Stanley Gibbons Share Discussion Threads

[shanklin] 08/10/2015 08:26

Thank you for the information re the open market value of stock. Surely faster turnover of stock would be in the interest of management and shareholders even if the company had to take a haircut on some of their, presumably very optimistic (as stock is not selling fast enough), selling prices? Or is this stock very difficult to replace?

[arthur_lame_stocks] 08/10/2015 08:23

If SGI's stock really is worth £150m how are they able to buy at such keen prices? Surely competent collectors have a fairly good idea of the value of their collections and won't always be in a rush to sell to SGI at a third of the open market valuation when they presumably could put the items into auction themselves and get more for them?

[spob] 08/10/2015 08:20

quite a few of my intended long term holds have been stolen from me recently in takeovers

need to replace some of those

[spob] 08/10/2015 08:19

I'm not looking for a quick profit here either

SG has a long profitable history

and a long track record of divi payments


quite happy to hold for the long term

couldn't care less about the short term share price movements

[spob] 08/10/2015 08:15

Even if you cut that £150m in half, there is still hidden value on offer here

I don't want to shout about it though, as i'm looking to buy more

[spob] 08/10/2015 08:12

Simon Thompson just over a week ago

" Moreover, included in that net asset value figure are stocks with a book value of £53.8m, but which according to analysts have an open market value of £150m. "

[spob] 08/10/2015 08:09

Stock is not accounted for at open market values

analysts have estimated the open market value of SG stock is around 3 times more than that recorded on the balance sheet

[shanklin] 08/10/2015 07:40

Surely the requirement for prudent accounting would mean stock is on the BS at the lower of cost and current valuation? So, it should not be the case that 175 stamps are in the BS at £20m even if that is what SGI have them listed at.

BTW, I find it quite difficult to know how much of SGI's problems are down to a weak market for what they are trying to sell vs management weakness, albeit some of their problems seem to be self-inflicted.

For me, one of the biggest issues with management is the apparent lack of realism in their commentary on the business, as reflected in the first of the two recent TSs, which just seemed out of kilter with the facts they provided... ...as I posted at the time.

All IMHO.

[oldnotbold] 08/10/2015 07:02

Good points from many posters particularly the last one on the 50p valuation. What do we know about the stock? Held at cost or revalued? Age of stock? Balance between stamps and coins and other collectibles? The fact that earnings were so much higher in 2012 and 2013 is interesting. Once they get through the IT spending bubble and stabilise management could we see 14p of earnings again? It is a very interesting situation here in need of a lot of digging.

[njb67] 07/10/2015 19:10

Eastbourne

While valuations are far from an exact science, my personal view is that a fair price today is closer to 50p than your £1.75-£2.25

SGI EPS has been falling steadily over recent years: 19p in 2012, 11p in 2013, 6p in 2014 and 4p last year. It is hard to imagine the 2015 EPS will be an improvement on 2014 given the announcement yesterday. Even if SGI were to repeat last year's 4p EPS, then it is still trading on circa 25x current year earnings, which is pricey at the best of times.

IMV SGI has not been managed well for some time, a view that an increasing number of investors appear to hold. This is important as the multiples of earnings investors are willing to pay is related to faith in management. What we are witnessing here is a double whammy, a reduction in EPS and a lowering of the EPS multiples investors are prepared to pay for SGI stock.

To be fair SGI reported £54m+ of stock in their last results (or net £42m when you also take account of £12m debt). My concern here is how quickly they can sell the higher value stock, especially in light of the illiquidity comment in the RNS. Expensive stock that no one wants to purchase is a problem for any company.

The net stock figure equates to around £1 per share. I would though value this closer to 50p in the pound given concerns about whether they can sell the high end items and also the time it would take to shift the stock (it is about 1 years revenues after all).

Given the confidence I have in the management, I would only be prepared to pay six times earnings for SGI - so around 25p. Add back in the discounted figure for the stock and you get back to around 75p per share.

By the way, I do not hold SGI and would only buy SGI when a new management convinced me that they know what they are doing and will create rather than destroy shareholder value. And I could invest at the right price.

Hope useful


Edit:
Having had a quick look at their website this evening, the 175 most expensive stamps on their site collectively retail at circa £20m. So approx 50% of the value of their stock (after debt) is tied up in just 175 items. This is the apparently illiquid end of their business.

I also recognise that I value conservatively, others may have equally valid valuations above mine. By sharing with you my thought process, I will leave you to form a view as to whether you agree with me or not.

GLA.

[jonwig] 07/10/2015 18:49

Eastbourne - I think I agree.

Frankly, I know nothing about this company, but going straight to the statutory accounts, the balance sheet doesn't look stretched, and the only oddity is in the income statement with "Selling and distribution expenses" double last year's. Why? Does this explain the poor cash flow position in the year to March?

NTA is around 95p, no value attached to intangibles. Who values their inventories, themselves? Maybe writedowns are expected?

Would like to know why you say fair value is 175 - 225? Any clues there?

Maybe the narrative explains it, I haven't looked ... yet. Should I bother?

[eastbourne1982] 07/10/2015 18:31

You say you took a while looking at these and circa 50p came to mind, how did you come to this figure ???

50p would give a market cap of around 25 million.

SGI isn't going bust, it is clearly performing poorly however that is why the price has tanked from £3 to under £1, a massive overreaction imho, it is a good business with loads of assets albeit some of those are currently slow moving.

Fair value given current trading is around £1.75 - £2.25 imho.

[superiorshares] 07/10/2015 15:24

I will call the bottom folks between 40 and 50p ??

[deanowls] 07/10/2015 13:05

If anyone followed mallet and read the rns it seems they have brought not just the company but the same issues that they had. Awaiting large sales, downscaling the ny showroom, no we'll keep it open, no it didn't sell as well this half, expecting large sales, no they haven't gone through, setting up a website, lending pieces to customers without getting paid, finance director will be leaving and we will not replace thus cost saving, no he's now staying.

[pugugly] 07/10/2015 12:10

dd:> Very interesting - Could be read a number of ways - Not sure which (if any) could be right and which best or worse for SG.

top lines - Trading disaster in progress - IT has major glitches and burning cash - personality clashes resulting in too much internal politics and only resolved by parting of the ways - a managment breakaway to set up a separate business and potentially taking major clients with them

anyone else got other thoughts / knowledge.

[davidosh] 07/10/2015 11:20

Pugugly....I not a regular follower here but I know a few in the trade. I gather there is a rumour that Mark Rosenberg has also parted company, who I think came in with Bidstart to build the IT platform.

[pugugly] 07/10/2015 10:51

Link re Stephan Ludwig and Dreweatts/Bloomsbury



Sounds like a major management bust up - The phrase "Rudderless shp" comes to mind - or may be "The boy stood on the burning desk"

The omission of any references - That I can find in the company announcments from SG is a worry to me.

whakfird - Many thansk for that post. I was thinking of bottom fishing but now doing a lot more digging.

I suggest shareholders need a lot more answers from the company.

[11_percent] 07/10/2015 09:09

Gone below 100p

[whackford] 07/10/2015 08:53

Headlines in yesterday's Antiques Trade Gazette (ATG):
"Top two at Dreweatts in surprise exit" and article goes on to say "....Stephan Ludwig and Ian Goldbart, creators of the group of businesses that includes Dreweatts, Baldwin's and Mallett, are understood to have left parent company Stanley Gibbons......"

Article goes on to say "The departures are not thought to be connected to the financial performance of SG share price...... ATG were unable to contact SG at time of going to press".

Maybe this article forced issue of trading update yesterday.

Another piece in ATG deals with Simon de Pury's sale of the Lambert Collection (page 3). Apparently, this was due to be an online event organised by Dreweatt/Mallett. It now seems that Christie's have muscled in for a live sale in King Street. Apparently SG still involved although Christie's likely to take greater share of commission - so more poorish news.

I bought another 1000 yesterday and intend holding for the very long term as is always my practice.

[mad foetus] 07/10/2015 08:52

Eastbourne,
what the heck does "progress was made..on completing some high value sales" mean? Surely selling a few stamps or coins isn't the most complex process in the world. So it could be a new client asking for a catalogue or an existing client saying they would like to sell something if a buyer can be found.

You may genuinely think this will double in the next three months. I wouldn't say that about any investment in the whole world, let alone a smallish company which has just issued a corrective trading statement. I don't have a position, but if I had to take one I would sooner be short than long at this juncture.

[clocktower] 07/10/2015 08:44

For those that can remember this was split years ago from FBDU, and look what happened to that. They followed much the same pattern as this, takeovers that do not seem to work and add problems rather than profits. "The Marketplace" is a disaster waiting to happen imo.

Well done elmfield if you were short.