Nahl Share Discussion Threads

[rcturner2] 27/3/2018 12:59

Price action looks very weak to me.

[aleman] 22/3/2018 14:31

I can't fault you on wanting value. I just think it is a type of business that normally commands a higher p/e since it normally has less capex demand on its cashflows than, say, an airline and much less cyclicality than, say, a housebuilder, and should be far better off than a company that suffers both as in, say, a car manufacturer. These all tend to get lower P/Es.

I was disappointed there was not a forecast for 2020, as there should be less start up cost for and more cashflows from ABSs. I'm thinking it might be set for a strong rebound number. Good luck getting below 140p. Markets are unhappy with central banker overkill this week and getting more volatile. You might well get your chance.

[rcturner2] 22/3/2018 14:03

I don't think there is any such thing as a typical rating.

Most companies trade at a PE somewhere in the 10 to 20 zone.

A company that has just seen a steep decline in profits and has cut the dividend will normally be towards the bottom of the range.

To take on the risk I want a discount. So I can see eps 14p, PE 10 gives 140p. I want a discount from 140p.

[aleman] 22/3/2018 14:00

This is a low overhead, people business with generally low capex and high cashflow and a business that tends not to follow the economic cycle. It would normally have a high P/E and higher payout ratio on profits. Why do you think it should trade at a 50% discount to a typical rating? There is regulation to come on 30% of the business but they have prepared for it and it should hit competition more. A 50% discount seems harsh.

[rcturner2] 22/3/2018 13:52

Aleman, I would say the market is priced correctly for those forecasts, but they look a bit optimistic to me.

[aleman] 22/3/2018 13:34

Forecasts for next year, including a 3rd ABS, are better than I expected and then there is an increase after that. The first two ABSs must be starting to produce already. The market seems to have overreacted. P/E is only around 7.5 or so and the yield around 6.5%+ and expected to rise. Forecasts for this year were on the money so updated forecasts should be believable and make the shares look good value.


2018 2019
Broker Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)
Consensus ............ 13.35 18.74 9.44 ....... 18.28 19.72 9.93
Arden Partners 20/03/18 BUY . 13.10 18.07 9.18 .. 17.75 19.04 9.66
FinnCap 20/03/18 CORP .......13.60 19.40 9.70 .... 18.80 20.40 10.20

[rcturner2] 22/3/2018 13:10

I think after the XD date they may well drop away as there will be a lot less clarity about the size of the dividend going forward.

[garycook] 22/3/2018 12:36

RCT2,Fair play.

[rcturner2] 22/3/2018 10:12

Definitely under 130p. As low as possible really.

[garycook] 22/3/2018 09:48

RCT2,What price do you have in mind,to get back in ?

[rcturner2] 22/3/2018 08:46

I sold mine quite a while back, but I would buy back if the price pulls back more.

[mnomis] 21/3/2018 11:28

Interesting discussions; I took some profits at £1.92 a little while back on a portion of my holding, and have bought back in with that money plus dividends at £1.45. Good value here imho (but short-term who knows where the market goes) and prudent capital management re dividend decision. Still decent yield and seems well managed to me.

[aleman] 21/3/2018 09:37

You hit the nail on the head there. B of E is withdrawing liquidity and deposit rates are rising slightly. It all helps us on our way to recession.





Stop Press - UK Claimant Count rose 9.2k last month, continuing its gradual 2 year rise, and possibly accelerating. ILO unemployment rose 24k in the last quarter - the second month it has shown a rise.

Poor numbers on government borrowing in February. Spending surged as revenues were weak. No increase in VAT revenues and petrol and alcohol duties fell. Start of recession or bad weather?

[aleman] 20/3/2018 22:07

Article and readers comments might answer some questions.




Again, apologies for off-topic.

[fenners66] 20/3/2018 21:50

Thanks for trying - again I can understand the HK$ carry trade and its implications - though really talking about a multi year low when the rate varies between 7.75 and 7.85 seems a bit over dramatic; but again no mention of what OIS really is based upon.

[aleman] 20/3/2018 21:12

I actually do not know but I might have some background information that helps.

I recall LIBOR/OIS blowing out in the Great Recession and the PIIGS crisis of 11/12. It got bad in the Great Recession until Congress, Fed and regulators started running around making special arrangements. In the PIIGS crisis, I recall liquidity became tight everywhere until the Fed provided some extra liquidity for US banks yet Libor/OIS remain elevated as the crisis rumbled on in Europe where banks had no access to it. Eventually, after the crisis intensified, the Fed and ECB arranged liquidity swaps so that ECB could provide $ liquidity to banks it supervised in Europe and things improved.

I can't remember what article I read recently but I gather repatriation of US companies foreign-held profits under Bush tax changes could be contributing to the problem. They are selling short-medium term liquid assets held in foreign currencies for cash and short term $ assets that can be repatriated immediately or allowed to mature soon into $s. This leaves less $ cash and short term $ assets in the market for foreign financial insitutions to meet interest on longer-term $ liabilities. It is perhaps a rerun of 11/12 but I suspect not centred on Europe this time. Given that rising US interest rates will be causing similar stresses in the Far East/Asia where main forex and interest rates are linked to the US, this reduction in short term liquidity is likely to be hitting home there more than in Europe. Europe has its own currency and rates that are not exhibitting the same sort of bubble pattern as the $ yet. Less bubble should mean less stress on tightening. Some European banks will be short of liquidity, and European sovereign and bank debt is undoubtedly still fragile, but I suspect stress will be occurring more in Asia just now.

Now, ask yourself which Asian banks.financials have been taking too many risks to borrow short and lend long (or similar gambles such as interest swaps) and now cannot get back the liquidity they need to service the long (or meet maturing contracts). I don't really understand it yet but look at the chart in this article that shows stress on the Hong Kong $ peg - it was last this stressed in 2008/9 and 2010/11. I think the Fed is ignoring the stresses that are appearing and might be about to raise again when maybe it should not. The black swan might not pop up in Hong Kong but it might appear somewhere else in Asia that has been milking the links to ultra low US interest rates for lots of financial speculation. If and when it starts, it will see junk bond yields and rates on riskier sovereign debt blow out rapidly in a flight to safety, which would quickly lead to global recession and probably reignite the European debt crisis which has never really been resolved as indebted entities have also milked low European rates to allow debt to rise even more - but that will be a Euro problem in future. The Libor/OIS spread is indicating $ liquidity stress now.



I hope that helps. I don't pretend to understand it all and might be barking up the wrong tree. Some say elevated Libor/OIS is nothing to worry about as there are ameliorating/special circumstances. Given I am seeing deteriorating signals all over the place in the economies of several countries - bad corporate news, rising defaults and weakening housing markets in US, UK, Canada, Australia and India, amongst others - and central banks are STILL talking about raising rates as long bond yields fall and flatten yield curves, I tend to a pessimistic view.

[fenners66] 20/3/2018 19:59

Aleman - I followed the link to the explanation of the spread between OIS/LIBOR

I get what it portends and why.

What I didn't fully get was the use of the term "swap" in the OIS and what exactly they are therefore pricing to come up with the comparative rate.

LIBOR is pretty self explanatory.
If OIS was based on a feds fund rate I would follow that - but there's a bit in the middle I'm not getting - can you explain ?

[aleman] 20/3/2018 19:14

Just to be clear, one of the reasons I bought NAH is because I thought it would not be affected by the economic cycle that I think is now turning. When people get financially stressed, they are more likely to make claims. Also, insurers are more likely to reject claims and that will lead to more legal attempts at redress. Although NAH will have to work a little harder to filter out the more tenuous claims, I think they could see a rise in demand - not that I assumed that when I decided to invest. I'd be happy enough for turnover to remain flat.

topvest - ?

[topvest] 20/3/2018 18:16

A lot of this is £ related is it not?

[bc4] 20/3/2018 16:26

So it looks like the end of the world sorry for being off sub

[aleman] 20/3/2018 15:53

Apologies for off-topic.

Death crosses are generally a snowball effect. One or two shares won't make a difference to an index but once several have gone through a death cross, their plunges will tend to drag the rest of the index through. High Income index was first, then FTSE100. Now shares all over seem to be going through them so a market collapse seems very likely as downward momentum increases.

FTSE High Income index



FTSE100



This is a fund of small high income shares. High income tends to be where there might be a few more shares with more problems. It's okay in good times and great in recovery but will suffer more when things turn down. (Same for Nick Woodford's value shares probably.) It tends to lead the market in downturns - so watch out.

[hawaly] 20/3/2018 14:55

I think (imho) this chart (link below) is very illustrative of the change in sentiment since, probably, June of last year. The appearance of a potential Death Cross could be a portend of lower lows.

More recently it's interesting to see the dearth of 12 week upward breakouts compared to those breaking downwards through support.

[aleman] 20/3/2018 14:29

Well, it's a relief finnCap have taken an optimistic line about the cost and revenue balance for the ABSs. I do hope they are right and the end of the tunnel is sooner rather than later.



Thanks, hawaly. Another significant point I forgot is the LIBOR/OIS spread is the highest since 2009, indicating unseen stress in the banking system. (Note it has risen again to nearly 56 since this article.) The flattening yield curve stresses financials. LIBOR/OIS rising is the bending branch starting to creak.

[topvest] 20/3/2018 12:47

All very short term. They are investing in cases. The payback is a couple of years. Happy to hold. Management are strong and they run the business well.

[hawaly] 20/3/2018 12:25

Good posts Aleman - I raise my (half-empty) glass to you.

GLA