for the 2021/22 financial year.

Moreover, with Duke’s cash receipts increasing from £2.5m to £2.8m in the last quarter, so more than covering annual operating costs of £2.3m, then a significant amount of incremental cash receipts is now being converted into operating profit. Expect Cenkos to push through material earnings upgrades in due course. Improving cash flow is good news for the quarterly dividend of 0.55p a share, too.

Trading on a price-to-book value ratio of 1.3 times, offering a dividend yield of 5.5 per cent and a prospective yield of 6.75 per cent, I feel the 38 per cent re-rating since I included the shares in my 2021 Bargain Shares Portfolio has further to run. That’s because based on full deployment of Duke’s available liquidity, my financial models suggest the company could be generating annualised cash receipts of £22m and free cash flow of £12.2m (3.4p a share) in the 2022/23 financial year to support a 3.1p annual dividend. A target price of 50p is not unreasonable given that upward resets of royalty payments from existing partners and a reversal of last year’s Covid-19 induced asset impairments should drive up NAV sharply. Buy.

[cheshire man] 06/7/2021 08:10

Thanks for that Boystown :-)

[solarno lopez] 06/7/2021 08:07

I am not surprised at that

[boystown] 06/7/2021 07:58

Re-tipped by Simon Thompson fwiw.

[joe say] 01/7/2021 08:46

Thanks bwm2 - makes sense at those rates and given the security - and the repayment period obviously very short

[bwm2] 01/7/2021 08:19

Yes but remember that there is no capital repayment at the end of the period so return lower

[joe say] 01/7/2021 08:14

So if I read this right then the implied (initial) rate is within the 12.0 to 13.5% level - is that your take?

[zangdook] 01/7/2021 07:55

There's some detail in this presentation

[kadvfn1] 01/7/2021 07:41

Can anyone clarify/speculate what they mean by typical Duke's investment term in this case?

[red ninja] 10/5/2021 11:22

Latest Downing Strategic I.T. comment :-


Duke Royalty PLC (Duke) (3.30% of net assets)
Cost: £2.02m. Value as at 28 February 2021, £1.41m

Background
Duke Royalty provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and North America. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders and has the benefit of having first mover advantage in the European Royalty Finance market.

Update to the investment case

Positive trading update
Follow-on investments into existing Royalty Partners
Successful exit from Royalty Partner
Appointment of new CIO
Reinstated cash dividend

Progress against investment case
The challenges of the last 12 months have been well navigated by Duke, with the period acting as a good test of the resilience of the business model. The royalty partner that gave the most cause for concern during the pandemic for us as investors was the River Boat Cruise operator Temarca. On 31 March 2021 Duke announced that this position had been exited for negative IRR of only -2%. This has been very reassuring for us and demonstrates management’s ability to step in and rescue value under extreme circumstances.
Duke raised a further £32 million to continue deploying its strategy on 1 April 2021. This was well supported and has acted as a positive catalyst for the share price.

The volatile macro environment presented by the pandemic has created opportunity for Duke. Banks have tightened SME lending criteria whilst business cashflows have been put under more pressure, and demand for more flexible, alternative sources of capital remains very strong. As a first mover and leader in the UK and European corporate royalty space, the group has a significant opportunity to build and further diversify its portfolio. Importantly, it has significant liquidity available for new deployments, which adds to management’s high level of confidence for 2021.

[btgman] 10/5/2021 07:19

Excellent update from Duke the forecast increase in cash revenue looks excellent especially given the £70m of available liquidity to deploy.
AIMHO
GLA
BTG