Helphire Grp. Share Discussion Threads

[sven2006] 16/2/2014 15:24

welcome along Leopald - hope you havent sunk the Q8 or Q5 or whatever it was !

Sven

[leopold555] 16/2/2014 14:09

I like this company will have a toe dip tomorrow :-)

[nurdin] 16/2/2014 13:33

I dont know where he gets ROCE of 35% from....REFS shows it as 15%...ah well

[sven2006] 16/2/2014 12:53

nice find !

[bc4] 16/2/2014 12:31

Normally end of FEB results

[mirabeau] 16/2/2014 12:22

Feb 21, 2014
Helphire Group PLC Interim Management Statement (Estimated)

[mirabeau] 16/2/2014 11:34

Very interesting analysis from - in January saying that HHR could be worth around £420m (now £179m) = 2.3x upside

--

Magic Hat Portfolio: Reviewing Helphire

Tuesday, Jan 07 2014 by Mark Carter

On 19 December 2013, I reported that I wanted to change my public portfolio on - from a defensive style to a Magic Formula style. I just didn't think I could achieve significantly superior outperformance using the former approach.

So now I am experimenting with the Magic Formula. My aim is to beat both the ASXX (All-Share Index ex. Inv Trusts) and the shares chosen by - as part of the Magic Formula screen over the long term. The transition will take a year, as I rotate a share on a monthly basis. Can a monkey that follows -'s approach blindly outwit the intellect of a former Mensan? Prepare for Epic Fail.

Since the portfolio is only beginning its transition, I'm making the sell rule simple: eliminate a low-scoring share. You will see that, on Friday, I sold out of SGE (Sage) to clear up some cash for the purchase. The MF score is 75 – which actually isn't too shabby. Whilst we could argue if the PE of 16.7 is a bit toppy for what it is, I reckon it wouldn't make a bad hold for those wanting to practise some "strategic indolence".

In terms of what to buy, my basic plan is to keep it as simple as possible: reject the Chinese stocks, and buy where directors have bought.

However, I noticed that there is currently a lot of BB discussion about one MF candidate: Helphire (LON:HHR) :

"The Company is engaged in the provision of non-fault accident management assistance and related services. Its main revenue is derived from replacement vehicle hire, the financing of vehicle repairs and the management of personal injury claims for the innocent parties involved in motor accidents."

On further investigation, I am going to forego the simple selection, and instead discuss the merits of HHR. It has a market cap of £166m, a ROC of 58%, an EY of 22%, and an MF rank of 95%. Their seems to be some "special situation" occurring with HHR. - lists its (FCF) Price to Free Cashflow as 5.78, which is very low. The great thing about - is that it actually breaks down the cashflows. In the latest set of accounts, it has £31.2m in CFO (Cash from Operating Activities), and net cash inflow of £29.0m from investing activities. The company has had a number of such inflows over the years, and seems to be related to disposal programs. Although revenues have halved from 2008 to 2013, ROCE has actually improved.

Let me ignore these disposals, and strip out what look to be expectional investing inflows. It appears, then, that a reasonable estimate of capex expenditures is about £2.5m. So free cashflow is about £28.7m (=31.2-2.5). Given a market cap of £166m, that means that my adjusted PFCF is 5.78 (=168/28.7). That's an implied return of 17% (the inverse), which is very good.

But I think the story is even better than that. The company had net cash at the year end. The interest paid last year was £460k, which I am going to take as negligible. What's more, on 5 December 2013, the company placed £57.5m to grow its business. The shares represent 42.3% of the enlarged share capital. They were also placed at a premium to the market, which shows quite some interest.

The company has a ROC of 58% and a ROCE of 39%, as calculated by -. Suppose it can only generate a 10% return on the money placed, though. Maybe it will take time to invest its money, or whatever. I will also assume no gearing. So a 10% return on £57.5m placing, add in £28.7m existing cashflows, gives forward free cashflows of about £35m.

How much will the market pay for these cashflows, given its high ROC and low gearing? I don't know, but i would certainly hope more than 10. 15? Very feasibly. Let me split the difference and call it 12X.

So we're looking at a company that may be worth £420m (= 12 multiple x 35m free cashflows). Current market cap: £165m. Seems like a lot of upside there, which is why I want to put it in the portfolio.

- See more at: hxxp://www.-.com/content/magic-hat-portfolio-reviewing-helphire-80323/#sthash.vIZdihvC.dpuf

[mirabeau] 16/2/2014 11:21

11th January 2014

[sven2006] 16/2/2014 11:18

Mirabeau, from what date was that taken ?

[mirabeau] 15/2/2014 22:14

Naps for 2014 fromSCSW for HHR:-

'For 2014. A speculative counter. Covers much of the uk through a network of 25 branches from where it runs a fleet of 7000 vehicles.£60 m placing will enable it to buy one or more of the bigger personal injury claims firms. Bringing this work in house will galvanise margins and give rival QPP a run for its money.'

-

A reminder

[mr_bluesky] 15/2/2014 14:12

Thanks for your replies.

I have already put a toe in at c.6p but I intend to add a lot more as this has to be one of the best looking charts and turn around stories on the market right now.

Mr Bluesky

[bc4] 15/2/2014 13:16

To me the autofocus is the brucie bonus the main thing is increasing profits and big divi yield, with low interest rates that alone makes this a no brainer IMHO

[knigel] 15/2/2014 13:09

re Autofocus - it's been going on for two years now! The difference now is that the company can negotiate from a position of strength. The insurers could drag their feet when the company was only worth £ 3 million and had £ 100 million in debt. How with the company debt free - cash rich, and recovering revenue/margins - the insurers might finally be prepared to agree settlements. Of course no one knows the amounts due (there was talk of £100 million once) but "every little helps".. I'm still not sure what fair value s/b as I was going to exit at 6p but decided to hold as interest builds... probably prepared to hold to double figures now.. GLA

[bc4] 15/2/2014 12:56

Yes KNIGEL what this board have achieved is truly remarkable and it shows no sign of slowing if anything it is gathering momentum

[mirabeau] 15/2/2014 11:56

Potential triggers for further revaluations

Autofocus settlement. Now HHR has been granted access to classified insurance/driver information by the courts it's obvious that a settlement is a fait accompli and simply a matter of time. The settlement could potentially run into tens of millions of pounds

Improved trading across the group buoyed by recent climatic calamities

Removal of the debt burden wipes away the dead hand of debt and interest payments and improves EPS considerably

Proposals for the use of cash to expand HHR into more profitable areas?..An expansion strategy always inspires the market

New broker(s) coverage does tend to suggest a material turnaround in HHR's fortunes. Brokers want to be associated with success and accurate analysis which may explain why HHR is attracting such coverage now it's on the cusp of a new era

[ltinvestor] 15/2/2014 11:45

Mr Bluesky, the total voting rights include the shares issued as a result of the £60m placing so mkt cap of around £179m includes £60m cash.LT

[crazycoops] 15/2/2014 11:42

Bluesky, the new shares were admitted on 24 Dec I believe.

[knigel] 15/2/2014 11:40

Itinvestor - the board was a lot quieter when the share price was just 0.8p - there were only 2-3 of us on here! I have to be honest - I never expected such a turnaround in a relativity short space of time!

[mr_bluesky] 15/2/2014 11:25

I know the application for the £60 million placing has been made but can any one tell me if the placing has actually happened or is it still waiting to hit the market thus diluting the share pool?

Thanks in advance.

Mr Bluesky

[telbap] 15/2/2014 09:32

Sounds interesting, will do some more research and look to buy Monday or Tuesday. Nice informative bb.

[ltinvestor] 15/2/2014 08:08

This has been a quiet board with informative postings as the price has risen from under 3p to its present level.Can we please keep it that way with no ramping and exaggerated claims of shareholdings.It doesn't need to be ramped as news will determine progress or not.LT

[lauders] 15/2/2014 04:29

Hope so opodio! Pleased to be in & will enjoy the ride. If any news is THAT good I may still buy more as I am sure the story will not stop there. For the time being I am just watching & hope to be rewarded further ;-)

[dimpkins] 15/2/2014 00:19

Cheers Fingers much appreciated

[fingers xxd] 14/2/2014 23:25

HHR - (Update) - (from the 'FXD' thread)'GAP-DOWNS'There has been mention of the 'gap-down' from around 12.50p to 6.85p that occurred during May 2011. Some may say that such 'historical' occurrences, are of no significance in todays market, but I disagree. I believe that such events will continue to have an influence upon the price movement upon returning to the same levels.That 'gap' should not be considered as a 'resistance free area', but should be viewed as a 'wall of resistance', which can often be difficult to 'climb'.