Dx (group) Share Discussion Threads

[tuftymatt] 09/5/2016 11:57

Jbat,Large items of over 150cm approx or items with a weight above 30kg. Also can be classed as "IDW" which stands for irregular dimensions / weight.

[jbat] 09/5/2016 11:29

What's the definition of 'ugly freight'? :)

[tuftymatt] 09/5/2016 10:43

I agree with the above in regards to consolidating within the sector but would not expect RMG to step in for DX. due to ParcelForce.

If DX. are to be picked up by someone then I too think it would come from a non traditional carrier such as Amazon.

DX. do not have a firm foothold in the mass parcel sector, rather they currently focus on the secure side of things and the ugly freight, so need to up their game in the key area in order to maximise their chances of long term success. This will cost money in terms of their fleet etc but they have spend in this area in order to see the share price climb.

Otherwise the risk of lost contracts within the secure area / Tuffnells in the ugly freight area will always weigh heavily on them IMHO.

[imgoingallin] 09/5/2016 00:24

By just Royal Mail?
The industry is consolidating unbelievably at present; FedEx buying TNT, DPD buying back the Interlink franchises.
Where does this put DX and its offering? In a very unique position! They offer a two man delivery service that not many other carriers provide and a whopping infrastructure to go with it so who would buy it out?
UPS... Reeling off the back of the failed TNT takeover attempt? No! UPS wanted TNT for the European share of the market which, as it was too large, also stopped them from being able to take it on.
Who else is left? Not many but that's if we think inside the box.

The three companies whom I believe are perhaps eyeing up DX as we speak due to its both post/small packet side of the business and the two man side too are;

ARGOS(soon to be owned by sainsburys) - Argos have gone after the whole "we'll deliver to you the same day" service and so have increased their own fleet of delivery vehicles dramatically. This would be massive though and it would be two large purchases in quick succession for Sainsburys which I can't see happening.

AMAZON (my favourite to buy DX) - it's quickly becoming apparent to AMAZON that their humongous number of RDCs located throughout the country isn't enough if they're to offer reliable Sameday deliveries through their prime offering. The purchase of a next day delivery network to use as a ready made on might seem attractive.

ROYAL MAIL - you could say DX with the secure post and DX codes pulled off an absolute blinder they practically added a X digit reference to every address of solicitors and watch makers and suddenly they were the best thing since sliced bread and they carried out their services superbly. Then with the purchase of night fright this really opened up the parameters as to what DX could delivery. Royal Mail is desperate to do this, there isn't an ever increasing letters market, sure there'll always be one, but it's definitely not increasing and so their only growth can come from parcels what better way than to buy out a rival?

[jbat] 08/5/2016 11:02

DX is a tiddler by the standards of the big courier companies. It might even attract a bid from Royal Mail.

[kmann] 06/5/2016 15:29

Multiple reasons to buy imo, directors buying is one, divi was another, the fact that they can afford to dish out the divi is another, ie they dont need the cash. A re-direction of business, and a new distribution hub to look forward to (all paid for), and the cost efficiencies that will bring. Also the virtual kitchen sinking of the last results. It looks like all the bad news out of the way.

Chartwise, theres a growing uptrend from january. Value wise, this could grow in to a monster if "handled with care" imo.

[opodio] 26/4/2016 17:22

SIV profit warning

[aleman] 26/4/2016 09:53

Following insider share pruchases can sometimes produce negative returns.



I've investigated this in the past. Some studies find positive returns. Some find no correlation. Some even find negative correlation. Some suggest those that found positive correlation failed to adjust flawed biasses out (markets generally rise in the long run) or the gains were not significant. Overall , there was little compelling evidence to suggest following directors was a good idea. Regardless of the studies, my experience says there is little or nothing to be gained and one should direct research time elsewhere. I don't think that is an incoherent view and I only provided it as you asked me.

[staverly] 26/4/2016 05:09

Blindly following them would be foolhardy hence why it's important to understand the motivating factor in such cases ... the actual point of my question. I thought, given your earlier posts, you might have had a coherent view.

[aleman] 25/4/2016 10:33

You won't make money following director trades. Studies show no correlation with share performance on timescales over one year. I agree with that, based on my experience and ignore them.

[staverly] 23/4/2016 15:33

Aleman ... I'm still not clear as to spiv CEO/FD motivation to pledge .7m of their own money. Admittedly 17p, with hindsight, appears a good trade taking into account dividend payout intentions. But IMO still not enough to justify these disproportionate share purchases. The BOD, relative to their much larger listed UK peer, are materially overpaid so maybe purchase of the badly beaten up share price is an affordable sop to an unappealing corporate structure re parasitic VCP top co. What is clear is that initial vesting period looks likely to pass off uneventfully as potentially generous and vague performance criteria (£1+ per share by FY17) still looks a huge reach. What's your view ...

[scapital] 20/4/2016 15:15

Apologies for the misinformation yesterday.Capital reduction has gone through now.

[jbat] 20/4/2016 11:15

Nice one Aleman. Of course you're right about the 2.5p dividend - I'm neglecting the 1.5p already paid this year.

Just trying to get an idea of what a sustainable dividend is at this level. If the share price stays around 25p and the dividend is 2.5p full-year, then that's a 10% yield, which is ridiculous. The shares should at least double in price therefore, if they were going to return to something approaching market normality, unless profits come in lower than expected in future. Not many good companies yielding 10%+ hang around at these sort of share price levels for long!

[aleman] 20/4/2016 10:38

I don't know why you are speculating about the dividend. The forecast is 2.5p dividend as that is what the board said they anticpated at the November update. They said trading was broadly in ine at the interims when the annouced the 1p inteim divdend so nothing has changed. If trading continues in a similar vein, the dividend will be 2.5p.

Suppose you issued loads of shares when you floated as a potential internet giant but things went sour and you never made it to profitability and the business shrank rapidly. You then find a profitable niche as much smaller company. You can't pay out dividends because you issued loads of shares at float and the capital raised amounts to many hundreds of millions but you lost most of that and are now turning over £50m and making £5m profit. It will be many years of £5m profit before you can get back to the capital raised at float and eradicate retained losses. To pay the dividend, you go to court, have the share premium account cancelled (the amount you paid over 10p per share for a 10p share when new shares were issued) and maybe have your 10p shares reclassified as 1p shares so 9p per share also alleviates the retained loss. If you reclass if enough, this lets you pay out a dividend sooner when the loss becomes profit again. A handful of companies do this every year.

[jbat] 20/4/2016 10:32

Fantastic. A penny a share dividend promised is a nice 4.5% or so on the current price, and who knows what more when it recovers further.

The analysts think it'll be 5p per share earnings next year. If they were to distribute only 2p of that, and assuming the share price managed to climb to 40p a share, you're still talking a juicy 5%. If the business prospers but the share price continues to stagnate it's even better - 2p a share at 25p share price is an 8% yield.

If they were a bit more adventurous and paid out 3p per share from those 5p earnings, it's 12%, and if the earnings are better than expected, well - who knows?

I'm well in on this one. As ever, DYOR, etc.

[dangersimpson2] 20/4/2016 09:49

The idea behind only being able to pay dividends out of distributable reserves is so that you can't just set up a company, borrow a lot of money, do a small amount of trading, pay yourself as owner a large dividend and then declare the company bankrupt ripping off your creditors. Essentially to prevent this you can only pay yourself out of profits you've made on trading = retained earnings.

Due to the history of corporate structure at DX. plus the recent goodwill write-off at they have a large share premium account but negative retained earnings and it is this they want re-classify.

The reason they have to go to court to do this is so that there is a check that they are not adversely affecting lenders or trade creditors by doing so.

[jbat] 20/4/2016 08:55

Thank you all for your comments and assistance on this. I know that a capital reduction is different to a share consolidation, but I wasn't clear what effect it would actually have when it went through.

Thanks everybody.

[coolen] 20/4/2016 00:27

At the end of the day, any capital reduction = management failure.

Thanks to Alemam for being totally correct in his explanation.

[aleman] 20/4/2016 00:10

I believe the number of shares is not changing. They are reclassifying the share premium account as distributable reserves. It's a balance sheet restructuring to create reserves that can be distributed as dividend after the recent impairment wiped out what was left of other distributable reserves.

[pedr01] 19/4/2016 19:07

No jbat that's not right.
Paper exercise, doubt number of shares will change etc so your %holding will remain the same.

[scapital] 19/4/2016 18:50

Yes jbat that's right.

[boonkoh] 19/4/2016 15:11

There is no doubt that the DX Delivery bit is growing really quickly. The question is how fast can this low margin part of the business grow, to offset the high margin DX Secure decline? I feel there is a tricky balancing act here.

[jbat] 19/4/2016 09:59

When the capital reduction goes through, presumably we'll see a significant upward re-rating in the share price, but nobody makes a profit because the size of their shareholdings is reduced in proportion - is that right?

[lingy] 14/4/2016 18:43

Saw my first one today in Chester.

[scapital] 04/4/2016 15:50

Same kMann, saw my first one last week.