Epe Special Opportunities Share Discussion Threads

[hiddendepths] 14/8/2018 13:48

Luceco picking up. Maybe something is afoot!

Can't be bad for EPE if it continues...

[spectoacc] 20/7/2018 06:55

Took both off watchlist but just glanced at LUCE's share price - down to 40p, not looking healthy.

I still say EPE's overvalued, even with them nudging lows. I've also just spotted this from the end of March, seemingly showing I was wrong on P2U (I'm not, see more below, but they have found a greater fool):


"EPE Special Opportunities plc ("ESO plc", or the "Company") announces that Pharmacy2U Limited ("P2U"), a company in which it has a minority investment via ESO Investments 1 LP ("ESO 1 LP"), has raised a further GBP40 million of new growth capital to support the rapid expansion of its online NHS repeat prescription service.

P2U is England's leading online NHS pharmacy and is the fastest growing pharmacy group in the country, with 25,000 new patient registrations in the last month alone and year-on-year growth in patient numbers of 178%.

As well as offering consumers increased choice and convenience, P2U's online prescription management service is highly beneficial for the healthcare economy, saving GPs an estimated six hours and 40 minutes a week on paperwork. It is estimated that managing repeat prescriptions online could save the NHS over GBP300 million per year on prescription costs.

The growth capital raise was led by G Square Capital, a European private equity firm focussed on the healthcare sector. In conjunction with the new investment, G Square Capital also acquired a majority of the share capital of P2U from existing shareholders and as a result is now the majority shareholder.

The new investment will allow P2U to invest further in technology infrastructure to support customer demand and remain at the forefront of innovation in digital pharmacy services. P2U's state-of-the-art, award winning dispensing facility in Leeds is already the largest and most technologically advanced in the United Kingdom, with the ability to dispense one million prescription items per month.

ESO 1 LP has realised 50% of its existing investment in P2U in the transaction, implying a 2.0x Money Multiple realised return. The transaction was completed at a premium to the holding value of P2U. The remaining 50% of ESO 1 LP's investment has been retained to benefit from the growth potential in P2U offered by the GBP40 million investment. This retained investment offers further upside in terms of Money Multiple returns to ESO 1 LP "


So - they managed to get out of half their stake in the dire P2U, at a premium to book, and have now valued the remaining half higher, to reflect the greater fool pumping in more money "..From the growth potential.." of the extra cash.

Now read:


Potential to deliver 700k prescriptions a month, pushed up to 1m a month, actually doing 200k a month.

Still, if they keep finding greater fools... Amazon next perhaps?

Hats off to EPE for getting an exit at all at P2U, and even if remaining stake went to zero, they'll have had their money back. But all is already reflected in the 208p NAV, battered by the performance of LUCE. They could do with a greater fool there too.

[manfrommoyse] 06/3/2018 10:46

dont forget that they have >8M of unsecured loan notes, plus the 3+M of bank debt the underlying partnerships hold.
Buy back also not poss because closed period. And if share price drops further they get better value.
Suspect new man at LUCE is kitchen sinking so p/w may not come in threes unless market remains weak or weakens.
Discount not big enough on ESO once net cash is taken into account, but it might get there
Nibbled at LUCE in hope that makes the share price drop (application of sod's law hopefully in my favour!)

[spectoacc] 06/3/2018 09:06

Jeez what an RNS.

"About that buy-back..."

"LUCE, it's great really"

"Our NAV's still quite high - if you value LUCE at 77p"


Not sure why I'd buy ESO over LUCE if I believed that RNS. If I didn't believe it I wouldn't buy either.

[iantrader2] 31/1/2018 07:29

A stonking gamble Mammy

[mammyoko] 30/1/2018 11:22

Way over-valued. When LUCE goes down the toilet all they will have is 80p a share cash and some assorted sh1t. Stonking sell

[arthur_lame_stocks] 27/1/2018 16:32

I reckon these might be worth a punt now. The market cap is about £48m at this price.

At the last set of results they had over £30m in cash plus the LUCE stake must still be worth a bit over £30m and then there are the other investments of unknown worth.

I think LUCE is close to the bottom and now looks pretty good value to me so this could be a decent, discounted and safer way to take a punt on a recovery in LUCE's fortunes.

[spectoacc] 25/1/2018 08:47

LUCE down to 87p, wonder what ESO's NAV is down to now.

[spectoacc] 05/1/2018 07:05

I agree re LUCE (other than "profit warnings come in 3's") but I don't like the illiquidity, the reliance on LUCE/cash (some of which is now being spent on buyback) or my knowledge of what P2U is like (have no idea about Whittards/other holdings). Just feels like the previous huge discount was wholly justified.

[horndean eagle] 04/1/2018 20:39

Discount is still very large. Fall is a huge over reaction. Whittards has been a bit of a dog for years but they seem pretty excited about it recently. You seem to be writing off LUCE. It has a very good track record. If this accounting issue proves to be a one off the re-rating will be pretty sharp. Also ESO valuation multiples are listed in its valuation methodology and seem pretty conservative. Just as they were when they have been writing up LUCE over the years

[arthur_lame_stocks] 04/1/2018 18:06

I considered these after the recent fall but don't think there is much point. The discount is not now very large and LUCE looks fairly valued to me.

I checked out the accounts of Whittards and they don't look to be worth much so unless these drop to £1.50 I don't think i'll bother. They probably won't do now they are buying back shares. You appeat to be reliant on the investing expertise of Giles Brand and i'm not sure he is all that good tbh.

Arthur

[spectoacc] 04/1/2018 08:47

Share buy-back should help it. Needs LUCE to turn the corner tho.

[spectoacc] 29/12/2017 14:20

Fair point - with LUCE lower, the cash makes up a much larger % of the NAV. Any guesses on current NAV? They should be telling us soon but it'll already be out of date of course.

The cash went into P2U in conjunction with the merger with Chem Direct (another big loss-maker) - is possible the scale will save them but £10m is a lot when margins (NHS prescriptions) are so low, and marketing spend so high. We'll see - would be very interesting if they tried to float it, along the "technical disrupters" line (putting local pharmacies out of business). Would need a few years of actually making money before they'd dare try that, and then a lot of bad history to get past.

[horndean eagle] 29/12/2017 14:03

I wouldn't massively focus too much on financials re p2u. Once these private equity guys are involved the accounting usually turns a bit dodgy. Not always easy to work out whats going on. That 3rd party funding round was external so it wasn't ESO putting in the cash. That 3rd party funding was put in mid way through last reportable accounts so those investing must have been reasonably aware of what was going on balance sheet wise. Will probably see a pretty different set of results next time around. Id argue there is some pretty strategic value within p2u even in its current form. It has a lot of data and conducts issues prescriptions online. Any large player looking to get into the space would pay for its customer base.

Not sure you could ask for the same discount post LUCE fall. Cash is a huge slug of nav.

[spectoacc] 29/12/2017 12:27

Thanks @HE. LUCE p/w rather spoiled the "massive discount" argument for ESO - wonder what NAV is with LUCE at 112p? I've not tried to work it out, but guessing that to restore the previous discount, ESO need to be way lower than here.

Re P2U - they had a great business initially, made a lot of money, but now loss-making. They may get there with sufficient scale but to say I wouldn't touch it with a sh*tty stick is an understatement. Having Andy Hornby involved only adds to that feeling. NHS work used to be a gold mine, now it's more like a salt mine. The negative press of their business practices (previously censured for selling patient data etc) can't help. Not sure why someone like ESO saw it as a good place for their money.

Fair to say I know more about P2U than I do about ESO. What worries me is that I know more about P2U than ESO do :)

Agree re LUCE - time will tell whether it's "profit warnings come in 3's" or a short-term blip.

[horndean eagle] 29/12/2017 12:15

Valid points your raise. However in defence:-

External party injected cash into p4u at the valuation that ESO hold their stake. It was a sizeable injection so I would be fairly happy its not a mickey mouse number they are using. It is fast growing and in a particularly exciting growth area.

Their track record on valuations has generally been pretty conservative. LUCE was held at a very conservative valuation throughout its rapid growth phase.

Their long term track record is pretty impressive. They have a lot of skin in the game.

Hopefully LUCE issues are a one off. Looks very cheap if that is indeed the case.

[spectoacc] 28/12/2017 07:26

Luceco profit-warned the day before the MoneyWeek article on ESO. Also a mention of the stake in Pharmacy2U, whose accounts are well worth a look - they seem to only keep going IMO by endless cash injections, £10m last one I saw, & merging with others.

I'm usually a big fan of heavy discounts, particularly on p/e ITs. Have never, even once, been tempted by ESO - they seem to be mugs, something I concluded when looking into who on earth was pumping more money into Pharmacy2U (who have had a lot of negative comment over their habit of mailshotting the elderly with letters using the NHS logo - nothing illegal, but plenty of comment online about it).

Still - everything has its price I guess, & I know little about the other holdings other than knowing that the NAV discount has come in considerably thanks to LUCE!

From 15th Dec (LUCE closed at 112p yesterday):

"EPE Special Opportunities plc
Net Asset Value
The Directors of EPE Special Opportunities plc ("ESO plc", or the "Company") note the fall in the Luceco plc share price following a trading announcement this morning.
As previously disclosed (including in the full year ESO plc Report and Accounts released 3 April 2017), any change in the Luceco plc share price will impact the ESO plc Net Asset Value.
Should the Luceco plc share price close today at 145.0 pence per ordinary share, the estimated ESO plc fully diluted Net Asset Value will be 315.57 pence per ordinary share.
The end of December 2017 ESO plc fully diluted Net Asset Value will be confirmed in due course. "

Not sure where that leaves the ESO NAV now, but with certain things in it I'd discount completely, and LUCE having gone lower, I can't see ESO as a bargain.

[esmith3] 15/12/2017 11:38

Tipped again in Moneyweek today!

"EPE trades on a sizeable discount to its net asset value, the bulk of which is comprised of a 24% stake in Luceco, a leading UK LED lighting business that is growing strongly". etc etc

[hiddendepths] 23/10/2017 11:23

Tipped in Moneyweek.

[ntv] 07/7/2017 11:53

asset value increased again
discount is large

[robizm] 05/7/2017 19:15

The performance fee is a bit hard to swallow. Anything over 8% investment adv gets 20%

[ntv] 23/5/2017 17:30

discount is rather large for a fund that appears to be doing well

[horndean eagle] 23/5/2017 09:41

About time the share price responded to nav growth. I can't fathom why the IM has been so tight with the cash. Could have brought a lot more stock back sub 270p. Struggle to see how they are going to deploy all that cash any time soon.