Henderson European Share Discussion Threads

[jtcod] 24/4/2006 16:00

culchi
IEC is a great company, and their P&P reserves could well quadruple over the next 3 years imo.

Obviously I can't make your decisions for you. All I can say is that I sold stock in one of my favourite companies (BUR) to buy stock in HET today. Such was my belief in it's current undervaluation.

[culchi] 24/4/2006 15:41

Thanks jtc for sharing your expertise. My largest holding is in bur which i bought at£2-65. Have since bought amu @81 pence,chns@£1-45 and iec@£7-80 .I was going to add to iec tomorrow as my holding is only 1200 shares. Should i instead use funds available to buy het at present prices. Your opinion would be appreciated .Many thanks for your contributions.

[goonertone] 24/4/2006 15:38

Rec

It took a bit of time when I first looked at this to get my head round what they do. My first instinct being video/dvd rentals from high street stores thats a bit cyclical and subject to weather, world cup etc wheres the stability?

However rentals now account for less than 30% of turnover, although they are a higher margin they are subject to outside influences. The growing part of the business is the fulfilment side. For example they supply dvd's, videos etc to local stores, post offices etc to allow these stores to offer a greater choice of products to their clients. They now supply approx 8,000 stores an increase of 250 stores in the first 28 weeks of the year and made £860k in that period.

They also supply, manage and distribute all of the stock of dvd's etc for lovefilms(an online dvd rental business) and most of the major catalogues like Littlewoods and Grattans.

Movie downloads will have an effect at sometime but blu-ray and HDdvd should keep the marketplace bouyant for a fair few years yet. Piracy is also an issue but new licensing and encryption technologies should have an impact on this in he future.

I haven't even touched on dvd sales, the website, the direct to customer sales etc but I'll stop before people nod off.

It's not all roses by a long shot but somewhere in there there is a profitable and growing business trying to get out.

GT

[recruiter] 24/4/2006 15:06

GT, thats my problem, I just have the "blockbuster" image in my head, although I see Andromeda was a supplier to many leading retailers & the like.
It is tempting, but I am having trouble believing that initially Andromeda will not have a negative impact on earnings.

[jtcod] 24/4/2006 14:55

Agreed GT

Nice to come across you again. If it wasn't for your diligent work on this bb, I probably would not have picked up on the Andromeda situation. Though I was still interested in buying without that dropping in our laps.
Cheers
JT

[Abuse team] 24/4/2006 14:52

Post removed by ADVFN

[goonertone] 24/4/2006 14:50

JT

I was in the process of starting a new messageboard thread for HET and then this popped up and saved me the trouble, thanks.

I could wax lyrical for hours on the pro's and cons of HET as a business investment. All I would say for now is that if anybody does take a look at the company then try to see past the initial image of a blockbuster clone. The profitable part of the business and the driver for growth are the fulfilment businesses of choicesuk local and choicesuk direct and it is these parts that will benefit from any crossover business from Andromeda.

GT

[scumdog] 24/4/2006 14:46

JTCod's started a new thread today.

[jtcod] 24/4/2006 13:29

Rec
When the P/E is this low, long term growth is less of an issue imo. Ben Graham always worked on the principal that a zero growth stock is worth a P/E of 8.5. I think that is a very good rule. The safety is in the purchase price against intrensic value.

I do think we will get meaningful growth though from the integration of Andromeda. Andromeda had a T/O of £70m and was profitable. It just had a bank that killed it's short term cash flow by calling in the £4m overdraft.

As a 'value' investor, I don't need growth but if it's there, well that's just icing on the cake.

As ever all IMHO
JT

[recruiter] 24/4/2006 13:08

I would love to get excited about this one, but just cant. For me it is a really struggling & highly comeptitive sector, that is with, piracy, internet dowloading etc, dying out. It will remain on a low pe for quite a long time I would imagine as it has to be asked "where is the long term growth going to come from ?".

[sporticus] 24/4/2006 13:03

If they only rise to £1.00 then I will still be well out of pocket. Does anyone have any views on their latest EGM notice to shareholders, especially the bit where "new options for old" only applies to selected employees? That does not seem fair to me.

[mellious] 24/4/2006 12:35

No movement still, the market has no trust in the share. In the long-term they may rise to £1.00 but no higher! As that is a fair value even considering last years mass losses due to obsolete stock that they had to sell cheap as they could only be seen selling mordern items which is a clear weakness along with the investments made into advertising and their TV channel, just hope the refitting has a positive impact!

[cambium] 24/4/2006 11:23

This brings a whole new meaning to a CTF. :o)

[jtcod] 24/4/2006 11:17

cod tracker fund!?;-)

You will have no problem imo MS. That 3 % after me was also a buy I believe.

Seems an institution must be happy to throw the towel in.

Watch for another RNS on notifyable interest soon I think.

[miamisteve] 24/4/2006 10:58

JT - What's your view on the current liquidity of the stock. Seems you managed to buy 1.5% of the company without affecting the sp? Would like to buy 100k here for my cod tracker fund but with amu for example my 10k orders at offer never seem to get filled.

[jtcod] 24/4/2006 10:17

Cheers HB

That scenario will do me fine.

If we both like it, then I'd like to think it's a good sign.

[horneblower] 24/4/2006 09:31

JT,

I really like HET's chart. It is exhibiting a straightforward 'diamond'-shaped bottom pattern that should recover to at least 100p pretty quickly and thereafter is likely to reach 130p within, say, three months. Longer term is not possible, imo, to predict from the chart but I'm happy to go along with your fundamentals.

Two buts...

1/ It is possible (likely, even) that we will visit 60p first (to complete the diamond shape).
2/ Assuming the rise to 130p, there will inevitably be setbacks on the way up (profit-taking and relief selling by historic shareholders). The chart suggests this will occur around 72.5p and 97.5p.

I shall take a small position today but hope to expand considerably at a lower level.

Nice research.
Good luck.

[goonertone] 22/4/2006 09:32

As an aside can anyone explain how 40000 shares purchased can cause a drop in the price?

Bearing in mind it was only the bid that dropped and you could still only buy 150 online I smell something fishy, I'm just not sure what.

GT

[goonertone] 22/4/2006 09:28

Pjetr

I got Andromeda's accounts from Co house for Dec 04. I think it was the old start up problem, to far to fast and cashflow got them. They had cash outflow in the year of £3.5 mill with a £4 mil o/draft. I'm not a games expert but there were also delays with the launching of most of the new consoles.

The logistics business is subject to an MBO so the only things brought would have been the stock and the goodwill from the fulfilment side. Bankside consultants told me that an RNS wasn't needed due to the amount paid being non notifiable. I think therefore that for a cheap amount they will have augmented there fulfilment division.

GT

[pjetr] 22/4/2006 09:03

probably choicesUK got the assets at good prices, so that's good news.
but I'm just wondering what exactly went wrong with Andromeda Entertainment...and if it says anything about the future for other players in this industry (ie HET).
After some googling, I understand that Andromeda was a very succesful company up until 2003-04-...? Fast growing, very decent net profit margin, blue chip clients, top IT systems to deliver.
Did consoles sales drastically decrease? (don't think so) - did game prices fall sharply (don't think so)? what happened with Andromeda and how is HET different?

any ideas?

cheers

[goonertone] 20/4/2006 11:02

I thought MM's had to at least offer the NMS on a share?

Barclays is currently down to a max of 150 @ 67 to buy and 10000 @ 65.6(7500 @ 66)

GT

[goonertone] 19/4/2006 23:33

Have had a look round the Andromeda website and looked at what we might be acquiring.

Andromeda was a former darling of the papers as it was in numerous top private companies lists.

It has also started a logistics business that is not part of the bankrupt business but this was only started in 2004. The turnover in 2003 was £51 million and in 2004 £58 million.

The bit I like is that they are buying the goodwill ie the client base which appears from there website to be blue chip. They are in the fulfilment business which is the profitable part of choicesuk and opens up further opportunites in this area.

They will be it appears transferring the business to Peterborogh which should mean synergies on a large scale.

however it is all conjecture without an RNS to explain exactly what parts of the business they have purchased.

GT

client list


company summary

[scumdog] 19/4/2006 16:40

Well found goonertone.

[goonertone] 19/4/2006 13:35

Why no RNS?

Choices UK has this morning confirmed its acquisition of Andromeda - as predicted yesterday by MCV.
The company, which boasts over 220 stores, more than 7,000 concessions within the convenience sector, and has business interests in e-commerce, mail order and fulfilment, has picked up the games stock and certain assets from the receivers of the troubled distributor.

"As a result of this acquisition, ChoicesUK has significantly strengthened its position in the fulfilment business and will provide suppliers and customers with continuity and the benefits of dealing with a well established operator."

A number of key personnel from Andromeda Entertainment will be employed by ChoicesUK.



GT