Sivota Share Discussion Threads

[chrisgail] 25/6/2018 08:01

Another step in the right direction to refocus the company. The shares should over time reflect the future potential. I continue to hold.

[bigfrocks] 23/5/2018 09:35

Yes almost touching that £1 milestone ask price

[battyliveson] 23/5/2018 09:19

Showing as a 52 week breakout on advfn, so may attract more traders. Certainly heading in right direction.

B

[chrisgail] 01/5/2018 19:32

This deal removes nearly half company debt, increases profits by removing a loss making division. I am a holder, the up side looks very substantial to me, hold for the longterm

[bookbroker] 01/5/2018 12:14

Needs to up its valuation, otherwise a serious takeover target for bigger concern!

[edmundshaw] 01/5/2018 10:16

Yup, looks like a good deal. Good luck to Clays with their new owners, I hope they make a success of it!

[waveneygnome] 01/5/2018 09:03

I'd say it was a great price.....Clays lost money last year, and margins are being squeezed even tighter this year.

[bookbroker] 01/5/2018 07:54

A fair price, and they get to keep the freehold property, so now they can focus purely on the marketing business with a sharply reduced debt level, the marketing side being the real growth driver!

[irenekent] 01/5/2018 07:43

Better change the header - they have sold the print!

[ppreston1] 20/3/2018 07:30

Peel Hunt reiterate their Buy recommendation this morning and increase their price target from 130p to 145p. Plenty of upside left despite recent share price strength. GLA.

[bookbroker] 12/3/2018 14:21

Thanks Jatin!

[jatin724] 12/3/2018 13:28

An excellant article!

>
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> Home
> Stockwatch: A cheap share on the up
>
> Growth/recovery
> Income
> Long-term growth
> Over-priced?
> The big picture
>
> By Edmond Jackson | Fri, 9th March 2018 - 11:19
> Share this
> Stockwatch: A cheap share on the up
>
> After I cautioned on £60 billion advertising group WPP (WPP) earlier this week, interestingly at the opposite end of the scale in marketing services, £118 millionSt Ives (SIV) has declared very good progress and prospects for its strategic marketing core business.
>
> Interim results to 2 February show adjusted pre-tax profit up 35% to £12.7 million on revenue up 7% to £146.5 million, with strategic marketing now the basis for long-term growth, delivering 23% growth and representing 85% of adjusted operating profit.
>
> In contrast with big advertising groups having issues with multinational clients altering buying patterns for services, St Ives cites its marketing services specialty as robust.
>
> Stockwatch: What to do with this bombed-out blue chip
>
> New client wins include NFU Mutual, Sun Life, Amgem, BMS and Brunswick, and "As a result of an increase in client demand for more integrated solutions, we have continued to drive our collaboration agenda....we continue to focus on the disciplines of digital, data and insight, although strict distinctions are becoming less relevant as clients demand more integrated propositions from us."
>
> It contrasts with the "part-structural, part-cyclical" excuse from WPP for its flat performance just lately; instead affirming how sizable corporate clients continue to spend on development, especially in digital, which accounts for 62% of St Ives' strategic marketing revenues. This is positive both for selective investing in the sector and the wider economic context, though I’d still pay attention to advertising trends as a leading indicator.
> Interim progress helps full-year forecasts
>
> Before these 7 March results, the consensus expectation (see table) for pre-tax profit rising over £24 million and earnings per share (EPS) over 12p looked demanding.
>
> Admittedly, the outlook statement is a bit convoluted and doesn't mention the full year. New projects won from existing and new clients, seem bullish for strategic marketing, "however we recognise the need to continue to address the effect that our legacy businesses are having on the group’s overall performance..."
>
> Long-term followers will know they have been an Achilles heel involving nasty changes, however, in books printing (26% of interim revenue, 10% down on the prior period due to a contract loss) "we are continuing to take decisive action to ensure the cost base reflects anticipated volumes" and on 5 March a "significant" part of the marketing activation activities - four businesses - were sold for £6 million, having struck a £4.4 million loss on £106.3 million revenue in the year to 28 July 2017.
>
> This is large-format printing and other services, and the sale "significantly reduces the group's exposure to the structurally challenged, commoditised print markets and the risk of further, potentially significant restructuring costs."
>
> A chief risk to 2018-19 forecasts is, therefore, the remaining print-related businesses offsetting good performance from strategic marketing, if the UK economy eases under Brexit uncertainties and higher interest rates.
>
> Yet this could be discounted by a forward price/earnings (PE) multiple of about 6 times, admittedly with de-rated dividend expectations providing little downside support, given a 2.4% yield at the current share price around 82p.
>
> The interim dividend is maintained at 0.65p per share, but the total dividend dropped from 7.8p in respect of the 2016 year to 1.95p in 2017. Mind that tables like the one shown cite payments actually made in a period, which can lag a change in policy.
>
> Anyway, and with goodwill/intangibles representing 192% of net assets as of 2 February 2018, intrinsic value very much relies on earnings.
>
> Adjusted versus statutory figures in the latest release thwart a comparison of operating margin but, looking back to the March 2017 interims, the margin is up from 5.8% to 9.7% on an adjusted basis.
> Balance sheet issues
>
> The next key question for medium-term prospects is to what extent gearing and other balance sheet issues could weigh.
>
> Long-term debt is down from £88.9 million to £63.7 million (there being no short-term bank debt) versus £21.4 million cash.
>
> However, a £26.6 million deferred consideration payable demands a cautious view of near-term financial pressures than a net debt measure of £34.2 million implies.
>
> Last October's 2017 accounts had indicated £29 million cash and £7 million shares due paid in the next two years, with £20.5 million cash due 2018 and £8.5 million due 2019, all this being over the £26.6 million deferred consideration if you just look at the interim balance sheet.
>
> An interim finance expense of £1.4 million was covered nearly 10 times by operating profit. Ideally, this would be lower though should not weigh on the balance sheet, near-term.
>
> You could take quite a negative view of all this if deferred consideration payments soak up cash in the relative near term, and clients proceed to cut marketing budgets in a general slowdown, which also coincides with interest rates having to rise to contain inflation. That would be a worse-case "UK stagflation" scenario.
>
> Meanwhile, cash generated from operations is up 23% to £23.1 million despite a comparative slip at the net level as a prior tax credit normalising to a tax payment. Priority to manage liabilities is shown by the cash flow statement: dividend payments down from £7.8 million to £1.9 million, like-for-like, while a £5 million decrease in bank loans rose to a £15.5 million decrease this time.
>
> Otherwise, £60.6 million trade receivable versus £59.0 million trade payables looks fair, reported profit is not being enhanced by late payments. And despite a £15.8 million pension fund deficit, it's down 15% like-for-like.
> St Ives - financial summary Consensus estimates
> year ended 31 Jul 2013 2014 2015 2016 2017 2018 2019
>
> Turnover (£ million) 323 331 345 368 393
> IFRS3 pre-tax profit (£m) 5.5 11.9 8.7 -5.7 -44.1
> Normalised pre-tax profit (£m) 15.9 14.7 14.8 19.4 12.7 24.3 25.5
> Operating margin (%) 5.2 5.0 5.1 6.1 3.9
> IFRS3 earnings/share (p) 3.6 8.3 4.2 -5.9 -30.4
> Normalised earnings/share (p) 12.0 10.5 8.9 12.4 9.4 12.1 13.3
> Earnings per share growth (%) 11.6 -12.6 -15.6 39.6 -24.2 28.9 9.9
> Price/earnings multiple (x) 8.7 6.8 6.2
> Historic annual average P/E (x) 17.8 18.6 16.3 6.4 7.8
> Cash flow/share (p) 26.1 21.2 20.8 10.6 19.0
> Capex/share (p) 5.2 8.5 1.0 3.1 -5.8
> Dividend per share (p) 6.0 6.7 5.0 7.9 6.1 2.0 2.0
> Dividend yield (%) 7.4 2.4 2.4
> Covered by earnings (x) 2.1 1.6 1.2 1.6 1.5 6.2 6.8
> Net tangible assets per share (p) 20.3 -18.3 -38.5 56.5 38.1
>
> Source: Company REFS Past performance is not a guide to future performance
> Broadly a UK but also US business
>
> While the 2018 interims don't give a latest geographic breakdown, the 2017 accounts report showed revenue as 83% UK-derived, 13% US and 4% rest-of-world. If anything, UK majority revenues are likely reducing with the latest disposals; the operating review cites for strategic marketing, "growth and improved profitability in our US businesses, with the new office in San Francisco quickly building a strong presence in the technology sector."
>
> Healthcare consulting has also expanded abroad, especially in the US. Thus, St Ives is not exposed to potential issues arising from whatever trade agreement (or not) is struck with the EU, like the big advertising groups. If the UK economy does slow as a result of Brexit, this group's clients are generally big firms/organisations, and likely more resilient to marketing cuts than smaller ones.
>
> Admittedly, as a turnaround stock, St Ives has needed trading. I first drew attention near 90p in October 2012, on an historic PE of 5 and prospective yield of 7% covered 2.5 times; the price had shot up to 225p a year or so later; and in March 2015 I suggested risk appeared to weigh on the upside at 177p.
>
> Stock to Watch: St Ives
>
> The share price hit 247p a further year on, but a downturn started from April 2016 as various large projects e.g. in books printing got cancelled and deferred. Challenges persisted for the grocery-oriented marketing activation side and the stock was down to 37.5p in mid-2017.
> Much more focused, on a growth segment
>
> Despite the "Clays" books printing side remaining, it is a market leader which ought to help a sale. Meanwhile, the strategic marketing businesses look in strongest shape and St Ives relatively most-focused, than at any time I've covered the group.
>
> Barring a UK recession, at about 82p the stock, therefore, offers scope to re-rate - likewise dividends - as the deferred considerations are managed through. The operations could also prove a useful integration for another marketing services group, to bid while market price is low. Accumulate.

[miti 1000] 12/3/2018 13:10

Sorry, I did try but it doesn't seem to allow... just google the article (iii siv chat board )

[bookbroker] 12/3/2018 08:16

Miti - any chance you could copy that piece to here, would like to read his opinion, been here for a year, was always keen the digital side as MArtell was building it up, held the stock prior to its collapse a couple of years back!

[miti 1000] 10/3/2018 11:55

Top article on siv from Edmund Jackson on iii...well balanced and coherent explanation of the balance sheet issues and why the rating is low but hopefully won't remain so.

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[bookbroker] 07/3/2018 12:28

Seems crazy undervalued, I was slightly disparaging about the chief here, but he has done a good job of bringing value back to the business and growing the digital side, will likely buy more here as the opportunity will not last long!

[bookbroker] 07/3/2018 10:28

I stated net debt £35mln., inclusive of the sale of marketing activation business!

[chrisgail] 07/3/2018 10:15

I would have thought the cash generation potential definitely makes it a potential takeover target at anywhere near the present share price.

[bookbroker] 07/3/2018 09:58

Sold and bought back, impressive underlying figures, and that’s just the half year. Net debt hitting £35mln, if they find a solution for Clay’s then this will be churning out cash if things continue as they are, failing that it is almost tempting to believe they may be vulnerable to a takeover, although goodwill would be a possible block in terms of the price!

[chrisgail] 07/3/2018 09:29

An excellent set of results. Company now definitely moving in the right direction. A substantial rerating due. A good long term hold.

[edmundshaw] 05/3/2018 10:33

Interims on Wednesday. Should be interesting reading...

[boffster] 05/3/2018 10:24

Revenue is vanity, as they say. Getting reasonable money for unprofitable businesses has to be a positive development.