Redde Northgate Share Discussion Threads

[ltcm1] 11/12/2019 09:21

If you look at the chart here you can 'see' the price appears to be being dragged back to an 80p re-test.

[wbodger] 05/12/2019 12:59

Informed opinions, well written, thanks all. Just the thing for further research.

[minerve 2] 05/12/2019 12:57

Aleman

Payment days does increase and actually with many companies reaches infinity. There becomes a great disconnect between what the company expects and what it gets and business customers, if they in turn are having problems, will use any excuse not to pay.

I am not saying that is the case here but as an investor I wouldn't get too comfortable on expectation of receivables or anything like that to come back in-line.

I don't know how much you know about Redde but I would recommend you read the old threads and news about Helphire over the decades.

It still is a similar company working with a similar business model within an industry with the same pressures. The ONLY thing that seems to have changed is business experience and the implementation of this 'protocol' that protects Redde from issues of the past. I could be wrong, but that is my understanding.

[aleman] 05/12/2019 12:51

Payment days can't keep increasing. It might not fall but it should at least level out and more cash will come out of the end of the tunnel for the dividend or reinvestment when that happens. Regardless of whether payment days force them to choose a cautious cut to the dividend or not. The market cap does not fully reflect the underlying cashflow. Nor does the NTG bid. Despite the bid being recommended, I think there might be room for a private equity bid while the price is depressed - though I'd prefer to stay independent.

[minerve 2] 05/12/2019 12:45

Aleman

Cashflow is important but it isn't the only thing. You still need operating profits of course.

You've hit the nail on the head: working capital is currently being stretched as payment days increase. The big question is whether that trend continues or reverses. I would suggest that the trend is continuing and hence the haste to marry up with Northgate because future intrinsic value is probably not where one would like it to be.

Even before payment days started to increase again Redde have been struggling to increase shareholders' equity for the last 5 years according to my data.

I'm not prepared to trust the word of any of the self-serving, self-interested BOD clowns in any company apart from Berkshire Hathaway.

That is why I have sold out and I'll see whether this transpires into something I want to get back into .

I would have preferred Redde to cement its position in its own niche more. Acquiring smaller companies from profits that add value. Merging with a van hire company potentially at the top of its cycle doesn't inspire me with any confidence. Where is the USP in van hire? Very price sensitive market. At least Redde had some USP and was building on it.

Anyway, each to their own.

Good luck. :)

[aleman] 05/12/2019 12:34

It's cashflow that matters. 2018 and 2019 saw cash and equivalents fall £6m and £19m. But the swing in working capital was -£8m and -£32m, mainly due to growing receivables and contract balances. Had working capital been neutral, cash and equivalents would have risen £3m and £13m AFTER the payment of the dividend. So long as business does not deteriorate further, the underlying cash generation might be able to maintain the dividend for now, though a conservative board might want to cut it by maybe a 1/3rd or a 1/2 even, depending on how they might reinvest the cash freed. But the business does not look to be in trouble and is still generating lots of cash. The market value seems harsh unless some bad news is coming. A takeover by NTG looks like bad new, though. Vote no.

[minerve 2] 05/12/2019 09:45

"the dividend is covered by adjusted EPS"

It always is! ;)

[wbodger] 04/12/2019 23:13

If the div is maintained so much the better. I didn't invest here for yield but it is always a worry if it seems too generous. Thanks for the reassurance!

[zangdook] 04/12/2019 20:37

Wbodger
"Redde were likely going to reduce the dividend payout anyway judging by your share price chart"

I don't agree. They've said nothing to suggest that; the dividend is covered by adjusted EPS, and the share price has been held down by the Woodford situation, not by canny investors with inside info about a likely dividend cut.

[jammydodger1] 04/12/2019 20:05

Tonight you people need to research ALGWBIG PLANS 100,000,000 million. Credit facility about to be approved and signed by a leading UK asset managerMcap of this company is only 5m nowWill be multiples And way past 20pDnt be left out in the cold

[davr0s] 04/12/2019 19:32

I've just replied on another thread. I'm going to short this tomorrow - thanks for the tip

[jammydodger1] 04/12/2019 19:28

Tonight you people need to research ALGWBIG PLANS 100,000,000 million. Credit facility about to be approved and signed by a leading UK asset managerMcap of this company is only 5m nowWill be multiples And way past 20pDnt be left out in the cold

[aleman] 04/12/2019 19:25

Vote no. Don't tie us to cyclical NTG just as we go into recession. Independence ideally but a private equity bid might at least deliver some value.


4+ year support went in 2007



free stock charts from uk.advfn.com


Looks like 6+ year support might be going now.


free stock charts from uk.advfn.com

[rogthepodge] 04/12/2019 17:23

But maybe a more cyclical company

[wbodger] 04/12/2019 16:59

Of course it will go ahead. The instis will have been sounded out. Besides they will have a strong recommendation from your CEO whose career will be boosted by the deal.

In all takeovers that I have invested in where the small shareholders feel they are being lowballed, the support of instis is sought long before a bid is announced.

This doesn't seem a bad way forward for Redde. You (or rather, we) will get 44.5% of the continuing company, it will be your CEO leading the combination, and he will have the order book of NTG to play with. It looks like a sensible combination with synergies to be exploited.

I immediately bought a small holding of Redde on the announcement (not great timing!) If NTG's offer is trumped, so much the better. If it is not I like the company anyway. And if the bid fails Redde were likely going to reduce the dividend payout anyway judging by your share price chart. This is a progressive way to do it. The new dividend will be better secured in a larger company.

[fozzie] 04/12/2019 15:03

I will be very disappointed if this merger goes through. REDD has been a lovely earner over the last 5 years. Very lucky to have sold half near the top last year but have traded a few on the swings between 100 and 120 and carried on collecting that lovely dividend. Holding on at the moment and hoping they come to their senses.

[prokartace] 04/12/2019 13:33

As you can all see the market has corrected itself by at least 5% halving the gap which should not be there. This has already proved that it would have been the correct transaction for a FM. This is not an arbitrage as Minerve suggested but an investment decision based on 'best investment' practices.

[dmdmdmdm1] 03/12/2019 15:59

Tempting to sell and book a small loss after this news to avoid further loss, but I do wonder if this merger will actually go ahead as mentioned previously

[zangdook] 03/12/2019 15:23

I would agree with Aleman, except the Board's recommendation increases the danger that it might go ahead. Lots of unadventurous and corporate types are likely to do as they're told.

[prokartace] 03/12/2019 15:13

Minerve for the time being the view of the market on the shares is intertwined by the expected offer. You are correct that there is no certainty but given that REDD shares were higher pre announcement this would insinuate that the market feels the merger is bad for REDD. That being the case if the merger fails REDD would be the shares to be in. If it goes ahead the FM will have benefited by being in the share which had fallen more than the other as it would come back into line with the ratio offered

[rogthepodge] 03/12/2019 14:56

I agree Aleman

[aleman] 03/12/2019 14:13

NTG shares are down because their results were not very good and they are a very cyclical business so those results might be saying the best is now behind them. REDD shares have not risen to nearly match their bid since there is great scepticism that it will succeed. However, that should leave REDD shares at where they were or higher since REDD were undervalued when this opportunistic bid came in. Maybe some institutions are taking advantage of higher volume to offload. Buy the shares while they're cheap and vote no.

[bc4] 03/12/2019 14:08

It seems the selling stops at around 100p

[skinny] 03/12/2019 13:06

I see Link have shifted a few. :- .

[riverman77] 03/12/2019 13:00

I'm no bull, but simply not rational for the combined market cap to be now 12% lower than before the announcement. Only makes senses if you think the deal is so bad that it will lead to a 12% drop in combined earnings. I personally think there should be some modest synergies - cost savings and cross selling etc - albeit fairly minor.