Stanley Gibbons Share Discussion Threads

[robinnicolson] 31/10/2012 16:59

House broker Peel Hunt reduced their 2013E and 2014E EPS by 15%. However they see this "as a significant deal for Stanley Gibbons...it has the potential to transform the company's business model and profitability"

[woodcutter] 31/10/2012 16:41

d42

My apologies, i hadn't meant to imply that sgi was moving completely to a high volume low margin market just that this is becoming more part of their business model, that may be a good thing in the long run who knows. But l prefer high net worth indivduals buying at strong margins, that's what attracted me to the business in the first place.

You have a distinct advantage over me in that i am not a collector but like wilmdav i think there's now more risk to the profits. And investing the bulk of the proceeds of the placement in developing this US business is definately not without risk.

Still, it's recovered later in the day so the market wasn't too worried after all. I may buy more but i'll wait now to see how things develop.

My other concern was i have been collecting these for 7 years on the dips and i am in decent profit, i didn't want to see that dwindle away so i have made certain i have been rewarded for my patience. A profit isn't a profit until you've banked it as they say.

Woody

[jeanesy2] 31/10/2012 16:36

Pleasantly surprised to see this bounce back somewhat in the afternoon. I am still not sure about this though. I have been expecting news but on the rare stamp fund , this certainly caught me by surprise and could not be further from the news i've been expecting. Hopefully we will get some further news in the near future.

[dashton42] 31/10/2012 13:48

From tonight's Evening Standard:



From BusinessLife (slightly longer article):

[dashton42] 31/10/2012 13:38

Some more, fairly random, thoughts on this.

I agree, on the face of it, that placing so much faith in the acumen and business ability of a 29 year old to grow the e-commerce business globally is a risky move (!!); it could all go pear-shaped, and drag SGI's reputation down with it. However, this US auction/commerce website is there trading now, and although revenues don't sound especially high at present, it surely provides a superb opportunity for future expansion at a global level. The model has been developed and implemented in its original market; now, it can be rolled out more widely.

Put it this way, on around November 2nd when the acquisition is finalised, SGI will be a player, to a greater or lesser extent, in the US market. I'm probably wrong, but as far as I know this is a new market for the company? (I'm aware of some Asian retail exposure, plus wasn't there a South-American opening?)

As you say, WC, only a small proportion of the placing procedes are financing the acquisition directly; the rest is to be used to develop bidStart more widely, and to "pursue other growth opportunities in its (SGI's) core businesses" (i.e. not all of the raised capital is going on bidSmart and its subsequent development).

I note that in the Finals, SGI flagged up its intention to "Focus on developing the online strategy as the internet and other forms of electronic communication will become our primary sales channel ", and said that it was exploring US opportunities. Seems to me that this acquisition ticks both boxes.

[dashton42] 31/10/2012 13:05

WC - I understand your concerns that SGI may be moving to a pile 'em high and sell 'em cheap strategy, but I don't see it that way; I see it as potentially a complementary move, so that as well as appealing mainly to high net worth individuals buying via auction or retail channels, they can also expand into the - as you say - high volume, lower margin side of the business, to compete aggressively with the likes of Ebay.

It also seems to open them up to other collectable areas in which, so far as I know, they currently have no foothold.

I know as a collector myself that if I want top quality items - at a price - I go to Stanley Gibbons. If I just want a "spacefiller" or decent enough example, until I can afford a top-notch specimen, I go to Ebay (where SGI also has a presence of course).

Perhaps in the future, collectors of low to medium net worth will have the benefit of purchasing lower-cost items from an Ebay-like website, but one which also comes with the history, branding and reputation of a company like SGI (assuming that it's run under the SGI banner, rather than as a sort of disassociated entity).

Time will tell, and I'm still eagerly awaiting some analysis in the financial press, to give me an indication of whether I'm just being hopelessly and unjustifiably optimistic!

[wilmdav] 31/10/2012 11:36

If this comes off as planned/hoped it could work out very well indeed. But there are significant risks which were not there before. I will be watching from the sidelines with interest.

[jeanesy2] 31/10/2012 10:57

I agree with you WC !

[woodcutter] 31/10/2012 10:50

j2

My reasoning for selling more of my holding was influenced by a review of the last results more than the purchase of bidstart, although i do feel this is a move to a high volume low margin business model and i don't like that.

There was no cash on the balance sheet at interims, (i was generally okay with this at the time as i felt the investment in high quality stock for the fund or to sell on was a reasonable objective) but this placing is not just about the purchase of bidstart.

There's a significant element of the placing going to working capital, indeed the bulk of the proceeds of the placing seems to be going toward working capital. We're talking roughly £6m raised to buy a business at £630k. It just looks a little odd and the outlook statement didn't inspire me with confidence either, on reflection.

Woody

[rotors] 31/10/2012 10:20

Thanks for all the well-informed comments everyone. I am in this stock for the longhaul - indeed topped up this morning.
Martin Bralsford is a shrewd operator and would not have put up that amount of cash just to show stock support.
There is also the currency play here with this US purchase.
Fundamentals remain sound, don't panic!
But March finals are now critical to any sort of breakout north of 240 - 250p
Regards.

[jeanesy2] 31/10/2012 10:11

It seems like lots of others are doing the same WC . I should have joined you first thing. This is one of the biggest losers of the day - not good.

[woodcutter] 31/10/2012 10:03

d42 thx for that

On reflection decided to take some more off the table.

WC

[wilmdav] 31/10/2012 08:57

Hmmmmm - Distracted by TRCS results.
The only reassuring factor is that Martin Bralsford took part in the placing with 50K shares. The CEO did not however.
High risk. I'm out for the time being

[dashton42] 31/10/2012 08:51

Woodcutter - the Proactive Investors article is just a repetition of the RNS; no analysis, as such.

[dashton42] 31/10/2012 08:49

It'll be interesting to see what the press makes of this. I'm keeping my eyes peeled for coverage in Investors Chronicle and the FT...

[woodcutter] 31/10/2012 08:47

j2 what is the jist of the proactive investors comments on the deal. For some reason i don't ever seem to be able to access their site.

Woody

[dashton42] 31/10/2012 08:46

As well as the Buy It Now and Ebay-style auctions, bidStart also offers public auctions. As with the other listings, this seems to relate to US auctions at the moment, but hopefully, in time, the UK domain will feature UK public auctions, along with the conventional listings.

All this may end up giving NBL/Baldwins a run for their money, as well as Ebay.

[woodcutter] 31/10/2012 08:45

jeansy

This is not uncommon for companies of this size it keeps issue costs down but i agree at 195p i would have at least liked the opportunity to have discussed the possibility and more importantly would have had better access to the reasoning and knowledge behind the move.

[jeanesy2] 31/10/2012 08:44

Reaction from proactive investors

[jeanesy2] 31/10/2012 08:36

It would have been much better if we had a chance to buy more at 195 like the directors... the way things are going we might in the poen market. If we had been allowed to then the pricwe would not have fallen this low imo.

[dashton42] 31/10/2012 08:34

Yep, the £6m seems to be for their internet upgrade generally, not just the acquisition:

"Following the sizeable investment in our databases and website in recent years, the acquisition of bidStart and associated fundraising is expected to enable the acceleration of the delivery of the key aspect of our online strategy and consequent shareholder returns."

I guess that bidStart needs to be integrated into their existing web offering somehow, and possibly also expanded into new countries such as China - assuming it's not there already. (Note to self: check this!)

I may be being a bit "glass half full", but I'm feeling pretty positive about the acquisition so far...

[woodcutter] 31/10/2012 08:28

yep looked at their web sites too seem pretty decent. I do think though that the outlook statement could be construed as a veiled profit warning and the placing price will have had an impact on the share price too.

10% more shares so down roughly 20p due to dilution.

I topped sliced a little this morning but still have a significant holding.

Woody

[dashton42] 31/10/2012 08:26

Jeansy - the placing was at 195p, and involved a substantial number of new shares (nearly 11% of total issued share capital). When I first read this, I thought "dilution", and I guess that accounts for the immediate share price drop.

Still, I'm personally not too worried about any short-term negative price action on the news; rather, I want to understand what synergies this deal can bring to the company, and how it could open up new markets to them.

I see that bidStart lists a wide range of collectables - not just stamps and coins, but all sorts of other things like antiques and art, toys, books, postcards etc.

If I held SGI shares directly (not via a nominee account), I'd be heading to their forthcoming meeting to find out more...

[jeanesy2] 31/10/2012 08:22

UI am right in that the placing is raising 6 million pounds?. Surely this is not all needed to improve the acquisistion? Seems odd to me, and the market thinks so too , now down 15p !

[dashton42] 31/10/2012 08:15

I've just had a very quick look at the bidStart website - it has both a US and UK domain name (i.e. bidstart.co.uk), although the items listed here look to be from the US website, as they have Scott numbers for the QV stamps etc., plus prices listed in US$ first, then GBP.

Still, presumably at some point, the UK domain can actually list UK stamps!

I'd never heard of bidStart before, but at first glance, it does look comparable to Ebay, which is probably no bad thing. This acquisition may turn out to be a game-changer for SGI; hope so, anyway. Time will tell.