Litcomp Share Discussion Threads

[abc125] 15/6/2008 20:39

It is worth remembering that LIN will be unaffected by the credit crunch or if the UK goes into recession - an important consideration in the present climate. A brief description of what they do:

"LitComp is a national supplier of financial and legal insurance products and litigation services. LitComp's trading subsidiaries provide After the Event and other specialist insurances, medico legal reports and psychological reports to its client base, which comprises mainly U.K. based solicitors."

It is also worth noting that Litcomp have a first class management team and Jason Smart, the CEO, is a solicitor - which is handy because most of their revenue comes from the legal profession. The prelims should show just how quickly Elite Insurance is growing, and I think the market may then sit up and take note....any maybe even a few more private investors may jump onboard!

This is a gamble at this stage but LIN has the potential to be the sleeper share of the year....IMHO. If things pan out as I hope and expect, this stock will be a good 4 or 5 year hold and a potential multi-bagger.

p.s. As you've probably guessed, I have a large holding! Happy to hold even if the prelims don't sparkle.

pps. Note to moi....must stop talking to myself.

[abc125] 13/6/2008 21:46

My forecast for the share price if current EPS estimates of 6.9p for 07/08 are met is £1.27 based on a 12x rating on prospective earnings of 10.6p. This is not excessive for a growth share.

If March 08 targets come in as predicted, Litcomp will have two sets of strong annual results under their belt, and the market may decide to rate the shares on a PE of 20 or 25 given the 'actual' and 'expected' growth in revenues and profits.

We could then be looking at a share price of up to 265p (10.6p x 25).

[abc125] 13/6/2008 13:51

GE&CR have higher forecasts of 118p which thay reiterated on 01/03/08:


LitComp released a positive trading statement already covered in our December monthly, which underpinned our forecasts. Elite has experienced significant growth and profit over the past year and moved the company into profitability. The company entered into a reinsurance programme with a leading international reinsurer in June 2007, which although will lead to a reduction in Elite's retained premium, will also lead to an increase in its capacity and reduce claims risk. LitComp's medio-legal companies are continuing to experience a difficult year due to the appeal against the Wollard Judgement.

However, since the appeal was withdrawn, there has been a notable increase in nominations that will be translated into invoiced sales later in the year. The company is on the road to recovery with sales in the last three months showing improvement with some new business wins. LitComp also announced the issue of a total of 700,000 share options at 30p each to J Smart, R Smart and PA Lavender as part of the executive share incentive scheme. Recent share price weakness provides an opportunity for investors as the rating for Litcomp is now far too low given the growth it is delivering. With a target price of 118p we are upgrading our stance from long term buy to buy.

[abc125] 13/6/2008 13:47

Updated forecasts from Daniel Stewart on 07/01/08:


07.01.08 :+0, (47.5) up in midmorning deals as it said it expects its full-year results to be in line with market expectations, prompting Daniel Stewart to keep a 'buy' rating on the stock with a 70 pence price target. Earlier today, Litcomp said it expects its full-year results to be in line with market expectations. The After the Event (ATE) insurance company also said it has written its largest ever ATE policy, which was referred by a leading European litigation funding provider with whom it started working in Nov 2007. Chief executive Jason Smart said the company's medico-legal nominations and sales are continuing to improve month-on-month. LitComp added it has launched a specialist personal guarantee policy and expects that demand for the policy will show steady growth in 2008. In reaction, Daniel Stewart kept its 'buy' rating on Litcomp, noting its in line numbers hope. The broker also notes the group's further service/product enhancements, as it forecasts, for March 2008, an adjusted profit before tax (PBT) of 1.8m, giving earnings per share (EPS) of 6.9 pence. For 2009, this rises to an adjusted PBT of 2.8m and EPS of 10.6 pence, the broker said. Daniel Stewart said these numbers leave Litcomp trading on a price/earnings ratio of 6.5x, falling to 4.2x, which it said it feels more than justifies its 70 pence price target.

[abc125] 13/6/2008 13:34

I've started a new thread which will hopefully attract a few more posters once the year end results are out!

[abc125] 13/6/2008 13:33

THREAD CLOSED

COMPANY TAKEN PRIVATE BY NIGEL WRAY AND THE EXECUTIVE DIRECTORS FOR A KNOCK DOWN PRICE.

IF THEY EVER RE-LIST.........AVOID.

[abc125] 08/6/2008 19:47

GE&CR said in their July note last year when the share price was 67p:

"It is our assumption that, notwithstanding the attractions of a 10% coupon, at some stage the potential for significant capital gains to be realized will push all loan note holders to convert their position into ordinary shares.(the loan note term ends in october 08) "

- The conversion price is 30p, but with the share price at 42p, holders will opt for the cash instead. Taking ordinary shares and selling on the open market is a non starter as this would lead the share price to tank. It will be interesting to see how Litcomp tackle this, as they will need to hold onto their cash reserves.

[abc125] 08/6/2008 19:40

Daniel Stewart said in one of their early notes that:

"The FTSE Actuaries Insurance sector is currently rated on 14.1x historic earnings."

- given they are now pencilling in EPS of 6.9p for the year to march 08, a similar rating for LIN would deliver a share price of 97p.

[abc125] 07/6/2008 17:49

I was not aware that Daniel Stewart had also put out forecasts for Litcomp. They are slightly higher than Growth Equity's forecasts :

07.01.08 :+0, (47.5) up in midmorning deals as it said it expects its full-year results to be in line with market expectations, prompting Daniel Stewart to keep a 'buy' rating on the stock with a 70 pence price target. Earlier today, Litcomp said it expects its full-year results to be in line with market expectations. The After the Event (ATE) insurance company also said it has written its largest ever ATE policy, which was referred by a leading European litigation funding provider with whom it started working in Nov 2007. Chief executive Jason Smart said the company's medico-legal nominations and sales are continuing to improve month-on-month. LitComp added it has launched a specialist personal guarantee policy and expects that demand for the policy will show steady growth in 2008. In reaction, Daniel Stewart kept its 'buy' rating on Litcomp, noting its in line numbers hope. The broker also notes the group's further service/product enhancements, as it forecasts, for March 2008, an adjusted profit before tax (PBT) of 1.8m, giving earnings per share (EPS) of 6.9 pence. For 2009, this rises to an adjusted PBT of 2.8m and EPS of 10.6 pence, the broker said. Daniel Stewart said these numbers leave Litcomp trading on a price/earnings ratio of 6.5x, falling to 4.2x, which it said it feels more than justifies its 70 pence price target.

[abc125] 29/5/2008 20:40

Also from the admission doc in 06:

The Department of Constitutional Affairs is currently reviewing whether the minimum small claims size should be increased beyond the current £1,000. At present it is only claims over £1,000 where there is protection for legal fees associated with the case to be received from the other party. Accordingly if
this limit were raised substantially there could be a return to "an increase in contingency fee" arrangements with a consequential reduction in the sale of insurance policies. This may reduce the number of insurance backed claims cases within the UK and thus Elite Insurance Company's potential
market.


- There's been no news, so hopefully the insurers have fought a good rearguard action.

[abc125] 29/5/2008 18:30

The loan stock term ends in october so holders will need to decide whether they take the cash or convert into shares. If the share price stays at the current level (42p), I expect they will want cash:

"All Loan Stock not previously purchased or redeemed by the Company or converted will be redeemed on 31 October 2008. All Loan Stock, which is purchased by the Company or redeemed, will be cancelled." (admission doc)

[abc125] 25/5/2008 17:41

"By failing to take out after-the-event (ATE) cover when working on a conditional fee arrangement (CFA), personal injury firms are leaving themselves wide open to claims from their own clients.
It is widely agreed that ATE premium rates are sky high, yet solicitors are under an obligation to at least inform clients of their funding options when it comes to CFAs."





Average premium per policy is £805:

6. Current trading and prospects (from admission doucment)
Since regulatory approval was granted by the Regulator to underwrite policies from its location in Gibraltar on 21 November 2005, Elite Insurance Company has underwritten 108 policies to a value of £87,000 and has reached agreement, subject to contract, with four other new clients to supply AEI and related insurance.

[abc125] 25/5/2008 16:15

There is the issue of the £3.5m convertible notes however..... According to the AIM listing propectus, the notes will be converted into ordinary shares by october this year.(an extra 10m shares or so)








RNS Number:3442Q
LitComp Plc
30 January 2007



FOR IMMEDIATE RELEASE 30 JANUARY 2007


LITCOMP PLC
(AIM)

Trading update

The Board of LitComp plc ("the Company") is pleased to announce that its after
the event insurance business, Elite Insurance Company Limited ("Elite"), is
trading in line with management expectations. It wrote its first insurance
policy on 12 December 2005 and its management accounts to 30 November 2006 (an
eleven month period) show that it made unaudited profits after tax of #428,000.

The trust deed for the Company's loan notes gives the holders of loan notes a
close down option in the event that Elite is not profitable in the 12 months
from writing its first insurance policy; the Company has written to them to
advise them that, in light of the above and trading in December 2006, the option
falls away.

--ENDS--

[abc125] 23/5/2008 23:14

The last bit is of note:

Recent share price weakness provides an opportunity for investors as the rating for Litcomp is now far too low given the growth it is delivering. With a target price of 118p we are upgrading our stance from long term buy to buy.

[abc125] 23/5/2008 23:12

From GE&CR,march 1st,08:

LitComp released a positive trading statement already covered in our December monthly, which underpinned our forecasts. Elite has experienced significant growth and profit over the past year and moved the company into profitability. The company entered into a reinsurance programme with a leading international reinsurer in June 2007, which although will lead to a reduction in Elite's retained premium, will also lead to an increase in its capacity and reduce claims risk. LitComp's medio-legal companies are continuing to experience a difficult year due to the appeal against the Wollard Judgement.

However, since the appeal was withdrawn, there has been a notable increase in nominations that will be translated into invoiced sales later in the year. The company is on the road to recovery with sales in the last three months showing improvement with some new business wins. LitComp also announced the issue of a total of 700,000 share options at 30p each to J Smart, R Smart and PA Lavender as part of the executive share incentive scheme. Recent share price weakness provides an opportunity for investors as the rating for Litcomp is now far too low given the growth it is delivering. With a target price of 118p we are upgrading our stance from long term buy to buy.
-------------------------------------------------------------------------------


118p will put them on 12x forecast earnings of 9.84p for 08/09....hardly overly generous given the expected growth in revenues and profits.

[abc125] 22/5/2008 23:50

redtelephone

This share should do well. Profits/revenue growing substantially, debt free, and above all, the market they are operating in (AEI insurance), is recession proof.

[redtelephone] 22/5/2008 17:23

abc 125
The quiet share posts are the ones where the value is.

They will be queueing up to buy & posting like mad when the share price is three times the price than it is today.

[abc125] 22/5/2008 15:41

Another snippet from the November interims:

"Elite has experienced very significant growth in gross premium income and profit since 2006. The Directors are confident that growth will continue in Elite in the second half of the financial year."

Elite's gross income was £4.6m in H1 and medico legal reports fees £0.8m. Therefore total £5.4m. Broker estimates are £10.80m for the full year which they will acheive quite easily by simply turning over the same income in H2 (£5.4m+£5.4m=£10.80m. pre tax profit £1.5m)

- that is however assuming there is no growth in H2.

They are in a strong position to deliver beyond market expectations IMHO. Possibly, £13m revenue and £2m fully diluted pre tax profits.

[abc125] 11/5/2008 21:50

Last year, FE results came out on 9th july.

Elite is experiencing phenomenol growth....the market will pick this up at some point. Granted though, a lot of good AIM stocks are being overlooked in the current market.

EPS for 08/09 is forecast at 9.84p....on a measly 10x earnings rating....we're talking about a quid a share.

[philjeans] 11/5/2008 09:11

Agreed. When are results?

[abc125] 11/5/2008 01:23

From the November interims:


Elite has a number of substantial commercial policies which it could potentially write, provided that it is able to increase its capacity, which can be achieved through co-insurance, reinsurance and/or increasing its capital base.

Elite turned over £4.6m in H1 and H2 income could be closer to £6/7m. Throw in £2m from Litcomp and I think group t/o could be in excess of the £10.80m estimate. Even if they only deliver £1.5m (EPS 5.68p) pre tax profit....in normal market conditions, the shares would be rerated substantially.

[abc125] 30/4/2008 11:32

Online liquidity has gone through the roof!

B4, the most you could buy and sell online was 1000 shares, sometimes only 500, now you can buy and sell up to 20,000 online with TDW.

Something's afoot.