Photo-me Share Discussion Threads

[thorpematt] 06/12/2019 23:07

Yes it is. Management have stated that it will maintain the dividend of 8.44p for 2020 full year.

This is a quote from Fincap's latest 11 page research note:-

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"Free cash flow covered the dividend cost for the first time since FY 2016 and management has highlighted its intention to again hold the FY 2020 dividend."

also: -

Operating cash conversion was 145%, supporting a year-end net cash balance of £16.3m (2018: £26.7m) post a £31.9m dividend cost and a £13.5m acquisition cost.
 As expected, the dividend was held at 8.44p.
 Management has commented that looking ahead it will continue to drive profitability through the group’s estate and new product innovation. The recent entry into the fresh fruit and vegetable equipment market through the acquisition of Sempa provides a platform to further diversify the product offering and management remains confident for the future.
 The Board expects to again maintain the dividend in FY 2020.
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Essentially the FCF to dividend ratio has already bottomed out. That principle, coupled with the recent acquisition-spend would normally indicate net debt. But despite those two coincidences the company still has net cash.

So in summary yes 2020 = 10% yield.

[2bluelynn] 06/12/2019 16:19

So looking at the share price is the dividend giving about 10% return base on share price of 84pence . Thanks in advance

[galaxy enforcer] 06/12/2019 15:31

Well based on current valuation I confer with the Brokers that this is looking undervalued.

[azaman] 02/12/2019 13:32

Last trading update read "Trading has been in line with expectation." Now the lowering of dividend will only become necessary, if the overall earning has reduced. The earning from UK photo-booth business has been affected but the overall earning has not been reduced.

[snadgey] 02/12/2019 13:01

Cashflow per share is around 15p, so dividend well covered in this respect.
We'll find out next week how things have fared and, more importantly, the outlook statement.
All the best

[thorpematt] 02/12/2019 00:24

Ordinarily I might concur but historically the payout ratio has always been high for PHTM. It's high net margin, ROE and ROCE ensure a very strong ability to payout cash.

In the last decade the ratio has never been above x2 and generally speaking between 1.4 and 1.8

In the past 5 years the rise in dividend % has been : +25.0 +30.1 +20.1 +20.0 +20.1
Importantly it's this consistent hike in divi which has led to this year's ratio being so poor.

Despite this the company still shows a net cash of £15m and so a with brokers forecasts showing a return to growth in revenues for next year and beyond I see no reason to believe a cut is necessary or likley.

[smith99] 01/12/2019 21:49

Dividend cover below 1, company likely to cut dividend

[slogsweep] 12/11/2019 08:45

Snadgey

good summary - whats not to like. have held these for 16 years and added on dips, not sold many as divis (remember the old specials) have returned virtually all my cash and now have a cracking tax free income stream (via ISA) which exceeds my pension. they are my third most profitable investments after AHT and BOO, love 'em to bits

[snadgey] 05/11/2019 09:42

I agree. This could be a value trap as the IC recently commented with their sell recommendation. But I think not.

The company is still generating increasing amounts of cash - compare cashflow per share with EPS to see that the important "cash is king" figure is being maintained and increasing despite current headwinds.

That cash is being deployed into areas which generate higher levels of cash than the core photobooths - laundry (over 50% margins) and fresh juice (est 37% margin). Laundry is currently picking up the slack from drop in photobooths numbers.

Although many are critical of the move into fruit juice and "food" sector, this seems to me to be a good fit with what they do. The market appears large, and as they state, there is little competition.

Japan appears back on an even keel and again growing despite the My Number failing to move forward. Even photobooths appear to be back in growth mode here.

They state the B2B side of laundry is improving slowly and is expected to be in profit. Still can't understand why they entered this market but hey!

FWIW Fincap upped their earnings estimates on the acquisition of Sempa, "in line" statement should refer to earnings growth resuming, and, more importantly, dividend at least maintained.

All the best

[rcturner2] 05/11/2019 08:47

I have bought back in again today having held this for a profit in the past.

It is a very solid business with good numbers. The PE is around 10, most of the profits are returned as a dividend and there is net cash on the balance sheet.

There is the good chance of future growth, and the share price does not reflect this.

[knowing] 29/10/2019 10:19

Pretty good overview of the TS highlighting a lot of potential growth markets.

[masurenguy] 29/10/2019 08:52

Re post #8429 "I recently renewed my 10 year driving licence. You can now do this online and they allow you to quote your UK passport number so the government takes the image from your passport photo and puts it onto your driving licence. A sign of a further drop in demand for UK photo booths."

It is not quite as simple as that. While that might apply to transferring photo-images that they already hold for another ID requirement such as driving license renewal, the initial capture is now containing more biometric data, which the booths are set up to obtain and that gives them an edge over other alternative options. Consequently there is still growth in this market, both in the UK and elsewhere.

In addition to traditional 2D photo identification services, we have cutting edge technologies that offer governments secure integrated solutions, including biometric data capture, secure and direct transfer of data to government servers and 3D facial image capture via our photobooths. We work closely with national institutions to fully understand government standards and security requirements. To date, our government ID security solutions have been successfully deployed in the United Kingdom, France, Switzerland, Germany, China, Japan, Georgia and the Republic of Ireland. PHTM website

[revoman] 29/10/2019 08:34

Totally agree about the infrastructure that can service. And that's why diversifying into the juice vending market isn't a strange idea for Photo-Me, they have the ability to service those extra machines for little extra cost. But equally that means that selling off parts of the business (say, laundry) isn't so easy as they wouldn't sell off a part of the service side with, say, the laundry business.

[cheshire man] 29/10/2019 08:33

Lets not forget the outstanding yield that we receive,,,,,,not to be sniffed at in these rocky times :-)

[ch1ck] 29/10/2019 08:21

And maintain 12,000 laundermats This is a division which can be switched into any mobile service model. It's a very valuable element to its portfolio and with the growth of self serve and automats this could be the driver for a bid

[ch1ck] 29/10/2019 08:18

Someone loves the stock it's powering up today.I think the name will change in time but not just yetThe board impressed me with their decision to trial the vending machines and analyse the figures before committing resources and cash.Let's not underestimate the power of having an infrastructure that can service

[wildshot] 28/10/2019 13:55

As a holder of this share for a number of years my once notable paper profit is now a notable paper loss. I still have conviction in the share by looking to laundry and fruit/food for the areas of growth.

From personal experience in the last month I can relate 2 things about the changing tide of PHTM:

- I recently renewed my 10 year driving licence. You can now do this online and they allow you to quote your UK passport number so the government takes the image from your passport photo and puts it onto your driving licence. A sign of a further drop in demand for UK photo booths.

- on a more positive note, in the last month I've seen the Photo Me laundry units installed at my local Morrisons in East Yorkshire. (I've not seen any in use yet but then again I don't walk past it that often.)

[prokartace] 28/10/2019 13:32

The unfortunate aspect to the diversification is that it is in an industry that is not considered a growth industry and therefore the market perceives that the shares trade on the low PER ratings that other companies in that industry trade on

[essentialinvestor] 28/10/2019 12:36

Is PHTM attempting to diversify in to too many areas?.

B2C laundry looks compelling, B2B far less so, why are they in that segment?.
Then came fresh juices and the latest idea, food.
This requires excellent execution in multiple areas.

[astralvision] 28/10/2019 12:19

Good point gleach Looks a decent buy at these levels

[tradingsun1] 28/10/2019 11:47

Thanks for that gleach23. Can't see the reason for the sell off in that case. It was loved more however when it had a cash pile of £50m and looked to give anything over and above that cash amount out in a special dividend.

[gleach23] 28/10/2019 10:24

tradingsun1 - to add some context to your comments, those same results also mentioned -

"The Group remains highly cash generative, with GBP63.9 million of cash generated from operations in the period (2018: GBP61.0 million). This continues to support the ongoing investment in innovation and its future growth."

The £16m cash was after having invested £36m in the business.

[tradingsun1] 28/10/2019 09:37

I'd be interested to see how much net cash we still have at PHTM. Last results showed a marked drop from £26m down to £16m.