Rbg Share Discussion Threads

[euclid5] 22/10/2018 20:12

Nicola Foulston

"She has a deep understanding of operational restructuring, improving business performance, best outcome identification and implementation and balance sheet de-leveraging often working with multiple stakeholders at all levels of a company’s capital structure.

She has a reputation in the City for reliability, trustworthiness and delivering on time"

[pireric] 19/10/2018 18:46

Actually think the high payout ratio here isn't a good thing. Has often been used with IPOs as an attraction when the core story is not that good. This floated on the back of the Burford success so has some exuberance in it IMO. Financial officer resigning so soon after joining raises some qs

[riverman77] 19/10/2018 13:16

Yes it needs to be taken with a pinch of salt. Happy to take small position here, but acknowledge some uncertainties - new business model not yet proven, newish CEO with no background in law.

[quepassa] 19/10/2018 10:41

Thank you for sharing.

Lots of the standard cliches, impoverished words and threadbare phrases frequently found on non-independent research.

hope it works for you.

I personally would exercise extreme caution on any financial forecasts based on a mere 8 weeks of trading.

ALL IMO. DYOR.
QP

[riverman77] 19/10/2018 10:08

I don't think it's independent, so paid for research, but nevertheless it all looks pretty credible and measured.

Here is an extract - note the share price was 104p when published so bettdr value now

Rosenblatt has reported its maiden results following May’s IPO and subsequent acquisition of the Rosenblatt Solicitors business. The first 8 weeks of trading as a plc have delivered results in-line with our 2018 expectations, driven by a strong delivery in the core Dispute Resolution division. The group has also announced the establishment of a new subsidiary which will act as a litigation funder in its clients’ cases, yielding lucrative funding margins currently paid out to external third parties.

 Initial results show a strong start: Rosenblatt has delivered £3.0m (+15.4%) of revenue and £1.0m (+11.6%) of adj EBITDA in its first 8 weeks of trading. Despite the addition of c£0.2m of new plc costs in the period, healthy adj EBITDA margins have been maintained at 33.6%. This reflects both the efficient nature of the cost base in the hourglass model and management’s stringent control of costs. We believe June, along with December, to historically be the company’s strongest months of trading.

Valuation: undervaluing a high return model: Rosenblatt currently trades on an ex-cash 2018E* P/E of 12.7x or 10.1x on an EV/EBITDA basis. We consider this to materially undervalue this high margin, cash generative business that is delivering robust growth. We also expect Rosenblatt to reward shareholders with a healthy level of dividend distributions from H2/18E onwards (60%+ payout ratio expected

[quepassa] 19/10/2018 08:43

i haven't seen the Cenkos broker research.

can you kindly say if this is deemed independent or non-independent research.

[riverman77] 19/10/2018 08:18

Yes fair point, although reading through the broker note I don't think the estimates look outlandish. For instance they are assuming no contribution at all from the new litigation financing business, which I'd imagine could be quite lucrative. Given its focus on litigation, this is my favoured of the various listed law firms - higher margins, more specialist and less cyclical than say corporate law.

[quepassa] 18/10/2018 16:35

that would be a PROSPECTIVE or forward PE ratio.

let's not count our chickens before they are hatched.

[riverman77] 18/10/2018 11:25

But isn't the 1m adjusted profit figure related to an eight week period? Multiply that by 6 and you get annual profit of around 6m. Cenkos estimates 6.9m profit for 2018 with eps of 6.9p. This would put it on a more reasonable valuation especially when considering net cash position.

[quepassa] 18/10/2018 10:52

1.
a loss is a loss in my book.

pretty pathetic in my opinion that the IPO costs alone knock them into statutory loss.



2.
But anyway, for sake of argument, let's take your adjusted pbt figure of £1m against total shares in issue of 80million

That equates earnings per share of just 1.25 pence against a current share price of 85p.

That means that this share is trading at a Price-Earnings ratio of 68 x (yes SIXTY-EIGHT ) times

3.If we use the statutory loss metrics, then the P-E ratio is negative.



Two questions:

A). Do you think a P/E ratio of 68x means a share is

-cheap,
-right or
-downright expensive

B). If we use the statutory loss figure, we get a NEGATIVE p/e ratio. Do you think that's good?



Rosenblatt is not a start-up company where you would in my view expect stratospheric p/e ratios but a well-known and established law firm. Nor is it an embryonic pharma company where you might expect losses in the early years due to R+D. It's been around a long time.


Good luck to you but it seems to me that the share remains overpriced in my view.


ALL IMO. DYOR.
QP

[riverman77] 18/10/2018 10:16

The statutory loss is due to one-off IPO costs of 1m. The relevant section from the interim:

The loss before tax for the Period of £0.02 million includes £1.0 million of costs related to the IPO, resulting in a loss after tax of £0.016 million. Adjusted Profit before Tax was £1.0 million

[quepassa] 18/10/2018 09:11

why if they reported a statutory loss? and have a significant share overhang?

you could put an argument forward that their market cap is too high relevant to its recent statutory loss and asset base.

all imo. dyor.
qp

[riverman77] 18/10/2018 08:58

That was over an 8 week period - so would be around 6 million over a year assuming the same level. The company also has 32m in net assets and 11m in cash, so I think market cap of 67m looks quite reasonable.

[qs99] 03/10/2018 10:47

So Interim's produced c.£1m EBITDA? Market cap £68m? Litigation funding I'm sure could be big, but how big? Yours in ignorance but not surprised at share price decline! DYOR

[dahhad] 03/10/2018 10:40

from bad to worse!

[dahhad] 02/10/2018 17:08

Grim! To put it mildly!!

[euclid5] 18/9/2018 12:19

Extract below from Cenkos BN today:

"Valuation: undervaluing a high return model: Rosenblatt currently trades on an ex-cash2018E* P/E of 12.7x or 10.1x on an EV/EBITDA basis.

We consider this to materially
undervalue this high margin, cash generative business that is delivering robust growth. We also expect Rosenblatt to reward shareholders with a healthy level of dividend distributions from H2/18E onwards (60%+ payout ratio expected"

[quepassa] 18/9/2018 10:32

pretty nervous + downbeat sector outlook.

let's face it the multiple asterisks in the headline figures are a give-away and reveal what is a statutory loss before tax.

all imo. dyor.
qp

[malcolmmm] 18/9/2018 08:48

Yes I agree, good time to buy, marked down on very light trading. I think buyers will come in at this price.

[riverman77] 18/9/2018 08:28

Only covers 8 week period, but can't see anything too bad in results. Current trading strong and postive outlook. Looks like good opportunity to take a position.

[quepassa] 18/9/2018 08:11

uninspiring results.

share overhang.

[ccurtis1994] 18/9/2018 08:07

Positive results but share price down?

[clanger66] 17/9/2018 22:43

So interim results tomorrow.