Pennant Share Discussion Threads

[hastings] 11/12/2015 15:30

Given that the Broker is presumably basing its revised numbers on Pennant's own guidance, then one can perhaps be forgiven for assuming that the dividend will remain intact as per the note.Overall, a pretty upbeat view from Ireland at this level imo, so will see how things pan out in due course.Each to their own of course and fully respect an alternative view point.

[topvest] 11/12/2015 14:12

I'm not going to rush back. No obvious rush, but think this is fundamentally a good business. They are just suffering an order book "hole" which happens to most small companies. It's interesting that they did NOT confirm the final dividend which indicates to me that they are awaiting developments before committing. They need the Middle East contract to come through.

[hastings] 11/12/2015 08:37

Hi Topvest, WH Ireland has resumed coverage following previous update.Yes, full year as you say going to be pretty ugly.However, 2.9p div forecast to be maintained, with next two year's earnings underpinned to give EPS of 5.9p. Been keeping an eye for an age and despite the lumpy nature taken a nibble first thing.

[topvest] 11/12/2015 07:18

As expected. 2015 is going to be ugly and the big contracts being secured are not that big and not fully secured. Looks like they are reasonably secure for 2016 and 2017 but no news on the dividend front to calm investor nerves. I've only got a nominal holding thankfully after taking profits at £1. Think it's a little early to get back in as this is going to be heading downwards for a while I think. Will add next year I think and leave on my watch list for now.

[topvest] 15/11/2015 19:54

It does look increasingly like they will substantially miss this year's EPS estimate given the large contract awards that were imminent still haven't been awarded. Surely, there is insufficient time to register some material earnings in the 5/6 weeks that remain?

[boystown] 19/10/2015 08:15

Thanks danger!

[dangersimpson2] 19/10/2015 07:57

wrong date!

Your Board is declaring an interim dividend of 1.0p per share (Interim 2014: 0.9p) .The interim dividend will be paid on 11th December 2015 to shareholders on the register at close of business on 16(th) October 2015. The ex- dividend date is expected to be 15(th) October 2015.

[boystown] 19/10/2015 07:47

XD 1p today - so why no corresponding drop?

[breaktwister] 15/10/2015 12:46

Anyone that got in here at sub 50p got a real bargain, I cant see the price falling to that level again given the large pipeline of work secured until 2017.

[forestgreenrover] 30/9/2015 07:13

All - thank you for your comments. It's proven to have helped my thought process and for the time being I have decided not to buy.

Having previously not taken profits on the regular annual results uplift on two occasions I went into a loss and got dumped out of the stock by my auto stop-loss a month or so ago - the best thing that I could have done at the time and especially in light of recent developments!

I am still keen on the company and what they do but I am now very wary of falling knives. I think they've been resting on contract award delays for too long without much positive news (recent contract award aside). Not sure whether to keep watching or move on to other opportunities.

[rcturner2] 29/9/2015 08:03

Fair enough topvest. I have held these in the past and will look again once the full year results are out.

[topvest] 28/9/2015 11:32

Think they are fully vindicated on the potential profit warning front to be honest with you. They are not under any requirement to warn on H1 profits if they still think they might meet the Full year guidance and they did that with the final results anyway.

Management are pretty good in my view. I think the results do beg a bit of a question as to why amounts recoverable on contracts and debtors equate to 6m of revenue as you would have expected a large cash inflow if the new contracts haven't started. I suspect it's just contract timings though and the dividend increase is meant to show confidence. Overall, I'm holding and will possibly add on further weakness. Weakness in the share price short term is likely in my view as it looks like 2015 will generally be a poor year.

[pj 1] 28/9/2015 09:48

No position.

By the narrative and comments above, coupled with debtor situation, then safe to assume they also pre-book Revenues ?

[shanklin] 28/9/2015 08:29

rivaldo

Management seem to be hiding behind the following sentence from the 2014 final results:

"The Board looks forward to further progress across the Group in the current year, with an anticipated weighting towards the second half. The forward visibility of the order book also provides additional confidence in Group revenues for 2015 and beyond."

Presumably they have hung on and hung on to this statement in the hope that their pipeline would deliver contracts soon enough for the FY results to meet estimates. The need to issue H1 results has forced them to face this issue in today's RNS.

IMHO they should have highlighted the issue much earlier, especially given that the £7m contract win announced today will apparently not rescue the situation.

Each to their own, but PEN has become uninvestable for me as management seem either lacking in honesty or, less likely, incompetent.

All IMHO. Martin

[rivaldo] 28/9/2015 08:07

PEN have been on my watchlist for ages (similarly to PLA who also issued an unconvincing RNS this morning), but today's news is definitively bad!

In particular, surely the notice of results RNS only 3 or so weeks ago should have included some sort of warning that the interims would not be as hoped, and that it would be H2 which may or may not make up the shortfall?

If it's down to late management reporting/accounting of the financials, that's bad enough in itself given we're three months on from the 30/6 H1 date. If it's down to management policy then it doesn't exactly encourage trust from shareholders.

I agree with topvest that PEN could be pretty cheap at some point if it falls low enough and then recovers in H2. But it's going to take a stonking H2 to recover lost confidence.

[topvest] 28/9/2015 07:46

No, I think you will find they have not actually warned categorically. They have said that full year results will either be in line or significantly below so they have been justified not warning if they thought they could still get the H2 revenue.

I would guess that they will undershoot in 2015 and overshoot in 2016, but it sounds like it is still in the balance. To be honest it looks like they are already doing some work on new contracts given the large balances due under construction contracts in debtors.

Anyway, looks to me like there may be a very good market opportunity here if they warn again as the bounce back could be very fast with this amount of new work coming in.

I only have a very small holding left after having made very good profits on these, but it is looking like there may be another opportunity coming up. Will probably await the final results or clarification on H2. Could be a chance to get in for well below 50p and then a big bounce.

It does show that their business can be very volatile though and influenced by a few material contracts, maybe more so than we appreciated.

[rcturner2] 28/9/2015 07:19

They should be reported to the FCA, they quite clearly should have issued a profit warning here. They have a legal duty to issue a warning once they know that results will be more than 10% adrift from forecasts.

[robsy2] 28/9/2015 07:18

Yes this looks difficult.Income uncertainty.Chunky contracts that can be delayed, cutback postponed or even cancelled?
R2

[topvest] 28/9/2015 07:11

Wow. Double surprise. Truly awful H1 results..loss and very high debtors relative to the level of turnover. Massive contract win and talk of another £15m of contracts that are imminent. The share price is tanking. I don't think anyone quite expected results this bad.

[varies] 30/3/2015 14:34

The market in these shares is usually thin.
Seeing the 25% fall since the results makes me regret, of course, that I did not sell a few shares the week before these came out when there must have been buyers about.
As it is, the rating is now modest with a PE of about 11 if we strip out the exceptional tax credit and a yield of c.4%. The share price is unlikely to recover in the short term unless some big new contracts are announced but, having missed the chance to sell at 95p, I am reasonably confident that we will see this price again later this year.

[boadicea] 17/3/2015 15:08

Gengulphus - Thanks for that commentary, with which I entirely agree.
It would have been helpful if they had stated an adjusted or underlying eps to iron out the exceptionals and provide a truer progression of earnings.
I do note that the property revaluation was taken direct to the balance sheet, not through P&L, but the tax position needs normalising to get a proper view.

The share price response does not surprise me based on the view that further rapid appreciation is unlikely and that many folk may therefore think now is a good time to crystallise their profit.

[dasv] 17/3/2015 14:47

NB I don't think this is a bad company. I just think it's lost it's growth premium and I can probably reallocate to a more liquid co. with better growth prospects.

[gengulphus] 17/3/2015 14:22

PJ 1,

EPS boosted by R& D refunds and tax credits outstanding. Co should have advised of this beofre results imo

They did tell us about that - in they said:

"The reported profit after tax for the year is now expected to be significantly ahead of current market expectations. This is because the Group has successfully made claims in respect of Research and Development Qualifying Expenditure for the periods ending 31 December 2012 and 31 December 2013. This has resulted in a cash refund of approximately GBP0.645m and an increase in the allowable tax losses carried forward within the Group to GBP0.833m.

A further claim in respect of the year ending 31st December 2014 will be submitted in due course. As a result of these claims, the expectation is that the Group will now pay no tax in 2014 and that a tax credit will be recognised in respect of the period."

The fact that such claims have succeeded for two years and are expected to succeed for a third does suggest that the taxation boost to profits might well continue. But as we're probably getting 2-3 years' worth of that boost in this set of results, future boosts will probably only be about a third to a half of this year's.

Overall Revs down?, reference to delayed contract and weighting to 2nd half weighting 2015

The somewhat-down revenues and operating profits, largely due to "a delay in the award of a significant contract which is now expected to contribute to current year performance" are IMHO the bits they should quite possibly have advised about earlier... :-(

Is it a smokescreen or not is the concern I suspect.

Unconvinced either way so still on W/L

I don't see any real signs of a smokescreen - just of somewhat disappointing trading. But given that this is a company that is largely dependent on a relatively small number of relatively large contracts, some lumpiness in their trading is par for the course, I think.

I am quite pleased though that I did a minor top-slice of my holding yesterday, partly based on my holding having grown a bit too large for comfort, partly on a general feeling of unease. I couldn't pin that feeling down yesterday, but have now managed to do so - it's that the "trading update" I've linked to above didn't actually say anything about the company's underlying trading, just about exceptional tax items, which implies that the underlying trading was nothing to write home about. Pity I didn't work that out yesterday - I would have top-sliced rather more significantly if I had!

But I don't see anything basically wrong with the company or its trading, so I will probably be reinvesting the proceeds of the top-slice I did do if the share price drops low enough. Not there yet, though!

Gengulphus

[dasv] 17/3/2015 12:33

ex growth. PEG > 1. Rev down. Sold because I think I can probably get similar value elsewhere with some EPS growth (hopefully which isn't as lumpy as PEN either).

[deucetoace] 17/3/2015 12:16

So let's see. Flat earnings then a tax benefit that boosts them significantly. Revenue down. Profits this year second half weighted, never a good sign and to top it all purchased intangibles increased from 95k to 803k ie they have capitalised a lot of expenditure well above anything they have ever done in the past, although they are of course confident that the project to which it relates will do well.

I sold, albeit after pondering the matter far too long this morning.