Manx Financial Share Discussion Threads

[castleford tiger] 28/9/2023 22:26

Guys calm down.
I have the answers.
I will post tomorrow but it’s all above board .
Give me time to explain .it’s really simple

[smithie6] 28/9/2023 16:26

...but he made the decision imo to mislead the market with false claims for the PBT & the profit change as a % (he claimed it was up 30% when actually it was down !!)

& see the chart for the day of the RNS, up 10% to 24p at the market open

the market was completely misled by the false data !!
The mkt initially believed the claim of "profit up 30%"

then down quite hard from 24p, was it down 15% below 22p ! after some people read the financial numbers & saw that the true profit was much lower.

The share price went down ~25% overall over 3 days. 22p to 16.5p. From 24p to 16.5p the % fall is bigger.

JM is the big chief at MFX. He put his name to the claimed PBT of £3million & "profit up 30%" !! (When the truth given in the same accounts (!!) Is ~£2.2m & profit down 12% !!). You couldn't make it up ! I still can't believe that it has happened.

It wasn't the tea trolley lady signing as JM !

(But I think the shares are underpriced.
The size of the loan book has doubled in ~36 months, 25%/year, compounding.
Money lent out by PA ltd has risen by 67% in 1 year.
The growth is there).

[indiagolf12] 28/9/2023 15:15

JM has a great profile. He could sort the confusion swiftly IMO. Worth a listen:

[smithie6] 28/9/2023 15:10

If PA makes only the same profit in H2 2023 as in H1 then PA would make 4 X 612k PAT in 2023.

£2.45 million.

If we brought forward the purchase of the remaining 1/2 of PA ltd to tomorrow & that profit was all paid out as a divi it would be
= 2.45/115
= 2.1p

Just from PA ltd.
(While yes, company policy is to only pay out 10% of the profit in order to fund growth).

A yield of 12%.
Interesting.

[smithie6] 28/9/2023 15:05

M1keG

You agree that the accounts state that it is not attributable to MFX ?

And the last Edison analysis also talks of attributable profit & not attributable profit.

MFX does not own that 49.9% of PA ltd nor the profit nor the tax that goes with it.

Full stop. :-)

-----
Btw
Logic says that the PAT attributable to the other ppl who own that 49.9% of PA ltd will be paid out as a divi to them.

£612k

A bigger divi than is paid out for all of MFX, which was ~£400k last year (in cash or new shares).

But the info revealed to the mkt does not reveal that detail. They own that part so they have a legal right to it imo.

[indiagolf12] 28/9/2023 14:56

M1 - MFX have a controlling interest at 50.1%. I guess the detail in the acquisition terms of PA which are not public will cover this?

[m1keg] 28/9/2023 14:49

Smithie, If as you keep saying its not attributable to MFX could you explain why the company paid tax on it?

[smithie6] 28/9/2023 14:41

" I think we should write to the CEO asking why the headline £3.0m PBT was published when that’s not all attributable to shareholders?"

I agree.

[smithie6] 28/9/2023 14:40

Indiagolf
"since the Co are inviting engagement with PI’s,.."

They might say that but imo the bod have no desire to receive any communications from PIs. Since the co. is effectively owned by a handful of people, many of whom who sit on the bod & us PIs are in reality just specs of dust along for the ride.

[smithie6] 28/9/2023 14:36

Q&A at 11:00.
I believe it did not happen.

----
, "I think we should write to the CEO asking why the headline £3.0m PBT was published when that’s not all attributable to shareholders?"

Someone asked a similar question in the Q & A for the Mello event.
The reply of the CEO was imo quite waffly/vague & started talking about 2026 & that going to buy the other half of PA Ltd. You couldn't make it up !!
They seem to be happily delluding themselves about what the true 2023 H1 PBT is. It could be that JM (exec. chairman & big shareholder) has told the other execs what the song sheet says & that they must be careful to sing from it !

[indiagolf12] 28/9/2023 14:28

S6 - I saw the presentation on the website - but there was an investor call with Q&A at 1100 on Monday - I wonder if anyone listened in? I don’t think there is a recording. Maybe someone asked about PBT attributable to shareholders?

Failing that, since the Co are inviting engagement with PI’s, I think we should write to the CEO asking why the headline £3.0m PBT was published when that’s not all attributable to shareholders?

[smithie6] 28/9/2023 14:17

Just want to highlight some text from my last post.

"& if the growth stayed compounding at 25% (as it has for 2020-2023) then for 2026 the loan book would be ~£800 million !!
.....the current cap. value of £19-20 million looks too pessimistic imo)"
-----

Indiagolf
imo his stake in MFX is not irrelevant for JM.

& JM @ "Masterbuilder", a little typo in there I think. ;-)

[smithie6] 28/9/2023 14:11

From Indiagolf's post

2020 loan book £193 million

H1 2023 £2.2 £349million

So, we are set to have a loan book for the yr 2023 of 380-400million.

DOUBLE what it was for 2020 !!

Doubling in 36 months !!

That is impressive growth !!

(That is 25% annual growth !!)

(& if the growth stayed compounding at 25% then for 2026 the loan book would be ~£800 million !!
.....the current cap. value of £19-20 million looks too pessimistic imo)

Ok, the co. needs to now get that growth to feed thru to the bottom line, for profit. And then also for an increased divi for us PI shareholders.

[smithie6] 28/9/2023 14:03

Indiagolf

There is a pdf I think of the presentation. Pretty sure I have it, from the MFX website.

[smithie6] 28/9/2023 14:01

tiswas

...there is no basis for libel or similar if one is telling the truth & it is backed up with financial numbers in written company accounts.

MFX plc does not own or possess the PBT attributable to the 49.9% of PA it does not own. As reported in the accounts. The chairman & exec dirs claiming it does & including it in the H1 report & presentations is laughable/pathetic imo. And imo breaks the Company Act 2006 requirement for truthful reporting for MFX plc (which does NOT own that 49.9% of PA Ltd).

[indiagolf12] 28/9/2023 13:59

S6 - You are very welcome - it’s about time I invested more in researching my individual holdings!! Would be interested in Tiger’s & other posters thoughts…..

Did anybody register & dial into the investor presentation / Q&A on Monday morning- would welcome any feedback.

[smithie6] 28/9/2023 13:51

Stewy

'What is the % return at other banks on their loan books'.

I haven't looked yet but imo it is notably higher.
Especially for the H1 period because most are paying out about 0% on current accounts & the bank is getting phps 4% on that money parking it in the Govt treasury. And that has produced a jump in income. Millions for big banks. +£0.7 million at MFX.

Santander bank announced in recent days a big % increase in its Divi.
...the big banks are all doing very well imo due to the increase in the interest rate.

[smithie6] 28/9/2023 13:44

Indiagolf
...but I think I agree with most of the rest of your post.

Well done for doing the work to summarise the EPS , loan book etc over the last 5 years. Well done & thanks for sharing.

[smithie6] 28/9/2023 13:43

Indiagolf

"agree that JM’s £3.0M profit before tax for H1 is misleading as only £2.5M is attributable to shareholders, due to the PA earn out,"

£1.9m PAT ...is the MFX part.

The shares are for MFX.

There is no PA earn out for H1 2023. Or for 2023.
Other people are the legal shareholders of 49.9% of PA ltd.

MFX have an option to buy that 49.9% but it has not happened yet.

[stewy_18] 28/9/2023 13:36

Smithie, What is the %age return for other banks/lenders?

[indiagolf12] 28/9/2023 13:36

S6 Thank you for all your hard work. I have now had a chance to watch the Mello presentation and not being an accountant or a banker (just a humble 65 year old PI trying to make my SIPP fund my retirement), I didn’t understand all the jargon & found it hard to follow all the presentation, but my takeaway was this:

* The company is growing rapidly.
* Costs are increasing more than pro rata as the biz gears up for UK operations
* The banking licence is due in Q4 - possibly in October
* EPS are down due to ‘timing’ & investment in staff - see above.
* The Co recognises comms with PI’s have been poor - both Douglas & James are happy to take calls from PI’s - both published their email & DD phone numbers at the end of the presentation.

I agree that JM’s £3.0M profit before tax for H1 is misleading as only £2.5M is attributable to shareholders, due to the PA earn out, but to be fair it’s consistent with the Chairman’s Statement at the end of 2022 - £5.2 M profit, of which £4.8M attributable to shareholders.

I have listened to many of JM’s podcasts on Masterbuilder etc & he comes across very well IMO. MFX is small beer to him, but as a Manx resident I’m sure he’d want it to be viewed with the utmost integrity.

I have had a go at the table as follows - apologies the columns have gone awry when pasting from XL:



YEAR PBT (£M) LOAN BOOK (£M) % EPS (DILUTED)
2018 £2.71 £148.30 1.83% 1.54
2019 £3.02 £179.40 1.69% 1.66
2020 £2.02 £193.10 1.05% 1.37
2021 £3.03 £229.20 1.32% 1.97
2022 £4.87 £291.50 1.67% 2.93

H1 2023 £2.2 £349.00 0.63% 1.3


I have to admit the trader in me trimmed a chunk of my holding on Friday, but I’ve taken the opportunity to buy most back at a good discount now. As far as I can see the BOE have never declined a licence - just invited a withdrawal & fresh application, so this may prove a catalyst to the share price. But TBH I’m more interested in the share price in 5 years time. Like all PI’s find it hard to see my hard earned savings going down. But there’s always going to be a lot of noise - particularly in micro caps. In my view the rewards far outweigh the risks at a share price of 16.5p, with every prospect of baggability within the next 3 years. But that’s why a % of my SIPP is in here & not in a boring annuity!




IG12

[tiswas] 28/9/2023 13:09

Sorry Smithie, but you are the only bank analyst around here!

I appreciate your contributions and hard work. I just hope that you do not get a writ from JM any time soon! 🤣

[smithie6] 28/9/2023 10:38

The real PBT of £2.2million on a loan book average during H1 of perhaps £325m is a % return
= 2.2/325
= 0.7%

For 1 year that is 1.4%.

That is dismal imo.

But is perhaps one of the reasons the share price is only 17p.

If one thinks the % return will increase in future reporting periods then one might want to buy shares. Since PA has lent out 67% more than 1 year ago & the overall loan book has been growing for the last 10 years & a lot recently I think that profit will improve.
-------

Real PBT (!! Jim Mellon, shame on you) as a % of the average loan book for that period

(Hopefully this data will show an up trend & a dip for H1 2023)

2018_______
2019_______
2020_______
2021_______
2022_______
H1 2023______

I will try to enter this info during today (or tomorrow!).
But if someone else is able to do it then that would be great.