Stanley Gibbons Share Discussion Threads

[njb67] 26/6/2015 15:07

brando

If you are looking to diversify into alternative investments, then it is important to distinguish between the investment case for an asset class and the investment case for a company specialising in the asset class.

Even if stamps are a great long term investment, it does not follow that SGI is a great investment for all the reasons we have discussed above. So the key question is whether Hornby is a good investment as a business specialising in collectibles rather than whether investing in Hornby products is a good investment. Will it create worthwhile long term value to its shareholders?

Good luck.

[brando69] 26/6/2015 14:10

started looking at SG because I quite like the idea of holding something in the collectibles market place within my portfolio... but now looking more at Hornby as a possibility once they migrate to AIM.

[brando69] 26/6/2015 14:09

Totally agree with all the above Graham. Mirrors my experience.

As for the Far East, there's only so many four margin penny blacks you can sell to China before they get bored and move onto the next fad. Not a sustainable MO in my view.

Bidstart is way behind Ebay, Delcampe and even ebid as a market place for stamps in my view.

[graham1ty] 26/6/2015 14:07

brando agree entirely and have posted as such. I buy about £10,000 of stamps a year and would never use SG. Vastly overpriced ( trying to justify their catalogue value). There are some risks on EBay or just straight old fashioned auctions, but you can pick up things at 25% of an SG price ( c10% of cv). And if you get a wong un on EBay you just return it.

I have looked at bidstart and now the new platform a number of times and have been rude about it every time. I tried again to see what they had for a particular stamp and could not even get the sort or search facility to work. Nothing ( at present) would make me use the Marketplace.

One small thought: I wonder what % of their buying has come from the Far East and particularly China. They have a terrible reputation as non-payers. I wonder if that is the client who has done a runner leaving them £0.5m out of pocket.

Have still not had time to read the results line by line.....must get on

[brando69] 26/6/2015 13:55

i get marketing emails from them trying to persuade me to invest in high value stamps. there was a time when they would have been the 'go-to' place for this niche... but now there are lots of other ways of buying top quality stamps.

[clocktower] 26/6/2015 13:49

Net debt of £11.7m at 31 March 2015 (31 March 2014: net cash balances of £8.7m)

Debt, Debt, Debt how much are they happy to have?

I expect they see the future as an investment company but can they pull it off?

[brando69] 26/6/2015 13:24

I reignited my interest in stamps a couple of years ago after being left part of my dad's collection. I've spent quite a bit of money buying from various sources, but only once from SG - who are totally overpriced. Maybe a few high-end big spenders buy top quality stuff from them, but the 'mass market' for stamps is now fed by a plethora of other sources - not least ebay.

[njb67] 26/6/2015 12:49

SS

The brand name and that the company has traded for so long are plus points, I agree. That said, Encyclopedia Brittanica was once viewed in same light...

I think this is a badly run company - I do not understand in what direction they are trying to go and I have question marks about operations. With respect, if your strategy is to generate sales on line then the quality of your website is important.

Irrespective of the float price and how it has since increased, I do not view this as a good investment at the current share price even if I had confidence in the management strategy and operational performance.

Each to their own. GLA.

[graham1ty] 26/6/2015 12:44

Would have to look up, but think paid 35p or something !

[superiorshares] 26/6/2015 12:38

its been going for 300 odd years, cant be that bad :-)." how many other companies have taken so long to create an awfull website ? ". The lib/newlab/con party is a good example. a flagship computer system for the nhs that the brainy people, spent at least 6 years on and spent 12 billion pound to create it. at the end of all those years the brains said "it didn't work" and canned it. Think the website is ok personally. as ive said before, the brains- the economy talkers, are printing money to push the stock markets higher ! why would you invest in stamps at the minute ? graham if you have been following this since the flying flower days ? its been an awesome investment !! didn't it float at 29p ?? it was a ten bagger and beyond. it will be again.

[graham1ty] 26/6/2015 10:40

njb, my position. I have met Mike Hall a number of times. I think the SG brand was and is underexploited. However, on the back of ramped investment products, the never-arriving online platform, and scattergun acquisitions, I sold out ( too early) at 280p on the way up.

I have followed this for over ten years ( I remember the Flying Flowers days). if you look back on this thread I have commented many times on the stock levels, on the IT project, the exceptionals and the margins SGI make on various stamps. It has been constantly pushed by the IC and I think the jury should still be out on whether the expansion is going to deliver profits.

Statutory eps was 4p. It is only by throwing the kitchen sink at exceptionals that they get adjusted up to 12p.

I see they have snuck in a few exceptionals that I did not know about. £2.4 loss on sale of business....that means the previous balance sheet valuation was too high and they sold it for less. That questions their accounting policies for acquisitions and the holding value of Mallets etc and everything else they have bought. £0.9m in legal costs re the pension.....did we know that was such a mess ? The balance sheet now contains a £5.8m pension fund shortfall; one of their big customers has not paid up, so a £0.5m provision against that ( and that is the provision against the sale value of the held stamps: that tells you two things 1) the actual purcahse price was much higher 2) the stamps they sold this customer are actually not worth that at all and will sell for £0.5m less than paid for them. etc etc. NINE exceptional items

Will try to analyse further if I have time. Very suprised these been marked better

[njb67] 26/6/2015 09:58

Graham

They may well do. My quick view (I have not done proper due diligence on this so apologies if any of this is incorrect) on why I think this is over-priced:

- I do not believe the company is as profitable as they report. I do not like the constant reporting of exceptionals. Every year there is something to exclude from the numbers. Regular exceptionals are not exceptional so should be seen as an underlying cost of the business.
- Using your 2015 EPS figure of 4.2p means this is trading on 50-60x EPS
- It is a slow growing company at best
- I do not have confidence in the management
- The diversifcation strategy is difficult to comprehend
- I do not believe they understand how to maximise the value of the brand
- There are ever increasing stock levels - how is this being valued, what is it really worth?
- How many companies have taken so long to develop such an awful website?
- A business that is reliant on a small number of contracts (in this case high value purchases) is not a strong company.

So for me, a lot of concerns.

[graham1ty] 26/6/2015 09:31

Njb, not yet a short as Investors Chronicle will pump it again. However, if it gets run back up to above £3 then you really do have to question the valuation....Going to be interested where forecasts settle

[bookbroker] 26/6/2015 08:13

Lack of major stamp sales, we know this is a lumpy business, keep ur wigs on worriers!

[njb67] 26/6/2015 08:09

Could be a good short target. Have watched this for a long time, appears to be a management team incapable of extracting value from their brand.

[graham1ty] 26/6/2015 07:21

Eps of 4.2p but another bloody company that reports "adjusted eps" and therefore tells us that eps are 12.9p. NO THEY ARE NOT

[graham1ty] 26/6/2015 07:19

Acquisitions contributed £4.5m of the £8.8m underlying trading profits. So the original SG business contributed just £3.3m. The prior 15 months trading profits were £7m, or £5.6m annualised. So underlying SG profits have fallen 40%. What is going on ? No wonder the urgent need to diversify

[graham1ty] 26/6/2015 07:16

Now just read further down, Group revenue for the 15 months to March 2014 was £45.5m, or £36.4m annualised. This last year, revenue PRE ACQUISITIONS was £30.2m............Group revenues on a like for like basis FELL 20% ?????????

[graham1ty] 26/6/2015 07:13

It is all very well going on about the stock valuation of £54m but look at what has happened to stamp sales. 15 months to March 2014 £33m, or £26.7m on an annualised basis. This last 12 months, £23.9m so stamp sales have FALLEN by 11% despite all the hype. And as the majority of stock is stamps, over two years worth at historic cost. stocks rising almost faster than sales.

I know they say one particular sale fell into this year rather than last, but would that have made up the shortfall ?

[graham1ty] 25/6/2015 22:01

Thisthread gets very little traffic considering the size ( and name) of SG.

Going to revisit the new marketplace. I did my usual daily trawl of EBay for something I am really focusing on at the moment, then thought, about time to log in to the Market place to see if it has improved in the last month.........OMG.

I tried about three times to filter the date range that I wanted and it failed every time ( Canada 1875-1899); eventually got the mass grid of stamps ( all squished up so you cannot see proper pictures of the stamps, but I digress); then I tried sorting by SG or Scott number: cannot do. Tried searching the "name" of the stamps; cannot do. Tried cascading by price or anything: cannot do. Tried the general search: cannot do. So after 15 mins of trying to see if I could actually get up on screen every example of one particular stamp.......gave up.

Tried to leave feedback, and all you get is a list of questions ( how can I do this ? Why does this not work ?)and the feedback section is frightening, the criticism, the problems. Oh dear.

So, I could not look for the stamps I wanted. Nothing will make me go back to the site until it is changed for the better

[superiorshares] 02/6/2015 19:46

thank you El1te. I also have no position at present. I think this could be worth a short at these prices ? don't they say bad news comes in three`s ? I really like the ambition of having a globally trusted collectibles website. this I think will take a few years to mature though ? If Stanley got it right ? The value this would add to the brand would be insane ! thank you again. regards

[el1te] 02/6/2015 19:02

Hi Superiorshares,

Peel Hunt have EPS forecasts for 2015 and 2016 at 12.86p and 16.99p respectively.

Therefore:
- A 2015 PE of 13 would imply a share price of 167p
- A 2016 PE of 13 would imply a share price of 221p

All the best. (No position).

[superiorshares] 02/6/2015 18:14

would any of you technical types possibly tell me, what the share price would be on a pe of about 13 please.

[dickbush] 02/6/2015 16:52

If SG, the biggest name in stamps, makes honesty by its sellers the major concern they will take away a lot of business from eBay as the word gets around. EBay talks the talk but...