Stanley Gibbons Share Discussion Threads

[andy] 25/9/2010 10:33

New article and analysis;

[bookworm1] 24/9/2010 21:14

Moathunter I don't recognize your 'business model' as being fundamentally representative of Stanley Gibbons. Admittedly some of your numbers might stack up but IMO your interpretation paints a completely different picture of where I see it going. There are some fundamental elements that make this a much more exciting prospect than your model seems to suggest.

Growth: You don't think that this level of growth is sustainable. My simple model assumes that this business will grow at 20% year on year. Why? because they have just 1% of global market share and are one of the leading brands in the market. Because stamp collecting is gaining ground as an alternative investment amongst High Net Worth individuals in the fast growing economies. Or put in Warren Buffet terms: A monkey should be able to run this business cos it is basically very simple. Although I accept that skill knowledge and expertise is required to provide the various services.

Your analysis of the recent acquisitions is leading you down the wrong path and to draw the wrong conclusions. We are not talking about the incremental effect of adding smaller and smaller components. You need to stand back and see that the sum of the parts is greater than the whole. There is something else going on which IMO is bigger and whilst we are not there yet there are signs that it is starting to head in the right direction.

2. "The business model drag on cash generation. The SGI model requires an ever increasing stamp inventory, resulting in net cash working capital representing a massive 60%+ of sales. That's a major drag on free cash flow back to owners if SGI grows."
Think what they do and then think how they make their money. Then look at the graph at the top of the table. The company is investing in stock which appreciates over time and can be sold to collectors. The more stock it holds the more it can sell. You need to understand the dynamics of this to see that stock has to increase if sales are to grow. Admittedly they could spend a lot of money buying the wrong stock and then we would be snookered but that is all part of their skill knowledge and expertise. So far from being an inherent drag on cash generation the building up of stock is what creates revenue in subsequent periods and unlike most stock in most companies it does not decline in value the longer you keep it but actually increases in value. So you can throw your text books out the window with this model. Its a natural money making machine. Even if you can't sell it the stock is appreciating in value year on year.

Gross Margin: At last you have found their Achilles heel. I agree with you that the Gross margins have been falling over the years but you fail to examine the cause or its consequences. IMO this is probably the most important part of the business model. A drop from 60% to 40% is quite major and if it continues will threaten the sustainability of the business model. However I suspect that there are good reasons for these changes and that things may not be as black as they seem.

Overheads: No mention other than to suggest that a net margin of 15% is produced. However if overheads can be kept under control at the same time as increasing sales the effect on margin is increased. IMO there is no reason why overheads cannot be contained substantially below the rate of sales growth. The latest interim results suggested that there is still some way to go in achieving this result as Sales grew by 24% and profits grew by only 10%.

SGI appears to have left its rapid growth phase of "expertise + internet = big growth"
Have you read any of the reports? They got rid of all their whole internet department presumably because they couldn't make things happen fast enough! IMO we have not even got going yet with this part of the business yet. If you take time to dig around some of the reports you will see that some of their plans are still waiting to be implemented years after they were announced.

Now it's in very slow growth and yet in all probability will be around in another 50yrs
Unproven, unsubstantiated and very woolly..If you are training to be an investment analyst you will have to come up with a bit more evidence if you are going to make statements like that. Its a bold person who is prepared to make a prediction like that. But of course if you are trying to sell something to a customer what do you care? You will be over the hill and far away. But if you were investing your own money and looking for just one company to put all your money into for the next 40 years do you really think you have done enough analysis. Just this week I saw a comment from one of their competitors that would have suggested that this market was in terminal decline. Who is right and who is wrong?

I wont pass comment on your conclusion only to say that it doesn't really follow from your analysis.

Still I thank you cos it got me thinking and I hope I have done the same for you.

[wilmdav] 24/9/2010 21:04

That's a good article, Moathunter. Where does it come from?

The buy/sell advice for most here will be an oversimplification because a steady 11% return is of more interest in the current environment than it would be if the economy was booming.

[bookworm1] 22/9/2010 12:32

Sums up what a good acquisition should looks like:

Benham is a low risk bolt-on acquisition providing a strong return on capital,
high level of continuity revenue, good cash flows and diversification of revenue
streams. It will provide opportunities for Stanley Gibbons to diversify into
other collectibles markets and add specialist skills in volume mail order,
collector club management and in-house design.

[moneybags] 22/9/2010 10:24

Talk in the last day or two of a re-rating on this stock.
Maybe just talk but at least it's heading in the right direction.

Regards , Moneybags

[riskblue] 22/9/2010 10:20

Long may this upward trend continue. £1.78 puts it back to it's average PE, before taking into account any performance improvements of the business and recent acquisitions.

[jeanesy] 21/9/2010 19:38

Broker round up today- According to Freddie George, Research Analyst at Seymour Pierce, Benham is a low-risk earning's enhancing acquisition and with Stanley Gibbon's branded website progressing on-track, the stock "should see further upward momentum".

[tom.muir] 21/9/2010 18:01

Interesting acquisition:

[jeanesy] 09/9/2010 19:40

Sgi100 index up nicely in July/August

[jeanesy] 06/9/2010 19:42

Slowly inching upwards, hope it continues.

[clocktower] 03/9/2010 11:05

Good link bookworm1.
Marking the start of the end to paper stamps will only make them more valuable I guess.

[bookworm1] 03/9/2010 10:56

First 'intelligent' stamp put on sale by Royal Mail

The Royal Mail has launched the world's first "intelligent" stamp, the first to work with image recognition technology.

The stamp, part of the Royal Mail's latest Great British Railways edition, will launch online content via an iPhone or Android smartphone.

[nick100] 02/9/2010 07:22

STANLEY GIBBONS ACQUIRES LEADING STAMP BUSINESS

The Board of Stanley Gibbons, the AIM quoted leading name in stamps and
collectibles, is pleased to announce that on 31 August 2010 it purchased for a
consideration of GBP0.3 million the business and certain assets of Nigel
Haworth, a specialist stamp dealer who formerly traded as M & N Haworth.

The consideration is payable as to GBP0.15 million on completion with a further
GBP0.15 million payable in April 2011 and will be financed out of the Group's
cash balances with an expected payback within one year.

Established in 1964, the business specialises in modern issues of the British
Commonwealth, including varieties and other items that are difficult for
collectors to source and has an excellent reputation for the breadth and quality
of the material that it offers. Mr Haworth will be acting as a consultant to
Stanley Gibbons to assist in the sourcing of such material in future.

Commenting on the news, Stanley Gibbons Chief Executive, Michael Hall said:

"Following the recent investment in the refurbishment of our retail premises at
399 Strand, this acquisition ensures that we will hold the most extensive range
of British Commonwealth stamps available. Primarily, this is an investment in
our brand and the quality and range of our stockholding. The acquisition will
provide benefits for many years to come through increased sales and new customer
recruitment and, in due course, will significantly enhance the range offered on
our website and through the traditional channels of retail and mail order."

[jeanesy] 28/8/2010 17:52

There has been a muted response in the share price considering all the positive news, lets hope the company gets noticed in September! Noble investments(stamps and coins) has been flying recently

[jeanesy] 19/8/2010 12:54

Have these been tipped in shares mag ?

[westcountryboy] 18/8/2010 08:30

Yes, 2.25p.

[jeanesy] 18/8/2010 08:19

Are these ex dividend today?

[2020hindsight] 13/8/2010 15:49

Nice mention in the London Evening Standard :

[abergele] 13/8/2010 14:34

just emailed to me,,

Don't forget to look out for our Growth Company Recommendations email on Tuesday morning, bringing you tips, features, news, brokers' views and editor's picks. To make sure you receive it please click here

Stanley Gibbons is worth collecting

Stamp collecting and dealing specialist Stanley Gibbons is coping admirably with recessionary pressures and has that oversold look.

Last week's impressive half-year figures to June showed a 10 per cent improvement in pre-tax profits to £1.6 million, on turnover lifted 24 per cent to £11.9 million, as Stanley Gibbons continued to make positive progress in the resilient rarities sector. And from earnings upped 10 per cent to 5.58p, the board proposed a 13 per cent dividend hike to 2.25p.

AIM-listed Stanley Gibbons, bossed by CEO Martin Hall, buys and sells stamps both online and at its famous stamp shop on the Strand, while also running stamp auctions and offering opportunities to invest in stamps and autographs through a number of investment products.

Hall said the results were boosted by some £400,000 of sales following May's London Stamp Exhibition, as well as the opening of a new Jersey office, and insists that 'the stamp market remains strong'.

Going forward, he has expansionist plans for China, where the company has won £1 million of orders already. Hall believes 'the Chinese stamp market will ultimately have a substantial impact on our future sales and profitability over the longer term'.

Stanley Gibbons, one of the many exciting growth companies exhibiting at September's 2010 Growth Company Investor Show at the Barbican in London, is debt-free and a generous dividend payer to boot.

Based on forecast earnings of 15p and a likely 5.5p annual dividend, the shares, now 132.5p and valuing the business at £33.4 million, are swapping hands for less than nine times earnings and offer an attractive 4.1 per cent yield. As such, they are well worth stashing away in your smaller companies collection.

To read about other companies in the sector click here

[ygor705] 09/8/2010 09:14

Thanks Westcountryboy. Agree with your conclusion: a good two way bet at these levels.

[westcountryboy] 08/8/2010 21:06

ygor

Here is your retraction:



but he still doesn't seem to like the company!

Personally I thought the results good enough to stay aboard, though I still have anxieties... Time will tell.

[ygor705] 08/8/2010 17:06

bookworm1.............well if he is a high yield specialist as is suggested by Wilmdav I wouldn't expect any great pearls of wisdom when it comes to risk analysis. Let's hope that the share price improves to around 150p, we might then get a retraction!