Mallett Share Discussion Threads

[muffinhead] 09/11/2012 20:00

watch cashflow (excluding movements in working capital)

I think this is another small listed company best working for rather than holding the shares

[rainmaker] 09/11/2012 13:46

In a couple of years time I expect the majority of Mallett's profits to come from their 23.75% stake in Masterpiece.

regards

[rainmaker] 09/11/2012 13:24

In the year ending 30 September 2011,Masterpiece London made a profit of £521k profit on sales of £5.336mln.The annual report and accounts are available for purchase on line. There were 28,000 visitors last year paying a £20 admission which means that 1)89.5% of it's turnover comes from the sale of exhibitor stands,the remaining 10.5% from the entrance fee.2)Fixed costs are £4.77mln 3)With 152 stands in 2011, the average exhibitor paid £31k for a stand.4) Broadly speaking for 2011,the exhibitors covered the fixed costs and the entrance fee provided the profit.

Masterpiece London is a business franchise(and IMHO a toll gate business)with the freedom to raise prices(which they did between 2010 and 2011, by over 11%)so consequently this business has an expanding value. If we ignore subsequent psm stand price increase for this year and presumably for next, an additional 30/40 stands will increase profits by £930k to £1.24mln so theoretically Masterpiece makes £1.5mln to £1.8mln.An increase of this magnitude is perfectly feasible, given the 300 applications for this year's event.

regards

[rainmaker] 08/11/2012 15:03

From the interim results last August-


"Dividends
The Board has decided not to declare an interim dividend. However, as the Group continues it progression towards a stable level of profits, the Board reiterates its commitment to returning to paying a dividend once it is financially prudent to do so."

So take this as a clear signal that when Mallett make money, excluding one off exceptional items, they will pay a dividend.If the Company makes 5.9p next year as forecast(although for reasons already mentioned on this thread I feel this figure is too low)then they pay a 3p annual dividend?Obviously as a service industry there are no major capital commitments each year unlike say a manufacturing company.

regards

[rainmaker] 08/11/2012 14:33

When are Mallett and the other three Partners of Masterpiece London going to increase the size of their exhibition form circa 170 this year? We know that they have applications for 300 stands as we've heard this from a variety of sources. We appreciate that in order to keep rising stand prices each year they need to have queue of new exhibitors but surely they could increase numbers by some 30/40 for 2013. Since the exhibition's costs are overwhelmingly of the fixed rather the variable variety this would make a huge different to the exhibitions profitability. There would be no additional cost in the renting of the site,or the marquee, or staff so all that additional turnover would flow through to the bottom line.

I think last was problematic as the worlds financial market were in turmoil when they were allocating stands for this year's event but given greater global stability since I think this year there will be a further step up in stand numbers.Let me dig up some numbers.

regards

[rainmaker] 07/11/2012 17:21

As we've said before it's very tightly held. I've just checked a list of the major shareholders, reproduced below and adjusting this for the recent increase in Peter G's stake to 25.9%(I haven't seen any corresponding sales) means that the top seven largest shareholders own a whopping 80% so there isn't much in the way of free float.There are no sellers about so perfect conditions for a share price squeeze. Unquesionably with a cyclical upturn in trading and aqnnual cost savings from the move, we're going to be trading profitably and Mallett will make a return in excess of it's cost of captital for next stop +111p- tangible net asset value.




Mallett PLC - MAE.Add to PortfolioPrintGlossaryStock Profile PDFGet E-mail Alerts.OverviewChartShare PricePerformanceKey RatiosFinancialsBroker SentimentNewsOwnersDirectors.Owners is a feature of Morningstar Premium. To learn more, click here

Major Shareholders Shareholder Type Amount % Holding
Withers Trust Corp Ltd - 4,130,000 29.93
Peter Gyllenhammar - 3,439,500 24.92
Churchill Investments - 1,150,000 8.33
Stichting Value Partners - 676,000 4.90
Henderson Global Investors - 554,000 4.01
Mrs S Fenwick - 534,000 3.87
Share Incentive Plan - 466,042 3.38




regards

[azalea] 07/11/2012 16:25

Can't get an online buy/sell quote; getting interesting.

[rainmaker] 07/11/2012 11:06

Playful-he's very focussed,tenacious and doesn't get distracted by "market noise".He concentrates on undervalued Companies where he has an opportunity to purchase major stakes at way below their intrinsic worth.Then he sit and wait for the share price to close that gap.Potentially he could buy up to another 554k shares to take his current stake of 25.9% to just under 30% as is his style.

regards

[playful] 06/11/2012 17:47

Happy to see P.G increasing his position recently, this gives me renewed confidence.

[rainmaker] 06/11/2012 13:28

I've already stated that I believe the estimate for next year is too low and I think it's worth reposting this-


Rainmaker 3 Oct'12 - 21:56 - 325 of 338 edit

I just posted the previous message to remind everyone that Partridge Fine Arts, New Bond Street antiques dealer rival and neighbour to Mallett for some 100 years, are no longer around,having gone into liquidation in 2009.I think this paragraph is particularly pertinent "The firm's inability to adapt to changing times as the 20th century turned into the 21st saw its profits turn to losses and its strong family bonds descend into dispute and a breakdown in relations, culminating in the eventual sale to Amor Holdings Ltd, and subsequent collapse of the business when Allied Irish Bank called in a £3m loan at a moment's notice"

I've seen the (only) house Broker forecast for next year of 5.9p and since Mallett trades at between 20 and 30 times earnings suggests we can look forward to a share price between 118p and 171p within the next year or so. However I personally believe that the estimate is too low for the following reasons-

1)Potential upward stock revaluation-Mallett wrote down the value of their stock by 17% in 2009 or £3.40mln.A recovering market as evidenced by terrific sales at Masterpiece this year-the best returns for any fair in more than a decade- should lead to an upward revaluation as buyers return.We have already seen a minor upward revaluation of £300k but IMHO there should be more to come.

2)Mallett's change of strategy in their decision to target exceptional (expensive)pieces(where there is little competition) means bigger margins and profits particularly in the absence of major rivals such as Partridge Fine Arts and John Hobbs at the very top end of the market.Quite simply this gives them bigger market share and greater bargaining power in both the buying and selling of pieces.


3)Mallett's marketing drive in China, now the worlds largest art and antiques market with a Hong Kong based representative and trips.

4)The planned sale of 49 Clapham High Street, Clapham for £2/2.5mln means money to be reinvested in working capital to create more profit since Mallett have no debt to pay down with a net cash position of £600k

5)Increased contribution from Masterpiece as profits this year rose 29% despite stand and numbers being broadly similiar to 2011. Quite simply,this can be explained by rising stand prices as they're a business franchise and "toll gate" business so they have the freedom to raise prices.It's widely accepted that Masterpiece have a waiting list of 150 for stands so there is a definite potential to dramatically increase the number of stands next year from 170 this year.If they do this, then important factors come into play-1)the scalability of Masterpiece meaning they do not need additional investment for expansion and 2)the Company's high operating leverage as the vast majority of their cost base is in fixed rather than variable costs then small increases in turnover have a disproportionately positive effect on profits.

That's the way I see things. As always DYOR, AIMHO

regards

[rainmaker] 06/11/2012 13:25

Fundamentals
Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
31-Dec-07 17.49 1.32 6.42p 28.6 n/a -42% 8.40p 4.6%
31-Dec-08 12.11 (5.97) (31.40)p n/a n/a n/a n/a 0.0%
31-Dec-09 13.98 (1.77) (11.92)p n/a n/a n/a n/a 0.0%
31-Dec-10 13.26 (1.42) (19.08)p n/a n/a n/a n/a 0.0%
31-Dec-11 12.66 0.51 3.44p 21.1 n/a n/a n/a 0.0%

a. Based on UK GAAP presentation of accounts - includes discontinued activities

Forecasts
Year Ending Profit (£m) EPS P/E PEG EPS Grth. Div Yield
31-Dec-12 0.23 1.70p 45.3 n/a -51% n/a 0.0%
31-Dec-13 0.81 5.90p 13.1 0.1 +247% n/a 0.0%

Mallett forecasts

[azalea] 06/11/2012 13:10

The price is hardening; someone paid 80p for 100k worth on 31/10. The really big kicker will be the Ptx and Eps forecast for 2013. Whether they will be taken out before then, is another matter.

[rainmaker] 05/11/2012 13:45

Martin- there was a big vote against the renumeration report at the AGM-I think it was 40% and there was a virtual 100% vote against the Company allotting new shares.Do a search of this thread.

regards

[shanklin] 05/11/2012 07:57

Presumably, there is also a reduced likelihood of management awarding themselves huge unwarranted bonuses, with savings flowing straight to the bottom line!!

[rainmaker] 03/11/2012 17:22

Azalea I think it looks great. I think the share price will fly in the next month with the trading update and this going to be exacerbated to a small free float as I believe the top five shareholders hold around 75/80%% of stock. There are so many plausible reasons for a large rise from current levels ata lowly minimum liquidation level eg-

A continuation of the great trading we saw in June/ July at Masterpiece

Reports of major business with the Chinese now the worlds largest market for arts and antiques

A large upward stock revaluation-we had a write down of £3.3mln in 2009 but so far we've only seen a £300k upward revaluation

The sale of their freehold in Clapham High Street for between £2mln and £2.5mln-unquestionably it's going to be sold as the Company have already stated but when?It's not being advertised but maybe the Company are negotiating a private sale?

News of a large increase in the number of stands for next years Masterpiece exhibition-we've heard from both The Economist and another source quoting the Chairman of the exhibition that there were applications for 300 stands yet this year we had 170 so clearly there's definite scope for a dramatic increase in stands.

We could just see a change of market sentiment with Investors suddenly realising that the worst of trading is now behind the Company and that all these changes will happen sooner rather than later.

regards

[azalea] 02/11/2012 11:32

AB Union Discount(Peter Gyllenhammer's vehicle) tightens its noose by upping its stake to 25.9%. With only 13.815m shares in issue, the freefloat at best can only be 20%.Withers Trust Corp Ltd hold 29.93%. Looks promising.

[rainmaker] 10/10/2012 20:39

Selling their lease at New Bond Street was a terrific move, more than halving their rent and collecting £1.7mln in the process even if it did take 2 and half years. Despite NBS's exorbitant rents-during my research, I discovered they were one of the top three or four high rent streets in the world and on average some 60% more expensive than the next highest rent street, Oxford Street,I never doubted they would sell the lease such is the insatiable demand from Luxury Good Retailers for this street.

It would be nice to have news of a sale of their freehold property at 49 Clapham High Street. The last valuation I saw on line was £2.25mln with a high degree of certainty but I can no longer find this valaution. In the absence of this then we have a trading update to forward to in December.

regards

[azalea] 10/10/2012 11:01

As good as rent free but due to a reduction of £650k relative to the previous rent at New Bond Street. Lower by £200k due to the timing of the move and a further saving of £325k in H2.All told, a very significant savings.

[rainmaker] 10/10/2012 09:32

Slightly misleading statement from the IC whilst the rent figures are correct, Mallett have a 1 year rent free period from November 2011 at their new address.

regards

[rainmaker] 05/10/2012 12:43

Thanks Azalea-I haven't had time to find the IC article but with regards to tax losses there is a note directly below those figures stating-

"No deferred tax asset has been recognised in respect of these amounts due to the unpredictability of future profits arising from the uncertain nature of the antique furniture and decorative art market and the timing of it's recovery"

regards

[azalea] 04/10/2012 17:52

Rainmaker
This a verbatim reply from S.Thompson in answer to my questions on savings in rent and the issue of unused tax losses.
"I can confirm that the 15 year lease agreed on Ely House, Mayfair, is at an initial annual rent of £550,000, a reduction of £650,000 relative to the company's former premises at 141 New Bond Street. In the first half of 2012 the rent saving was £200,000 for the company reflecting the timing of the move to Ely House. The second half rental saving will be £325,000".

Regarding the company's unused tax losses, in note 20 of Mallett's annual report for 2011, the company states "as at 31 December 2011, the group had deductible temporary differences available for offset against future profits including £7,189,000 of unused tax losses".

[rainmaker] 04/10/2012 09:34

Hi Azalea, welcome aboard,nice to have some company but IMHO a quiet thread is always a good sign.Unfortunately his original article in February had factual errors and IMHO missed out important developments. Mallett are no longer carrying forward tax losses as they couldn't be sure of the timing of the recovery, he got the cost savings wrong and he failed to mention Mallett's valuable 23.75% stake in Masterpiece which is in the Mallett share for free.

Waiting patiently for the trading update next month. IMHO sooner rather than later we'll have a large rerating when it's clear that Mallett have returned to profitability. 112p(check) is Mallett's tangible net asset value so if they making a return above their cost of capital which they surely will be then consider it next stop.

regards

[azalea] 04/10/2012 08:24

MAE is one of Simon Thompson's 'BUY' reccs @79.5p,(5/4/12). He too highlights the £3m of tax losses to use up, its new premises Ely House providing more space-14,500sqft acoss six floors,higher ceilings (more room for displays), -reduced annual rent - £550k(£650k). "the shares look to cheap with NAV @ 112p, net cash 7%.
I note that serial entreprenuer Peter Gyllenhamer is holding 24.92%, whilst total major holdings amount to circa 79%.

[rainmaker] 03/10/2012 21:56

I just posted the previous message to remind everyone that Partridge Fine Arts, New Bond Street antiques dealer rival and neighbour to Mallett for some 100 years, are no longer around,having gone into liquidation in 2009.I think this paragraph is particularly pertinent "The firm's inability to adapt to changing times as the 20th century turned into the 21st saw its profits turn to losses and its strong family bonds descend into dispute and a breakdown in relations, culminating in the eventual sale to Amor Holdings Ltd, and subsequent collapse of the business when Allied Irish Bank called in a £3m loan at a moment's notice"

I've seen the (only) house Broker forecast for next year of 5.9p and since Mallett trades at between 20 and 30 times earnings suggests we can look forward to a share price between 118p and 171p within the next year or so. However I personally believe that the estimate is too low for the following reasons-

1)Potential upward stock revaluation-Mallett wrote down the value of their stock by 17% in 2009 or £3.40mln.A recovering market as evidenced by terrific sales at Masterpiece this year-the best returns for any fair in more than a decade- should lead to an upward revaluation as buyers return.We have already seen a minor upward revaluation of £300k but IMHO there should be more to come.

2)Mallett's change of strategy in their decision to target exceptional (expensive)pieces(where there is little competition) means bigger margins and profits particularly in the absence of major rivals such as Partridge Fine Arts and John Hobbs at the very top end of the market.Quite simply this gives them bigger market share and greater bargaining power in both the buying and selling of pieces.


3)Mallett's marketing drive in China, now the worlds largest art and antiques market with a Hong Kong based representative and trips.

4)The planned sale of 49 Clapham High Street, Clapham for £2/2.5mln means money to be reinvested in working capital to create more profit since Mallett have no debt to pay down with a net cash position of £600k

5)Increased contribution from Masterpiece as profits this year rose 29% despite stand and numbers being broadly similiar to 2011. Quite simply,this can be explained by rising stand prices as they're a business franchise and "toll gate" business so they have the freedom to raise prices.It's widely accepted that Masterpiece have a waiting list of 150 for stands so there is a definite potential to dramatically increase the number of stands next year from 170 this year.If they do this, then important factors come into play-1)the scalability of Masterpiece meaning they do not need additional investment for expansion and 2)the Company's high operating leverage as the vast majority of their cost base is in fixed rather than variable costs then small increases in turnover have a disproportionately positive effect on profits.

That's the way I see things. As always DYOR, AIMHO

regards