Finsbury Food Share Discussion Threads

[woodcutter] 11/10/2012 21:57

fwiw in an attempt to try and use an odd metric to measure fif and igr i looked to consider both businesses based on last results with no debt and excluding pension obligations (which i think fif has greater exposure to). Considering the continuing operations only, then fif would deliver in the order of 12p eps whereas igr would deliver in the order of 18p eps. Neither business is ever likely to carry no debt but it serves to illustrate my point. Current eps fif 7.8 igr 6.7 so a lot more to go at in igr case.

Now igr debt roughly £42m and fif debt roughly £34m so clearly igr more to go at to reduce debt but if interest rates remain low and that looks likely and as i believe they'll reduce debt at a faster rate then the leverage and eps should work appreciably in their favour as debt comes down.

It's crystal ball stuff this but i've always felt fif will bottom out at about 90/110p over the next few years restricted by it's markets(any aquisitions excluded) whereas, i feel igr will grow more globally and organically and bottom out at about 250/300p possibly twelve months later. There's no science behind my thinking just the way i see the businesses.

At the end of the day the difference between these two businesses is what you believe can be achieved in debt reduction and at what pace. That's the eps driver and hence the share price driver too.

WC

post note

my view on small pension deficits as in the case if fif. There's a lot of actuarial nonsense in this area, from one year to the next the volatility of indexes and markets in general renders the calulations somewhat pointless unless of course your heavily dependant on guilts (i don't include corporate bonds here as many of them have good yields at present). Okay if your deficit is like Renold then your in trouble but for something like fif it's not likely to be material.

[woodcutter] 11/10/2012 18:29

Aleman

I feel the thing with these older established businesses is they develop and grow then the management get complacent and/or run out of ideas, competition comes along, they don't move with the times and the business falls into a state of flux and declines or worse still decides it needs to go on a aquisition spree destroying shareholder value. If they're lucky they survive and usually go through a couple of management teams with more abject failure.

Then at some point someone with a bit of business acumen comes along and sorts it out and the business grows again. In fif case that's Duffy in igr case Fineman.

Thanks for your comments

[aleman] 11/10/2012 18:05

I couldn't argue with that. I only did a QUICK analysis. IGR may well have adopted strategy that leads to stronger growth. I may have a longer look when I get the time. Good luck with it in the meanwhile.

[woodcutter] 11/10/2012 17:47

Aleman

Your analysis looks pretty much similar to my own and i also think fif is better value now. I think igr is about 6/12 months behind fif in development i've always said it's a little behind the curve in comparison.

However I think there's more to igr though in terms of it's positioning as a business and in particular the way it is developing it's markets and penetration. In the long run i believe it will be a better performer than fif in terms of share price growth principally because it has a wider more global stretch, it's markets are bigger. And going forward i think it has the potential to reduce it's debt at a faster pace and hence grow eps quicker. (but i could be wrong)

Both appealed to me as they are both driving down debt with good cashflow but as i said fif a little ahead at present.

The mangement team at igr is very focused and has been making the same kind of change that fif has undergone albeit in a different sector. And consolidation/removal of weaker players in the sector is similar to fif.

Anyway we'll see with time. i can be patient , i've waited some years for both to appreciate while i've slowly been building my stake, a little longer won't hurt.

WC

[aleman] 11/10/2012 14:11

A QUICK comparison with IGR suggests FIF shares should be maybe 40% higher. The numbers are remarkably similar (even number of shares in issue!) but FIF seem to edge it in most respects. FIF has slightly higher EBITDA and EPS and lower debt and interest cover. FIF's market looks more resilient/stronger niche but IGR may have slightly stronger EPS growth as higher debt is paid down if all goes well but could be more vulnerable to downturn or higher interest rates. FIF has higher underlying free cashflow with capex just beating depreciation. If you adjust for IGR's lower capex (is it cutting corners at less than 50% depreciation for a second year?), FIF's free cashflow is about 2.5+ times higher at about £5m+ to £2m. I'd put FIF on a slightly higher P/E than IGR but it sits at 5.5 to IGR's just under 8. (Prospective about 5.1 v 6.5.) FIF is just over 2 times EBITDA to IGR's bit less than 3. EV/EBITDA for IGR is about 6.3. Similar for FIF would give a market cap of £48m or 90p! I'm not saying IGR look bad value. They could be good value IF they stay on track but there is quite a bit priced in. It's just that the comparison comfortably makes FIF look better value to me.

[this_is_me] 11/10/2012 13:35

I don't fancy IGR

[woodcutter] 11/10/2012 12:59

sicknote

you may get your return moving on igr earlier than you thought, seems like there's some investor interest today!

WC

[bamboo2] 11/10/2012 11:03

thanks Boffster. It's a case of me wanting to keep my tax situation as simple as possible.

[boffster] 11/10/2012 10:59

No and no :)

[bamboo2] 11/10/2012 10:52

A few quick q's

Can this go in an ISA?
Is there a dividend and/or interim divi, and if so, what is the exd date and payment date?

[woodcutter] 11/10/2012 09:25

Sicknote

I'm roughly 50/50 fif/igr too. As i've said before i think igr is a little behind the curve when compared to fif but the management are strong like fif and the restructuring changes taking place will come to fruition. igr has become more global and imv will be a stronger bet in the long run but i have no intentions of selling any fif to support more igr, you have to spread your investments, too much in one place is not a good idea, if it goes wrong you're in trouble.

I only ever keep about 8/9 stocks at once and operate the david dremen principle, if i find something else i like more, then one has to be sold. I think I've said this before, but i'll repeat it, for me i have good solid stakes in fif igr and sgi, i've held these a long time in the case of sgi over 5 years now, i like to build and hold. Four of the other companies my stakes are 1/2 to 2/3 the size of fif with two just about 1/3 the size of fif. I was heavy in cash a several years ago but i'm fully invested now which is difficult as i've got a number of interesting things i'm looking at and would like to add to my smaller holdings.

When/if fif reaches a price i believe provides for no further growth then i'll be out and move on but we're a long way from that. So don't be too eager to sell, no advice intended but that's my view. And i'll post when i'm out or if i slice, i think that's fair too. (after i've sold though)

WC

[s34icknote] 10/10/2012 23:33

Hi WC,

Have decided on being very patient with IGR and this one.It would be great if this went above IGR s price. I could sell half and buy more IGR shares at the same price instead of twice the Fif price!

IF Fif went to 57.5 p which would you rank the better buy ?

IGR of FIF ?

Would like to thank Aleman , Boffster and WC for all there interesting posts.

Good work more of the same.

Sick note

[aleman] 10/10/2012 17:58

My bet is that 40k at 43.5p late on was largely responsible for the fall this morning, as it looks a little out of place. It might have been already part accepted (probably at 44p) and the rest being worked (probably to a lower price - half at 43p?) when the run of smaller sells following it knocked the share price down. It would then be completed when buying returned in the afternoon and allowed MMs to turn a profit on it. I could be completely wrong and will probably never know, though. (I've had a few orders worked over the years. Sometimes the broker rings you back once there's enough trade on the other side to confirm the completion of your order at a suitable price or sometimes they just go ahead within a limit set by you in advance. Mine have always been reported at odd times later on which makes me think it might be that one.)

[castleford tiger] 10/10/2012 17:18

looks like a further 100% upside to me.
8p EPS =80P AND THATS A market cap still very low

tiger

[aleman] 10/10/2012 11:04

Doesn't really look like a tree shake to me. My guess is there was a big sell order early on. They'd probably offer to sell about 20k at the prevailing price and try work the rest. Any subsequent selling by others would see the price step down each time. (The price actually drops in 5 steps, not one as ADVFN misleadingly shows, and both bid and offer fall where tree shakes tend not to see the offer fall much as they try scare people by dropping the bid.) THe trade would then be reported later, often at the day's end, quite probably as a buy as the price would then be above the prevailing spread, with the volume depending on how much more of the order they could work. It's just a guess from a few possibilities, but watch for a late buy of over 20k in the 43-44p range that's really a sell from this morning.

Edit - those buys that have just gone through might help fill any sell order in the background so the volume reported later might be 50K+ now, if my thinking is correct. The broker could now ring back back the seller and tell him he can still have the guaranteed 20k at 44p from early on or take the extra worked and sell maybe 50k at 43p. The latter number could still rise if the order is bigger and more can be worked through the day. The slight rise in the price now suggests to me a possible 50k sell that will be reported later. If it was a tree shake, those buys would probably have already have caused the price to jump back up, with MMs very short of stock. Again this is only one of many explanations, and would be my bet. I think it is more likely than a tree shake but I could easily be wrong and won't be placing any money on it. :-)

[boffster] 10/10/2012 11:02

10k @ 42.98 CR?

[battlebus2] 10/10/2012 10:56

Up we go again :))

[cockneyrebel] 10/10/2012 10:54

Nabbed a few more on the dip.

CR

[boffster] 10/10/2012 10:51

Offer 43p but I can't get a quote for less than 44p.

[boffster] 10/10/2012 10:29

Looking at the day's reported trades so far there doesn't seem to have been sufficient selling to warrant a drop in the price, I believe we could be seeing the 'tree shake' here.

[woodcutter] 10/10/2012 09:51

possible first stage pull back this morning as some profits are taken, prompting the next wave of new investors for the next leg up.

[woodcutter] 09/10/2012 23:49

sicknote

hang on in there, you'll see a similar return on your igr, be patient it'll just take a little longer AND you're using the benefit of hindsight!! i'd be sailing around the azores now in my £5m yacht if i'd had that benefit. And i might buy Chelski too:0)

Thx Aleman

WC

[this_is_me] 09/10/2012 23:20

Volume was impressive too

[s34icknote] 09/10/2012 22:48

I,m wishing I had sold me IGR and put the lot on Fif !!! Instead of 50/50!!!
Can see a complete re rating here o 50/60p . Then a pause for next set of results to confirm the progress happy days !!!!

[s34icknote] 09/10/2012 22:48

I,m wishing I had sold me IGR and put the lot on Fif !!! Instead of 50/50!!!
Can see a complete re rating here o 50/60p . Then a pause for next set of results to confirm the progress happy days !!!!