Stanley Gibbons Share Discussion Threads

[jeanesy2] 07/6/2013 20:22

whats todays rise all about ?

[dashton42] 24/5/2013 07:59

There have been some changes to the Bidstart site, most obviously on the home page, where the SGI logo is much more prominent.

There also seems to be a new Ebay sync facility, where you can import fixed price items listed on Ebay to Bidstart, and then any sales are kept in sync on both platforms. This sounds like a clever idea to me.

One of the frustrating changes (from my point of view) is that they no longer seem to display the total number of items listed in each category.

I'm not sure that the more behind-the-scenes pages, such as Items I've won - have been changed; they still have that somewhat cluttered and over-technical appearance, and they could use (imho) a user-friendly facelift.

I think that they could also look at the resolution/sizing of the items on the home page, to ensure that all the pertinent stuff (including the larger SGI logo!) is immediately and fully visible on entry to this page. For example, my IE browser zoom level is set to 100%, and yet I get the main Buy, Sell, and SGI objects chopped in half.

All imho, do your own investigation!

[dashton42] 01/5/2013 15:25

I've just seen the additional SGI RNS from about 2pm today:



and



Simon Perrée as non-exec looks to me to be a good appointment, given that he co-founded Play.Com.

Taken with the other senior appointments, things look good re. the skills the company is bringing on board, although your point G1TY about the total renumeration package is well made, and one to keep an eye on. Still, you pays peanuts, you gets monkeys.

I guess the thing with the auctions G1TY, and you may be right - I haven't delved into the figures in detail - is that they're just one aspect of the offering, not the be-all-and-end-all.

Re. your earlier point about having to turn to far-eastern markets due to a slowdown in the UK, well, why not. Makes perfect sense to me to go where the high net-worth buyers are.

[graham1ty] 01/5/2013 10:46

12% increase in revenue is good in the context of my comments above. Also their comment about £1m sale last year means underlying t/o is up closer to 20%

It is a long statement, I like that. Better than the one line "everything in line" that so many issue. Just a pity that the AGM is in Jersey so noone can attend and actually quiz the Board. Private shareholders are generally not inited to analysts meetings, so the only chance ever to meet the Board is at the AGM....so SGI effectively never see their smalkler shareholders. Bad.

They flag "after charging costs associated with our planned increased investment"......what is the cost of Rosenburg, Zimmerman ( good cv); Mavram ( great cv); Ganzon; de Vries. Five key people. Including all benefits etc must be about £1m of extra overhead. On top of that the new Virginia, US IT office. etc etc. The IT strategy has to be right this time round......

IT spending has been high for years and if I recall a previous team was sacked and work written off. IT spend in 2010 from the accounts was actually £600,000 from Note 11; £256,000 in 2011 including system upgrades, page 6; and another £235,000 in 2012. In 2010 they wrote " Capex commitments in 2011 are expected to be much lower as the core development work on our IT systems was materially completed in 2010". Really ? Seems all systems go again.

Dash, you mention the auction division. Is this actually very profitable ? If u have a sale that raises £1m, even with 20% from each of the buyer and seller, after all costs of the sale and costs of the department, you are pushed to clear 10-15% if you are lucky ( or unless you churn through auctions like Christies so dilute the overhead substantially). IMHO for SG the auctions are fabulous PR, bring in new clients, but not neccessarily very profitable as such.

My conclusion: no horrors, even quite good. However, jury out on whether this will leap forward and be transformed. Remember eps forecasts are for a fall of c10% and they have at least £1m of extra overhead now.....

[hywel] 01/5/2013 10:40

What i thought was more interesting in today's statement than the numbers was the personnel appointments. They seem to have good experience and skills and hopefully can come up with a few good revenue enhancing ideas for SGI.

[dashton42] 01/5/2013 07:19

An interesting trading update from the company today.

Trading for the 1st quarter "in line", £7m net cash, auctions "substantially improved", Singapore office opening last week, continued "strong returns" from the Hong Kong office, key appointments made in the digital division, and the integration of The Virtual Stamp Club with Bidstart (which I have to say I hadn't noticed).

[dashton42] 26/4/2013 15:27

g1TY - I'm guessing that you used to be a sell-side analyst?!

...and that you don't intend buying the shares any time soon. Fair enough. You've done the research, crunched the numbers, and have obviously put the time in on this company.

Re. BidStart, it's no surprise that revenues were tiny, and I expect that they still are - as there haven't been any functional upgrades yet, so far as I can tell.

I do frequent the site, and have noticed one or two UK-based listers there now, including one well-known philatalist (aside from SGI itself). Not much to cheer from the rafters, I admit, but progress of a sort.

BidStart seems to be continuing at the moment as-was, which is hardly surprising really, as IT projects do take time to come to fruition. One thing that disappointed me about the results was the lack of mention of any planned IT rollout dates, but to be fair, I think at the time they were still recruiting the development team.

Lots to digest in your other comments, and I'm hoping that others with better analytical skills than mine will have their say...

[graham1ty] 26/4/2013 11:23

Eventually got round to reading the AR cover to cover:

1) Flat sales disguise various trends. Stamp revenue was down, yet according to other parts of the report ( ie the SG250 Index and their comments on prices re guaranteed return products, ie 10.2% up) prices generally were higher. Therefore volumes fell 10-15%

2) Note 3. Geographically they highlight increases in overseas sales, particularly the Far East. The detail shows UK sales down 13%, Channel Island sales down 55%. Is the UK/CI business stalling ?

3)In 2012 £4.78m (13%) was to one customer !!! As last year the biggest customer was £2.7m, then this disguises an even bigger fall in overall revenue ( excluding this customer). Revenue excluding their biggest customer fell from £33m to £30.8m, a fall of c7%. Good to have a new mega customer but this has not increased overall revenue, just disguised falls elsewhere. If this is a stamp client, loss of that one client is 18% of stamp revenue......

4) Overall margin increased......so do I mind ? Margin can only increase so far, and growth must be supported by an actual increase in sales. They say a number of times that they bought "prestigious collections....at sustantial discounts to market value". Assuming the vendors read this, are they happy to have this shoved in their faces !!!

5) Bidstart is TINY. Noone has focused on how small it is. I know it was only within SGI for two months of the year, but hidden under note 30. It contributed £22,000 of revenue...........er, is that all ?

6)Pushing sales in investment products.....advertising spend was over £1m in 2011 and £0.8m last year. Blimey, having to work hard to sign up investment clients. We have all had the SG bumf fall out of our newspaper.....but £1m ?? They do not disclose how much of overall revenue has come through stamp sales and how much through the investment team. In fact, I have always been slightly suprised that the total liability under investment/guaranteed return products is not shown. Note 20 says that no provision is needed against any of the products. Good. Can one guess the liability or exposure ? Some of the contracts extend to 2028 !! Let us say an average contract of five years ( I am making this up), and sales of £5m pa, that would make £25m of investment product out there. They say that if prices fell 10% they would have to increase the provision by £2.663m. Does my back of the envelope imply therefore that a 100% fall would be £26m ??? None of this matters as prices seem to be rising. I am just trying to tie it back to the advertising spend. Was it £1m of advertising to generate just £5m pa of investment sales ?

7) pushing sales with deferred payment plans. £4.8m of sales ( note 16) are on deferred payment plans. They say that all are paid within 24 months, so must be c £2.5m pa of sales on credit. That is 10% of sales.....

8) The pension. Note 31 highlights problems with the Pension Fund that have not been announced. A review of the scheme has found serious problems. Serious enough to justify claims of negligence against their adviser and litigation. The fact they talk of this means it has not been quietly settled. The deficit on the defined benefit scheme has risen to £3.2m ( with a tax credit). If they had raised a pension problem in the results statement how would it have been taken ? This may not be major, and the scheme has been closed to new members since 2002, but this has been hidden in the Notes

9) options. The Board exercised ( and then sold most of) their 2009 options in Jan. The performance tagets were not met so only 54% of the grant appears to have vested. Looking at the criteria for vesting, I had not picked up before how pathetic the targets were. The 2009 options had a target eps of 17.5p in 2011 for the options to start vesting. The 2010 target is LOWER at 17.3p for 2012. The 2011 options target is 19.2p and 2012 target is 21.8p ( for the years 2013 and 2014 respectively). Note 22 does not say which eps ( adjusted, normalised, reported) is used, but in 2011 they produced 18p basic and 19.4p adjusted. Does this mean that at the grant of the 2011 options the necessary increase in eps to get their options was a fall in eps ....ie 19.2p plays 19.4p ????. If the forecasts in the market are correct ( ie c17.p then 19p in 2014) then it looks as if none of these options are going to vest despite the pathetic targets.

10) if forecasts are correct, eps will be flat 2011 to 2014. The Board gave themselves a £99,000 bonus last year

11) The Board continue to buy and sell from the Company under the investment products. The Chairman seems to have portfolios worth about £200,000 plus at any time ( 2010 redeemed £176,000; 2011 redeemed £47,000 reinvested £172,000; 2012 redeemed £170,000). Byfield has a lot more ( 2010 bought £250,402; 2011 bought £101,000; 2012 bought £100,000, sold £100,000 of prior years); Donal duff £71,000 in 2009; £50,000 in 2010; sold £114,000 in 2011; Sold £20,000 in 2012. Who audits this ? Done on what terms ? I am sure they would say that it was all contractual as per the investment product.......hate it. It stinks.

12) and so often the Board say they cannot buy more shares as they cannot afford it. Contrast those purchases with the Chairman 115,000 shares; Donal Duff been at SG for over 4 years and has......50,000 shares ( but 40,000 just aquired through options where he sold enough to buy these.....ie no new investment); John Byfield been there 3 years.....has 34,000 shares. Does this mean they all see a greater return from investment products than from SG shares ? The Board hold 1.46% only

13) despite a placing of 3.1m shares ( 12% increase) there are still only three institutional holders of above 3%....Blackrock unchanged ( ie took their share of the placing); Artemis have gone; Fidelity has appeared with 5.3%; Barclays are unchanged. Why are institutions not interested in this ? Presumably despite a large road show for bidstart ?

To me the jury is still out on whether they can keep gaining market share ( er.....reverse the fall actually); whether they can profitably expolit online sales without destroying margins; be innovative while not dilute the SG philatelic name ( ie first day covers, coins etc surely dilute the name ??).

And then.....can they actually move profits up from the 13-14p of eps in 2008. Forecast for this year of 17.5p mean eps increasing 30% in five years. OK, but nothing special

[dashton42] 25/3/2013 13:02

Simon Thompson (Investors Chronicle) reckons it's time to book profits on SGI in his column today.

[dashton42] 25/3/2013 10:14

There's an interesting article on SGI and its forays into Asia in today's FT ("Stanley Gibbons targets southeast Asia"):

[dashton42] 22/3/2013 18:18

G1TY, I seem to remember reading in the results that one of their motivators for the bidstart purchase was to widen their involvement in collectables other than their usual mainstays, to include items such as postcards and comics,and in time, to rollout the bidstart platform globally and develop an "online global trading community in collectibles".

I don't know what their projected revenues are over the next few years from this, and it does involve IT-related risks (and possibly reputational too, as previously discussed), but if it does come off, I think it could be transformational for the company.

Jam tomorrow, though, I agree.

In any case, I don't think that you can doubt their desire to shake off their slightly fusty, old-fashioned, appeal to the super-rich image, and start cashing in on the huge interest in collectables among lesser mortals who wouldn't ordinarily purchase from SGI.

Having said all that, and world-domination in the online collectables market notwithstanding, if they continue to "do ok", then I, for one, will be reasonably happy.

[graham1ty] 22/3/2013 14:50

MarkR

Agree. Was undervalued below 100p ten years ago. Got substantial rerating and hit highs of 240p in 2008.

Hit by a profit warning late 2008 and been rebuilding ever since.

Mike Hall has now been there ten years. From young lad to long term in charge. Always argued SG a world class brand and issue how to translate into sales and profits through increased worldwide market share ( not relying on overall stamp market growing).

Has SG been transformed ? Trading is OK, stamp sales are OK. However, after many many promises the IT strategy has not taken off and they are playing catch up with bidstart and have had to buy-in the IT. Stamp sales are higher but they have not really increased market share but have relied on new markets ( China) and have failed to establish a leading auction position. There have been coins, autographs, first day covers which are nice add ons, but not company changers.

So, where now ? It is a bit bigger, a bit more profitable ( 2007 eps 13.5p, now 18.8p, so only up 40% in five years.....that may not be strictly like for like). Is it transformed ? Is it a world class, world valued company ? No. Is it doing OK, yes.

[sammy_smith] 22/3/2013 14:11

Take a listen to the Stanley Gibbons Group talking about their recent results.

Click the link to listen

[dashton42] 22/3/2013 13:50

It's all happening today. An interview with Michael Hall (I think - it hasn't quite started yet) over on brrmedia:

[markrogers88] 22/3/2013 13:33

Some great informed discussion on the thread, thanks to all providing insight, very useful for like-minded investors!


Graham - on the justification of the price, in my personal view the business went from being materially undervalued to probably around fair value today. Arguably become a little expensive in the latest run up to results, although that may be a matter of tastes and preferences?

To be trading at 8-10 times earnings (roughly a no-growth premium) despite an attractive record of increasing intrinsic value and earning power, in my view was something of an oversight by the market between 2010-2012.

From a fair price level, the long term investor I would guess can probably expect to make returns that are roughly in line with the performance of the business from this point, although market prices can do pretty much anything from month to month, wouldn't want to guess anything on that front.

Overall I quite liked the results, fairly straightforward, no real surprises. I'm happy to hold patiently. Love the conservative balance sheet, fairly low capital expenditures, and by extension attractive cash generation somewhat masked this year by the need to load up on inventories for more volume-heavy business. Probably my 2nd favourite business on the AIM market!

Hope everyone is having a good day, and thanks again everyone for the insightful discussion above.

[dashton42] 22/3/2013 11:45

G1TY - please can you resend me your details? Preferably email, if that's ok.

[graham1ty] 22/3/2013 08:43

Dash is reference to "Use of our new internet development office in Raleigh". I am fairly confident that is for the majority of corporate IT. U have my number/email and call me on that if you want

[dashton42] 22/3/2013 08:37

Lots to digest in these results; some niggling worries, but overall they look pretty good imho, and I'm pretty impressed with the overall strategic direction.

Some of the points that occurred to me:

1) Rare stamp fund - mothballed (?) due to lack of interest ("...disappointing and frustrating")
2) divi up, covered 3 times
3) Hong Kong SGI website - didn't know of this, very happy with foothold this provides into Chinese market, but opening of Singapore office delayed
4) No apparent reference, that I could see, to centralising all IT operations in the US, as had been speculated on this BB - just those concerned with penetrating the US market (have I got that right?)
5) Capex to be more than offset by growth elsewhere
6) Sale of block of mint 1d blacks for £1m!!!
7) Investment services - marketing switched from UK to overseas, where returns potentially much higher
8) Online potential - digital catalogues, magazine app
9) Low debt
10) bidStart integration with main SGI website and back-office systems
11) Mainenance of progressive divi policy

Happy to be corrected if I've got any of this wrong.

As I say, I'm happy with the results, bar a few niggles, but I wish they'd also revealed a bit more about their online domain plans (i.e. is there to be a Singapore SHI core website in time, one or more South American SGI websites, regional bidStart domains, etc.?)

[graham1ty] 22/3/2013 08:33

Couple of comments:

Stamp sales are actually down despite the Far east sales, and general expansion. Much higher margins though

A lot of comment on acquisitions.....gets mentioned 3 or 4 times through the statement. What have they got planned ?? US ?

They call bidstart low value/high volume site....positioning for the EBay equivalent, high volume rubbish end of the market. Not exactly the company transforming platform ?

They were spending £1m per year on marketing investment products !!!! All those fliers falling out of mags and ads in the Telegraph !! Blimey.

Overheads well up. Lots of extra bodies, senior management and IT spend

IMHO, all pretty good and more of the same. SGI is not yet growing the top line and not yet ready for transformative growth. seems to be doing pretty well at what it does. Did these results justify the run up from the placing price of 195p to almost 300p ? Not sure. will be interesting to see what first 2013 forecasts are and then what is pencilled in for the following year. they are cautious about this year ("operating profits will be affected by our intended increased investment in our online strategy" ).....but what of 2014 ?

[dashton42] 22/3/2013 07:18

But if you're an SGI investor and you invest in collectables, that must make you doubly intelligent...? :-)

[shanklin] 22/3/2013 07:15

Results look fine.

Thought this was quite amusing.

"Alternative investments such as collectibles tend to be attractive to the most intelligent and creative of investors as part of an overall wealth diversification strategy."

I guess the rest of us are dull and stupid :-(