Nahl Share Discussion Threads

[mr. t] 24/4/2019 18:26

Aleman, loglorry1, thank you for your helpful explanations. I'll take a closer look at their accounts and the turnaround story.

[loglorry1] 24/4/2019 17:55

Mr T that's a very good point and it is in my mind where the opportunity lies. The market looked at the poor cash flow, dividends being paid while net debt increases and just says Yuck!

As Aleman points out though when you dig deeper and understand how they are transforming you start to get really much more excited. Simply put NAH used to generate legal claims and sell the leads to law firms. They still generate the leads but now they process them themselves (and also sell some) which means it takes on average 2 years to get paid. That explains the blow out in receivables and poor cash generation. BUT it now means they have a pipeline full of valuable legal claims which pretty much offset net debt if they just let them run down (which they are not doing). Better still they actually get a better NPV from processing them than selling them as they did before so are potentially going to come out of this much more profitable.

Also Bush a smaller part of the group has been growing profits well and applying a conservative p/e for a growth business to that business just about covers the market cap anyway.

I think something else that is overlooked is how resilient earnings are to a recession. People still have accidents in an recession and need legal redress. This company should do just as well in a downturn as in a bull market.

Log

[bc4] 24/4/2019 17:55

You see most of the time they do not answer we will see

[bc4] 24/4/2019 17:49

Well I did can you read? What you obviously do not know is, when a share price is rising, unknown people come on the BB boards with negative comments for whatever reason, it happens every time.

[zangdook] 24/4/2019 17:26

bc4
If you don't have anything to say, do not answer then easy!

[bc4] 24/4/2019 17:21

MR T. do not invest then easy!

[aleman] 24/4/2019 16:15

There is a very compelling reason for the cashflow pause. Setting up legal firms consumes cash!

Impending legal changes mean it's gone from a company that handles marketing and generates leads for legal firms, to setting up 50% owned joint-venture legal firms to now setting up a 100% owned legal firm. It takes time after the investment in legal cases for the legal settlements to come through and generate cash. However, if they get it right, profits, cashflow and dividend could eventually be even higher than before. The first joint venture is generating cash and the second one is starting to come on stream. The wholly owned subidiary has only just lauched and will take 12-18 months to become cash generative but cashflow overall looks to be back on a rising trend again and could end up better IF they choose the cases they take on well.

Crucially, NAH have great experience in filtering out unwanted cases when it was generating leads for other firms; the legal changes are causing some competitors to withdraw from its market; and the new 100% owned company is using modern online systems to engage with clients which could make it more efficient than some of the stodgier competitors that remain.

The shares fell because the market thought the legal changes might damage NAH's business. There are signs that the business has made the right changes and is going to recover and might even come out stronger than before - but we won't be sure of that for another year or two. It's clear the market is starting to believe the story, though.

[mr. t] 24/4/2019 15:13

I've just come across NAH following a tip from basem1 on the RRE board.

NAH looks good value from an earnings point of view, so I can see the attraction. However, cash flow is poor. In 2017 12.4m of operating profit turned into 2.8m of cash generated from operating activities. In 2018 the numbers were 10.0m and 4.5m respectively. Over two years, that's less than a third of operating profit turned into cash.

Trade and other receivables has increased from 2.5 months of revenue in 2016 to 5 months of revenue in 2017 to 7 months of revenue in 2018. This is a bad trend, and a high overall number, which puts me off investing - unless there's a compelling explanation. I've seen the comments in the 2018 results on increasing receivables, but they don't give me comfort.

What are other investors thoughts on the low cash conversion and increase in receivables?

[loglorry1] 24/4/2019 12:41

The real free float is now very small. Most of the stock is in pretty safe hands now I think. I know one PI with a very substantial holding in seven figures who expects to see 300p plus dividends as the new business model takes hold. I see no reason to doubt that at all.

[someuwin] 24/4/2019 12:19

Ticking up on small buys

[aleman] 23/4/2019 16:56

Long term trend reversal or not?

[caterham88] 23/4/2019 12:45

Following the Stephen English interview on PI World, researched the stock and indeed it does look promising. Bought an initial £10k.

[basem1] 23/4/2019 09:22

I would like to be in the 120's come ex dividend day and finish the week at this level after going ex Div. The dividend is a 4 figure sum for me as I am sure it is for a few other people.

[someuwin] 23/4/2019 09:14

All buys so far today.

[someuwin] 18/4/2019 16:58

...Yes - good point.

[bc4] 18/4/2019 16:55

Do you not mean Thursday. Wednesday close of business ex divi Thursday

[someuwin] 18/4/2019 14:38

A bit cheaper now.

Buy before next Friday to get the 4.8% final dividend.

[danieldruff2] 17/4/2019 18:26

The glory of break-even is fast approaching!

[keith95] 17/4/2019 16:48

I've taken good profits today ....

.. back to a comfortable level of hold.


GLA.

[mister md] 17/4/2019 15:47

well, in 2015 the share price was 4 times higher and the p&l not too dissimilar, so you never know ;)

[aleman] 17/4/2019 15:04

4 or 5 times higher over 5 years is a nice comment, if highly speculative.

[someuwin] 17/4/2019 15:00

Cheers for that link. I'll listen to the whole interview later.

He certainly seems to like NAHL "...One of my highest conviction stocks" and "...One of the best restructuring stories on AIM".

[basem1] 17/4/2019 14:54

Thanks for that...Sees 3 or 4 or 5 times upside from current levels. Wow

[yupawiese2010] 17/4/2019 14:31

Favorable Discussion in respect of NAHL from Investment Director Stephen English of Blankstone Singleton, scroll in to 24.36 min to hear his comments.

[someuwin] 16/4/2019 13:56

Sums it up well...

"...NAHL has a c.19% share of the £157m claims management market but its move into claims processing increases the addressable market to £3.9bn."