Duke Capital Share Discussion Threads

[ntv] 26/2/2019 17:30

Bought a small position here
yield looks good and should be sustainable for the moment

[bageo] 25/2/2019 18:57

There is a new (Feb) presentation on Dukes website that includes more detail on recent deals.

This includes that royalty coverage for the Miriad deal is x2.1 (pro-forma) so this is similar to the x2.2 for Interhealth Canada and the target Duke has for any investments.

[bageo] 19/2/2019 16:42

Remember this new royalty is with a private co and hence headline profits don't necessarily reflect the cash generated. The 4 directors between them were paid £1m last year - absolutely nothing wrong with that when they held all the shares between them. So directors would take a small salary and large dividends and others the opposite. I expect salarys to come down as the directors (some or all) are receiving money from this deal and external stakeholders will have a view.

DUKE have been clear on their required royalty cover from earnings, hence my comfort in the real level of operating profits.

[montyville2] 19/2/2019 15:35

hxxps://www.stockopedia.com/content/small-cap-value-report-tue-19-feb-2019-grg-duke-mano-dotd-888-bltg-449668/

Write up by Graham Neary in todays SCVR - It encapsulates many of the reader comments above...apologies I dont know how to hyperlink

[brileyloucan] 19/2/2019 14:40

This loan seems to be massively leveraging the group and is far in excess of anything that a bank would lend in terms of EBITDA multiples. I cannot see how the company can expect to pay the interest on this out of earnings.

[davebowler] 19/2/2019 14:09

Yes £10m does seem excessive based on the company's earnings, I agree.

[riverman77] 19/2/2019 14:02

The deal does seem to increase risk profile based on my very rough analysis - taking an equity position in the company and allowing owner partial realisation.

Also - a £10m investment looks very large relative to the company's earnings of £0.9m. A 13% yield would equate to annual royalty payments of £1.3m - well in excess of current earnings!

The company obviously expects to use the proceeds to increase earnings (eg through an acquisition), but even so this adds risk.

Also note that 13% yield looks attractive, but about 5% of that effectively represents repayment of capital, so the actual interest rate they are earning is probably around 8%.

[davebowler] 19/2/2019 11:52

Cenkos;
A myriad of royalties to come

Duke has announced a new £10.0m royalty investment into MRDB Holdings, trading as Miriad Products (Miriad), the largest privately-owned wholesale supplier of recreational vehicle (RV) parts in the UK. Following the recent addition of Capital Step, Miriad represents Duke’s twelfth core holding, further diversifying the royalty portfolio. The deal continues the theme of investment into well-established UK businesses, with strong barriers to entry that help protect long-term royalty income.

[stevie blunder] 19/2/2019 10:34

Slightly different wrinkle on today's deal, as well as "exciting growth plans", it enables : "the existing owners to partially realise their investment in Miriad"

Duke have an equity involvement as well:

"In addition, Duke has received 12% of the fully diluted ordinary equity of the Group as part of its investment."

So we are buying in as the owners partially cash out.

I think this is the right company filing page at Companies House:



for MRDB Holdings. Latest accounts filed are for 2017.

MRDB have been growing well for the last few years, pretax in 2017 was 724k. Profits for 2018 are not in the public domain as far as I can see, but turnover was up about 10% on 2017 according to today's release.

With new director/equity investors coming into Miriad, partial cash out by directors, and emphasis on M&A going forward, I see this as at the riskier end of the spectrum.

[valueinvestor5] 19/2/2019 00:12

I bought in today. The business looks good and the yield is excellent. I'll accumulate over the coming months.

[graham86] 18/2/2019 20:31

buy 9256 gone down as a sell,and buy 18036 also down as a sell are the figures the same on level 2

[hiraniha] 18/2/2019 18:08

Going to ask a thick question here.

Looking at the trades on the LSE, there seem to be plenty at or very near 41 pence. They all look like purchases.

Can anyone explain to me why the share price hasn't budged today at all?

[molrey] 18/2/2019 11:14

Not if this seller sticks around!

[hiraniha] 18/2/2019 10:45

It's been tipped in Simon Thompson's Alpha reports this morning.

Should be making some headway shortly.

[melody9999] 13/2/2019 12:20

large trades today - 4 total 1.25M shares. I am sure something has been preventing the share price rise - maybe a large sell order is now filled.

[greyingsurfer] 04/2/2019 15:23

The only real problem I have with your calculations, carcosa, is that I doubt the share price will still be at 42p by the time they are paying 1p qtr :-)

[molrey] 04/2/2019 14:01

An unexpected announcement this morning but should help them on there way to a quarterly dividend of 1p. They must still have circa £20m cash remaining to do the further deals they have mentioned previously (although these seem to be taking longer than expected) and good to know they have a bit more flexibility in raising cash through their debt partner before tapping the equity markets and having cash sitting on the B/S inefficiently like it has been previously. Big seller currently in the market which is interesting as must be one of the institutions that have invested in the previous rounds - so seems strange to be selling at this point.

[montyville2] 04/2/2019 09:48

Looks a good deal to me. Company paid for with cash, takes on debt within the DUKE financing headroom, and is immediately accretive. The only issue is the actual royalty investments and we can assume that DUKE did significant due diligence beforehand. Like Cheshire says hopefully we will see a presentation soon. No doubt there will be some efficiency savings too.

No new shares to be issued which is great news.Chart looks poised with a potential golden cross forming in next few weeks hopefully. Very positive in my view. GLA

[carcosa] 04/2/2019 09:46

Ooohhh thanks podgyted for that Cenkos info. I calculated what I thought the change in dividends would bring and it came out so high I was embarrassed to post it here but after seeing your post I feel a bit more comfortable.

FWIW I see DUKE sitting in my portfolio pretty much as an income share.



My calcs are based on some of the additional £30m being deployed mid year and the additional 6% incomes as previously declared. Of course, today's RNS is included in my evaluation which brings in a tad under an additional £200k/month.

Yields based on 42p share price.

Edit: Slight error in my annualised yield table. For Pence read £

[podgyted] 04/2/2019 08:39

Cenkos

"Duke has announced the acquisition of Capital Step, the only known rival
provider of royalty finance and debt products to SMEs in UK&I. The
acquisition materially accelerates development of Duke’s royalty
portfolio, adding 6 core new investments (to a total of 11) in several new
sectors. This adds significant diversification, de-risking the portfolio to
individual names/sectors. The deal is expected to be immediately
earnings enhancing, reflected in our upgrades to FY19E & FY20E EPS
forecasts of 5% and 3%. This gives further support to DPS estimates which
produce a market leading 9% yield on our revised FY20E forecasts. "

[cheshire man] 04/2/2019 07:40

Looks pretty good to me

- The Acquisition is expected to be immediately accretive to Duke's shareholders in terms of cash flow per share and assists with the Company's strategy to consistently increase its quarterly dividend.

[bageo] 04/2/2019 07:37

Interesting acquisition hopefully a new presentation will follow providing more details on each agreement but outline sounds very positive.

[hiraniha] 31/1/2019 18:09

I bought in earlier this week after listening to the Cube Investment podcast my friend forwarded to me.It was recorded four months ago but after listening to that, seeing them at Mello and also watching the John Rosier PI Investors interview on youtube from last month, I feel reassured.Good luck all.

[nurdin] 29/1/2019 16:17

Only sellers today...if the logs are correct.Nothing to do with their presentation at the Growth and Innovation Forum today, I hope..Would be good to receive feedback from anyone who attended.