Fisher (james) & Sons Share Discussion Threads

[illiswilgig] 09/11/2020 09:24

I agree that the trading statement was not all that disastrous. But times are hard as we know. The share had been highly rated at more than 20x earnings in the expectation of future growth. That future growth is at least delayed and may be viewed as less likely, or not.

It may well be rated at that level again in the future, but today's market is much more 'show me the money'. Anything else gets punished.

In the meantime its not unreasonable to expect a lower multiple on current earnings when the market is less than optimistic?

Forecasts have been reduced over the weekend. Now expected to be 53p in 2020.

An earnings multiple of 14x gives a shareprice of 742p.

Almost there, and the price is still drifting down so may well get there. Looks like a 'buyers strike' to me. The trading statement gave no reason to buy and will selling still happening why not wait for a better price tomorrow?? I am.

To relieve the gloom a tad. The forecast for 2021 is now 73p (down from 83p) would be a rating of 10x earnings at 740p - which starts to look cheap. If you believe that there is not another profit warning on the way? Frankly I am not sure, and I can certainly see a big write off of assets on the way in an effort to get all the bad news out of the door with this years results?

Beyond that I don't see that the business model of the company is broken. The ability of the company to acquire new companies so freely is probably less and there will be more empahsis on organic growth. The demand for its products and services will be growing and the company is moving towards new growth markets. I expect this trend to accelerate.

I remain optimistic in the medium to longterm, but I have clearly been guilty of over optimism in the past. So what do I know?

cheers

Illis

[bouleversee] 06/11/2020 14:24

Illis - I did say "or" freebie options. I couldn't remember exactly what they had received, just that I was surprised they hadn't waived the right to it in the circumstances as indeed I have noted several firms doing this year. I haven't yet checked what they did get but I do know that the dividends we received were 32.6p last year and only 8 p this year. Don't forget they are getting a good salary as well whereas apart from a minuscule state pension some pensioners may be relying entirely on dividends for their retirement income and even if they are not drawing it yet, are relying on them to build up their pension funds. Also remember that loss of dividends, whether for pensioners/investors or the incorporated self-employed have not received any govt. compensation but as taxpayers we will be paying off over future years the cost of furlough etc. for others. Leaving out that between us my family has a pretty large holding in FSJ, I just think it looks bad for the directors to be taking bonuses (and wouldn't the dividend we had to forego in April or whenever for the previous year as well as the bonuses?) when shareholders have had to accept a huge loss of income.

I see Sainsbury's is being slated by a Times journalist for paying dividends (what does he think pensioners live on?) but at least the new CEO had the decency to waive his bonus which was the right thing to do.

As for the future, goodness knows what we can expect. Oil seems to have had its day and there is a lot of uncertainty about the windfarms. I don't know enough about the current leadership to form any opinion as to whether they have the nous and drive to get over this hurdle but hanging on to their bonuses suggests to me that they are more interested in lining their own pockets than rewarding more needy shareholders and it wouldn't totally surprise me if they agreed to be taken over by some foreign company at a price based on today's low value as has just happened with another of my holdings. Perhaps I am just suffering from depression; I do have a lot to be depressed about!

Incidentally, I didn't think the trading statement was sufficiently gloomy to warrant such a severe drop but what do I know?

[3800] 06/11/2020 12:35

Salpara you say "seems to be an overreaction" what folward p/e would you think would be reasonable and what ratio cheap?

[salpara111] 06/11/2020 12:20

Thats some serious drop! I had been thinking the drop was overdone at 900 and was going to make a cheeky day trade but just nipped out to get some milk and found it had sunk again.....seems to be an overreaction but I'm just going to sit on the sidelines for now.

[liam1om] 06/11/2020 12:03

Kinwah - They had a Trading Update this morning.

[gilesy] 06/11/2020 11:41

having bought these previously earlier in 2020 at a near time high price I have averaged down my purchase costs by buying a small chunk at 8.40p. I am hopeful earnings position and share price will improve in the next year assuming covid situation improves. good luck to all holders

[kinwah] 06/11/2020 11:19

Surprising fall with no hard news. I think a Biden victory will strengthen the US commitment to NATO and acting as the world's peace keeper. As a consequence it would give the UK government an opportunity to slash defence spending particularly on the Royal Navy. Maybe this explains the weakness.

[illiswilgig] 06/11/2020 10:59

Our Haven - Agreed!

[our haven] 06/11/2020 10:55

It has stopped for another breather and let's hope that that is the floor. Just going to hold for now as I am uncertain of which direction it is going to go now.

[illiswilgig] 06/11/2020 10:40

Hello Boule - What a horrible morning!

I think we agree. In many cases the large bonuses and free options are not justified. It seems to be rampant these days.

As I remember it any bonuses paid this year relate to the company performance in FY2019, which was ok, and propelled the shareprice to well above £20. Unfortunately that didn't last as we now know.

I don't know how you can take back bonuses for work that was well done and met the criteria on the basis of later events that are not connected? Contractually they are probably impossible not to pay?

Sadly its not the same with dividends. As owners we come well down the list. Our contract does not require a dividend to be paid. Part of the problem is perception. Unlike salaries, bonuses and dividends are all paid well in arrears by when the reason for their payment may no longer be clear.

I very much doubt there will be any bonuses for 2020. there certainly should not be - and to be fair the directors did take a 20% pay cut during Q2, something that few boards have done?

I'm not aware of any free options? Perhaps you could point me to them?

I do see that in September the CEO purchased 4327 shares at 1128p (or there abouts) so you could argue that he had (or perhaps even still has) confidence in the value at that price?

None of which helps negate the markets reaction to the lack of good news at the company.

Whilst desparately trying to sit on my hands this morning I have first considered selling my holding. I am now possibly thinking of a small topup purchase, but hopefully will do nothing, Working out what will happen in this market is not my strong point! and sadly I see other opportunities where the positive news flow is much better (though there are certainly much worse if you are invested in old economy shares),

cheers

Mark

[illiswilgig] 06/11/2020 10:13

Ow! Thats Painful. And still going down.

[bouleversee] 06/11/2020 09:29

Blimey, that's a big drop. IIRC the directors were oaying themselves large bonuses or free options recently. How can this be justified?

[salpara111] 06/11/2020 09:02

I was waiting for the update, the share price was already pretty much at the bottom of its trading range but given its exposure to oil and gas I didnt have the confidence to push the button.
There is a decent business here but I guess the big question is whether the oil and gas industry is now in long term decline. As someone who works in the automotive sector, I dont see a big decline in demand for liquid fuel until we get a step change in battery tech. Car sales growth over the next decade is going to be driven by developing markets but the cost and product limitations of pure electric vehicles mean they will be nothing more than a niche product for the foreseeable future.
In short, oil demand will remain pretty robust over the next decade so still hope here.

[illiswilgig] 06/11/2020 08:53

Ooops,

by 'share price drifting lower' - what I actually meant of course was the share price will nose-dive by 10% to 968p.

Good to know that my hindsight is still functioning superbly.

c'est la vie and I can't blame the market - there was nothing in the trading statement to point towards recover.

cheers

[illiswilgig] 06/11/2020 08:29

I notice that the bulletin board has become as quiet as the company in recent months.

Rather than recovering the share price has been drifting down to new lows in recent days.

Which makes it likely that this mornings trading update is clearly not a surprise to some. Downbeat.

The expected recovery in trading has not materialised. Turnover is down 17%. Finger of gloom is pointed at the marine support division with delayed and postponed oil/gas and subsea contracts.

No good news. No bright spots highlighted.

To give them their due they have given clear guidance on the expected level of underlying operating profit - 35-40m (was 66m in FY19) - at the lower end thats a fall of almost 50%.

You choose whether that 50% of profits is half full or half empty?

It seems that any recovery in trading is on hold for now - so is any recovery in shareprice? There may be more bad news on the way whilst they get the marine support division sorted out - ominous statement on the review of the asset base, which makes a serious writedown in assets likely in my view??

To be clear I am not surprised (though a tad disappointed) that a recovery has not materialised, oil prices are still very low and all the major energy companies are busy slashing costs and putting new projects on hold - even renewables.

It looks like a hard slog from here until there is a recovery in its markets - priced fairly though it may continue to drift downwards to new lows in absence of positive contract news. All this will obscure the good work that they are doing in entering new markets and new products in the other divisions.

cheers

[illiswilgig] 13/10/2020 12:19

Regarding wind power, off-shore wind and floating wind turbines - yes I think the potential is enormous. On that basis I have been buying into Greencoat UK Wind and The Renewable Infrastructure Group some time (don't take that as a recommendation!) so I am talking my own book here.

The Government is onto a winner here - but as usual you probably ought to look at what they don't say rather than what they do say.

It rather looks as if the government has quietly changed horses very recently - and especially our PM who is noted for claiming that 'wind power can't pull the skin off a rice-pudding' a remarkable turn of phrase that I am informed that he repeated only last year.

Sadly we've wasted decades arguing and prevaricating whilst our UK designed nuclear generators fall apart and we try to encourage the French, Japanese and more recently Chinese to build us gigantic monolithic replacements on the cheap - except they really are not cheap. As we now know. With the cancellation of future nuclear sites happening in droves - the arrival of serious off-shore wind technology brought to us by Oersted, Vestas and Siemens - whose governments have been backing them for decades - looks to be ripping the skin off the governments cheap tins of rice-pudding just in the nick of time?

The latest arrival on the scene, literally, is the floating wind-farm Hywind, with the floating turbine platforms built in Norway and towed over to the UK by Equinor (you may remember them as Statoil - think of them as BP but without being flogged by the Norwegian government and not having financed environmental disasters in the US) who have been diligently working on it and testing the technology off the Norwegian coast for 15 years now.

Probably it would have stayed in Norway apart from two things. One is the large UK population with a desparate need for renewable energy and the second - most luckily for us - is the gigantic wind resource to the west of the British Isles, but mainly in waters too deep for off-shore turbines mounted on the sea-bed.

So it looks like the government has abruptly changes horses and will be desperately trying to claim the credit for off-shore wind development and turn a disaster into a success whilst we use the technology and expertise developed abroad - where a lot of profit will inevitable be headed.

Buying into UK Wind and similar funds is all very well - but they are just virtual operators. I've looked in vain for a way to invest in the technology in the UK. But without government support its just not here.

The silver lining - and it might be a really big one for FSJ - is that the government is coming from well behind and will be desperate to shore up the UK content in these wind-farms and the grid-connectors, moorings and maintenance can all be provided from the UK - something that Fisher has been investing in, even whilst the government has failed, and will be extremely well placed to win work as this industry - and floating wind is still pre-commercial - grows very rapidly.

There is a long way to go yet, and realistically it will be years before commissioning and maintenance work can build up significantly. Success for Fisher will go some way to assuage my huge anger at the enormous screw-up now being proclaimed as a success by those who have spent so long trying to knock-it! Bring it on!

cheers

Illis

[bouleversee] 09/10/2020 00:03

Yes, I did hear that but Boris promises a lot of things that never come to pass, wooded bridges over The Thames (while the existing ones are falling down), airports in funny places, superb test and trace systems, getting Brexit done (or not), etc. etc. and I doubt if we will see all those windmills in my lifetime. Anyway, like you, I have been too busy this week on other urgent matters to keep track of share prices but it's good to see them moving in the right direction. I see the directors were more on the ball and knew it was the right time to buy, though the FD immediately sold a big chunk of his option purchases at £521.67 netting himself a huge profit. I sometimes wonder whether share prices are manipulated to suit options.

Disappointed by such a low dividend. At the moment, I'm more interested in income than usual and can't afford to risk any more capital.

[roddiemac2] 08/10/2020 22:41

I am sure you are all aware that on Tuesday this week Boris pledged that offshore wind will will produce enough electricity to power every home in a decade. This is a sensible, if ambitious aim ( once upon a time we led the world in equally ambitious projects ) . Boris has announced £160 million of investment in ports and factories for a start." Analysts have suggested that reaching this target would require £50 billion of capital investment , and the completion of a turbine every weekday throughout the decade. " I like the idea of floating wind farms.

FSJ is already well established in this arena. The potential now is massive.

Illis, boule,

I am sorry that I have not yet commented on the interim results. I have had a lot to deal with in the last couple of months , and investment has taken a back seat. Illis,-- I note that you have covered them well, as you usually do.

boule, I don`t worry too much about the share price . Our job is to take advantage of markets when we judge them to be irrational. I added several times as the shares fell; time will tell.

[bscuit] 02/10/2020 11:57

Very "fluffy" RNS. INO should have been a "Reach".

[bouleversee] 02/10/2020 11:38

Illis -

Many thanks for reply. My questions were rhetorical really; not expecting you to tell me what to do, but thanks. I'm just curious as to why it has sunk so low. I guess I just have to sit it out and hope for improvement. I think anything to do with oil is tainted at present.

[our haven] 02/10/2020 11:25

I take your point on the lack of any numbers. It only mentions millions which could be two upwards.Hopefully we will get clarification in the update.

[illiswilgig] 02/10/2020 09:36

I agree - good news.

I particularly like the rebreather technology.

But on its own this release is not a big deal and contains no figures - let's hope its the start of a flow of more positive news,

cheers

[our haven] 02/10/2020 07:22

Good news on the 5 year contract award announcement from the Royal Navy. Future earnings boost has to help.

[illiswilgig] 29/9/2020 21:17

Boule - Yes, I can sympathise.

I am not sure that I am the right person to answer your questions.

At times like this I think we all question our decisions and wonder does the market know something that we don't?

There has been no more news since I wrote my last note - which makes it hard for me to add much.

To recap - I did write:

'For the bears there is plenty of gloom surrounding the poor performance of the marine support division, about half the company by sales - but only 25% of profits, currently enjoys a return on capital of below 5%. Some underperforming assets there that need sorting out?'

It seems to me that this division started to go off the rails a couple of years ago. The pandemic has only hastening it? It seems unfair to blame the new CEO for decisions made before he arrived?

On the other hand.

If we are to blame the management for the poor performance at Marine Support - should we not be crediting the management for the outstanding turnaround at offshore oil? With turnover, profit and ROCE all sharply up during a pandemic?

Which begs the question - can they do the same with Marine Support?

If they can - then FSJ stands a good chance of being rerated as it returns to substantial growth.

But that might not happen - and even if it does a marine services company is not exactly a red-hot tech stock? It's clear that the market won't be rerating this unless and until there is positive newsflow and the figures improve a lot.

I will be awaiting the next results with bated breathe for any sign of progress.

And in the meantime I am afraid that only you can decide whether holding on or selling is the right decision for you.

I am sorry that I can't be of more help,

cheers,

Illis

[bouleversee] 29/9/2020 10:02

I'm getting rather uncomfortable about holding it, Illis. From being one of my best performing holdings (and one of the largest) it is becoming one of the worst. Something seems to have gone wrong with the management. What are they doing to adapt their business to the new prevailing circumstances?