Lavendon Share Discussion Threads

[qs99] 25/2/2016 18:16

yes Paul Scott ultimately says he thinks it is good value, it is discounting SA falling apart anyway so if that continues not to occur then it is in his opinion cheap...DYOR...

[gargoyle2] 25/2/2016 15:16

I've been adding today. With a 17% dividend increase, the board must be pretty confident for next year. There's a seller around, holding back the price, imo. Wont stay at these levels for long imo. I would have thought a historic PE of 10 would be about right, suggesting a share price closer to 180 than 140.

All imo, dyor etc.

[nurdin] 25/2/2016 15:15

Thanks zho,a fair assessment

[zho] 25/2/2016 15:08

Paul Scott's view at www.stockopedia.com/content/small-cap-value-report-25-feb-2016-soli-tide-lvd-122297/

Some interesting comments under Paul's piece.

[hastings] 25/2/2016 14:12

Peel Hunt also adds that the shares remain materially undervalued given the asset value of £1.31p per share.

[zoolook] 25/2/2016 13:37

Paul Scott has reviewed the statement on Stockopedia. His view is the debt level is still reasonable compared to fixed assets and lower than most hire companies and so the low rating must be due to as-yet-unrealised deteriotion for them in Saudi

[dr_smith] 25/2/2016 13:16

Cheers Zho.
I always ignore broker target prices for multitide of reasons, with the ommission of a corresponding date for target share price being near top of list.
BUT...
nice to see their target of £2.75, which I take as a sign I am not deluded. ;-)

I bought in at £1.79 and staying with it as business propescts are still the same, only illogical sentiment seemingly sending share price down.
We have had several reports since the share price started its dive, allaying previous paranoid fears of 'what does the market know that I don't', so no skeletons to worry about.

It seems others here with same strategy of following business prospects and ignoring (sector) sentiment, as latter must correct itself given time.

[zho] 25/2/2016 12:29

www.directorstalkinterviews.com/lavendon-group-plc-105-2-potential-upside-indicated-by-peel-hunt/412693856

[nurdin] 25/2/2016 10:50

Isnt high debt a feature of 'buy to let' businesses? Its all matter of how quickly they recoup their investment which in turn depends on the level of utilisation of their stock.That is hard to guess.

[qs99] 25/2/2016 10:46

Unless the reducing debt expectations creates external bid interest which is always a possibility IMO...

[beangrinder] 25/2/2016 10:04

Jeff. My philosophy exactly. Last slow burner (i.e. unloved and forgotten for ages) was PHTM with similar fundamentals; low market cap to EBITDA/cash flow, debt manageable and being paid down easily etc. Just wish I'd held on for longer there. I'm hoping LVD will rise to twice current price but patience is the key.

[jeffian] 25/2/2016 09:53

I agree, beangrinder. I use low P/E ratios as a filter when researching shares and have had some crackers - SUS and IRV being two - bought at a time when 'TMT' was all the rage and fundamentals counted for nothing. Unfashionable shares can be slow-burners, but if the fundamentals are good, the market will usually give them a rating at some point and a good divi helps the wait in the meantime.

[sphere25] 25/2/2016 09:53

Looks a resilient performance, with solid operating metrics, in a challenging climate, particularly Saudi, but in the interest of balance there are plenty of cautionary points in there:

Potential disruption to UK:

"Towards the end of the year, we concluded that our outsourced transportation function was not delivering the expected customer service improvements at the expected cost and was restricting progress in our drive for greater operational efficiency. Consequently we have decided to bring this function back under our direct control. This may cause some disruption and increase costs to the business in the short term, as we transition in-house, however we are confident that both our efficiency and customer satisfaction levels will improve over the year."

Potential disruption in Germany:

"An improvement in the financial performance of the Group's German business is a key area of focus for the Board and, following the appointment of our new management team in the year, we are accelerating the regionalisation of the business to concentrate our resources in the larger industrial conurbations and implement a 'local champion' strategy similar to that applied successfully elsewhere in the Group. Whilst these changes could disrupt the progress in our revenue development in the short term, and will incur restructuring costs, we believe that they will establish a firmer base from which the business can increase market share, drive revenues and improve financial returns to the Group."

There is also goodwill impairments for weak performance in Germany and Belgium. The big one though is Saudi where they are now having to cut back. Analysts have been very keen to get more insight into the debtor days in Saudi and this clearly has become a big issue:

"The well-publicised liquidity issues within the region have made the management of our working capital more challenging during the year. This is primarily an issue within our Saudi Arabian business, although its impact is mitigated by the better working capital metrics seen in our other markets in the region that are driving our current revenue growth. Whilst the region continues to be self-funding, its increased working capital requirements will moderate the rate at which we allocate additional capital into the region in the coming year. We are taking this measure so that the level of "free cash" generated by the region is increased, a discipline that will remain in place until the liquidity pressures in the market show signs of easing. "

The outlook is a tad shaky too:

"Trading in the current financial year has been in line with our expectations and, whilst recognising the recent increased uncertainty in the economic outlook, the Board looks forward to delivering another year of progress in 2016. "

So how much of this is in the price?

I'd say a great deal of it is already in the price, but with all the cautionary statements, I'd be surprised to see this rate higher for now. I'd expect the Saudi overhang in particular to keep the stock at a lower rating. The market will want to see further trading updates as reassurance to the numerous points above.

Continuing to trade within the current range is my call.

All imo

[beangrinder] 25/2/2016 09:42

It's impossible to know when the share price will pick up. On all the fundamentals the company looks very cheap and has done for ages. It's not looking like a trading position but I'm happy to collect 4-5% yield whilst I wait for it to climb at a future date towards more reasonable market cap.

[rjd1233] 25/2/2016 09:23

SP increase didn't last long!

[my retirement fund] 25/2/2016 09:11

Great results however unless markets can become more comfortable with debt leveraged models the shareprice will wallow however I suspect the eps and dividend will probably keep a floor under the downside.

[heliweli] 25/2/2016 08:14

150 next stop.

[gargoyle2] 25/2/2016 07:28

2015 PE of under 7.5 at these levels, with a confident statement and a dividend up 17% -- this is way to cheap imo.

[gucci] 25/2/2016 07:25

Increase in divi

[battyliveson] 25/2/2016 07:25

I like the investment in more rental equipment demonstrating they can fulfill future growth opportunities. Too many companies are growing put by short term cuts. However, demand needs to be there in market. Can never predict how market will react!

B

[qs99] 25/2/2016 07:23

Looks very solid IMO, debt will start coming down IMO this year....when it does, equity play will be more obvious IMO

[dahhad] 25/2/2016 07:15

Surely the debt and goodwill will not deter the market and hopefully these shares can start to be appreciated for what looks like yet another good performance!