Hercules Props. Share Discussion Threads

[nurdin] 15/2/2004 11:10

caamped...rephrased what I wanted to say...shucks!

[campbed] 15/2/2004 10:54

nurdin

Well HPS debt won't come down if "not well supported by the cash flow" as they would have had to tell us about new equity issued or material disposals!!!

[nurdin] 15/2/2004 10:14

The key thing to look out for tomorrow is the debt level...if this is seen to come down rapidly from the cashflow, a rerating will ensue regardless...

[rivaldo] 15/2/2004 10:05

Ah, that explains the difference - no probs with your EPS reasoning campbed, good to see the reason for the difference from the RNS EPS. Mind you, I disagree about expensing share options, but that's a debate too far for this bb and for which I just don't have time.

As for guessing games, the analysts have direct access to the company and in many cases (if not all) will be more au fait with the company and its progress than you or I will ever be. That's not to say that good research is hard to beat, or that analysts ever get it wrong (they do, frequently), or that the smaller companies arena is under-researched, which it is (see INX, CKN and MBY for gross EPS underestimates IMHO). But IMO analysts these days are doing a better job than they were using more cautious forecasts, so in many cases, such as HPS, I'm happy to stick with their numbers.

And when you're trying to forecast interims, you're increasing the range of difficulty exponentially!

[campbed] 15/2/2004 09:42

hi Rivaldo Re # 873

I hate guessing games! But I'll go for 13.8p EPS (last year's was 11.7p EPS, not 10p as in your post campbed)

HPS chooses to adjust for the costs of both goodwill amortisation and the long-term incentive plan (LTIP).

I don't agree with adjusting for the LTIP accrual as it is just a deferred compensation which is a real cost to shareholders. I also believe all share options should be accounted for as a cost in the P&L as they will be under current IAS from 2005.

Hence my EBTA and adjusted EPS figures in my post #871 include the £300k LTIP charge and adjust only for goodwill amortisation.

In actual fact, HPS reversed in H2 2002/3 the £300k LTIP accrual that was made in H1 in view of the share price tanking and so there was no additional accrual and no LTIP adj was necessary in the FY 2002/3. In each of the two previous years the annual charge was £600k made at the rate of £300k per half.

Not sure why you don't like "guessing games" -- surely what every independent investor is doing is making forecasts about how a company will perform in the future in order to find either undervalued companies to buy or overvalued companies to short. Otherwise why not just buy a cheap index tracker and not individual shares. Hence I play a lot of "guessing games" as do company managements and equity analysts only they call them forecast guidance.

Re. your post #875 and #877 on Windsor: -I agree though some people have their reservations about David Low as of course some do about Larry Lipman. However both have built up their respective companies and only time will tell how much more success, if any, there will be. I'm long both.

[rivaldo] 14/2/2004 14:27

OT : so do I DJ! But I still reckon WNDR, on its traditional multiple of 10, has 30% upwards in it, perhaps even up to the ex-div date of 10th March if there's a run-up and with my wibbly optimist's hat on.

Anyway, back to HPS....

[diogenesj] 14/2/2004 13:59

Have to agree with that, rivaldo: he did dump them very skilfully close to the all-time high and just before the shares tanked. I rather wish I'd followed him now.
:-)

[rivaldo] 14/2/2004 12:28

OT : Sorry CR, been through all this on the WNDR thread - Low is 59 years old and had (from memory) 11% of a small cap and relatively illiquid company. He still has 7%. Agreed it's not ideal - but if at that age he can't sell a chunk of shares in a company he's helped to achieve great success, at about the only time in the year when he can, I feel peeps are being a little churlish. The other way of looking at it of course, is how he was able to place 2.5m shares relatively easily...

[cockneyrebel] 14/2/2004 12:11

Yep rivaldo, possibly - doesn't explain Lows sell of 2.5m tho - a big proportion of his holding.

CR

[rivaldo] 14/2/2004 11:52

Hi campbed - I hate guessing games! But I'll go for 13.8p EPS (last year's was 11.7p EPS, not 10p as in your post campbed?).

OT : I'm also into WNDR as you'll have seen from that company's thread. That was a great post.

CR, I can tell we're going to go round in circles again on this one! Last year WNDR made 4.84p basic EPS, so its historic P/E is just 8.9 - and if you adjust for goodwill the historic EPS was 5.3p for a P/E of 8.2!

The current year forecast basic EPS is 5.2p, and next year is 5.4p, i.e a P/E of only 8. But if you strip out goodwill, the forward EPS is 6.22p for a P/E of just 6.9. Plus there's a 3% divi coming up for grabs. And if WNDR are handling Chelsea's insurance premiums as well...

Sorry to HPS holders!

[cockneyrebel] 14/2/2004 11:34

Hmm - if WNDR is so cheap why did director David Low sell 2.5m recently?

For an insurance broker a PE of 10 looks fair value to me. Less footballers around in the future with the current climate of reducing costs, can't help profits imo.

CR

[campbed] 14/2/2004 11:25

OK all you HPS followers what are you expecting in Monday's interims for EBTA (but after LTIP charge) and adj EPS?. My hope is for £4m (2002: £2.72m) and 15p (2002: 10.0p).

If you like HPS, then a similar undervalued small cap play may be insurance broker Windsor (WNDR) on which I've just posted

[nurdin] 14/2/2004 10:12

Possibly another 30-40% there short term imo.Have a look at the thread

Sorry people for going O/T

[rivaldo] 14/2/2004 09:47

Nurdin, I had a quick look a while back but didn't have available funds, plus the US investment point didn't really sink in. And now I've probably missed the boat! So I've stopped looking. Still worth a look despite the rise?

[nurdin] 14/2/2004 09:33

yup..good luck.We need the results to be in line to change sentiment...anything above will be a bonus!
Also SGI reporting in 2 weeks time..have you had a look at them Rivaldo?

[rivaldo] 14/2/2004 09:29

Yep, good luck to all - I'm splashing out on a slap-up Valentines Day meal in the expectation that HPS will have paid for it many times over on Monday!

[the speculator] 13/2/2004 20:30

Never thought of that nurdin.

Spec

[nurdin] 13/2/2004 16:55

I much rather sellers exit now rather than take the shine off the rise on Monday......heres hoping :o)

[spec12] 13/2/2004 16:44

Good luck holders and may all recent sellers be absolutely gutted come Monday.

[rivaldo] 13/2/2004 14:16

Agreed - profit-taking is never wrong, but in this case there's a possibility of another 50% if all goes well, so I'd rather hang in there.

[nurdin] 13/2/2004 13:27

yup..there maybe sells after the results but there are people in the wings ready to mop up...me included!

[spec12] 13/2/2004 13:22

Looks like the old strategy of buying on rumour and sell before the news....
Think they are wrong to do so in this case.

[40plus] 13/2/2004 11:55

Assume all long term holders are still in for the ride to 4.50? - Maybe today is just a re-test of Aug 2002 resistance/support before continuing the rise on results day. Profit takers IMHO are out way too early . .

[ntv] 13/2/2004 09:58

banked sum profit

[simonevans] 12/2/2004 21:12

agreed - this one is looking very good indeed.