Stanley Gibbons Share Discussion Threads

[kael] 01/6/2004 01:22

PE of 17 is perfectly acceptable for a company growing at over 30% a year BP. Good growth companies dont come cheap, the high PE is a reflection of the high growth and potential of this company. How you can say an EPS of over 5p (growth of 79%) is tiny in real terms is, to be quite honest, ridiculous. IMO the balance sheet is very strong indeed to support higher levels. SGI is as solid a growth company as they come. The only possible downside, as I have said before, is a change in the stamp market. But given all the indications, this is unlikely to happen.

With regards to acquisitions, I would definitely NOT want to see the PRVD money spent on that. SGI has no need for acquisitions, it is well placed to grow internally, there really is little need for acquisitions at this stage of development.

[barnetpeter] 01/6/2004 00:20

xd - these are all tiny amounts of profit in real terms and four years is a long time. I think some have got carried away about SGI and have suggested sily levels. At 90p the current year pe is over 17 - and that is plenty. The balance sheet is not strong enough to support higher levels and I would like them to use the pvrd money for acqusitions etc.

[kael] 31/5/2004 22:23

This is exactly my point xdavid - growth is key. That is the reason (unless anyone has any better ideas...) that institutions are buying up SGI. Those 2004/5 figures also look low to me - I assume you took them from the brokers note? - I am looking for above 5.5p this year.

[xdavid] 31/5/2004 22:11

A bit unfair in my opinion re management team.

SGI was demerged from Flying Brands Ltd in Sept 2000, less than 4 years ago. Shortly afterwards getting listed on AIM.

It's record since:

Year End EPS figues:
2001: 1.13p
2002: 1.95p (72% growth)
2003: 3.5p (79% growth)
2004(e): 5.28p (51% growth)
2005(e): 7.21p (36% growth)

I could witter on about all sorts of figures but I can't believe you have actually looked at the accounts. PRVD is a side issue.

A couple of years ago, people were saying exactly the same thing about Hornby.

[kael] 31/5/2004 22:07

Agree, the market has known about prvd but when do you see cash/investments reflected in the market price? The PRVD stake is a bonus and could be a sufficiently large one at that, investment isnt about luck. Knowledge is power and I would expect that the institutions buying into SGI are not doing it on the basis of a lucky guess, or hunch.

Growth is the key, as long as the management can maintain a decent growth rate then all in all that 70 million may be realised in the future. SGI will need to grow with the stamp market, ride the wave if you like, these things take time.

[barnetpeter] 31/5/2004 22:00

Perhaps. But with its brand, SGI should today be at least up there with Hornby and the like at a cap of around 70 million. Let us invest and await developments, but no praise from me until they really start to deliver ... and a lucky investment in another company that has trounced SGI in growth terms is not sufficient.

[kael] 31/5/2004 21:55

With respect BP this imo is the reason for the change:

RNS Number:5902E
Stanley Gibbons Group Limited
03 December 2002

The Stanley Gibbons Group Limited ("the Company")

Date: 3 December 2002

The Board of The Stanley Gibbons Group Limited is pleased to announce that Mike
Hall, who is currently Finance Director of the Company, is to be appointed
Deputy Chief Executive with effect from 1 January 2003. During 2002, Mike has
been working closely with the Company's Chief Executive and Chairman Paul
Fraser, and on 1 July 2003 Mike will take over as Chief Executive, which will
ensure Paul can concentrate on the strategy and direction of the Company.

Also, Richard Kenneth Purkis, aged 47, is to be appointed to the Board of the
Company as Operations Director with effect from 1 January 2003. Richard is
already fulfilling this role but his appointment as a Director will clarify the
management structure and reporting lines within the Company.

In addition Dr Philip Kinns, a Director of the Company's main trading
subsidiary, Stanley Gibbons Limited, is to be designated Director of Philately
to indicate his status as the Group's senior philatelist and emphasise the
Company's continued focus on the top end of the stamp market.


This information is provided by RNS
The company news service from the London Stock Exchange
END


The key part is the strategy and direction of the company, look what has happenned since. IMO there is absolutely nothing wrong with the management. Don't try fixing something that aint broke...

[barnetpeter] 31/5/2004 21:44

I am not sure I agree with folk here. The price has drifted for some time now; the market knows about PRVD. This was lucky not a solid investment and my concern is about the management of SGI. The share price was 20p for years if you look at the charts and they were very slow to develop their business, the website or even move to AIM.

So the company has superb potential, yes, but with the curent management team? Maybe not. A bid would be helpful but is it possible?

[kael] 31/5/2004 21:30

Quick update on PRVD's price as we near the ever important date (btw it may be worthwhile keeping an eye on PRVD volume in the coming weeks). Looking extremely healthy:

[clocktower] 28/5/2004 13:00

Good to see you back Kael.

Its just the current market that is the cause of little movement here imo.

[kael] 28/5/2004 12:37

The long term prospects of SGI are rosy indeed. The only possible downside is a downturn in the stamp market, which given the conditions at the moment is unlikely. The attraction of alternative investments is increasing substantially (and has been over recent years), the issue of pensions has resulted in many people taking control of their own financial future and this can only bode well for alternative markets. Given the strength the stamp market has been displaying over recent years, I am very happy to be an investor in SGI and to have built up a stake at a reasonable price.

To put things into perspective, before this years results were released SGI was sitting on a PE of 35. I personally see SGI exceeding expectations substantially this year and this translating through to a higher than average PE. £1.20p was my first target to reach by the end of this financial year, I expect a bit of frothiness on around 6p earnings and should take the price to around the £1.50p ballpark.

But the real usefullness of SGI in your portfolio is the growth potential - even in a financial market downturn. The diversity that SGI brand is willing to display by moving into coins is encouraging indeed (I believe they have teamed up with Noble Investments - NBL). Dividend cover will grow nicely in the near future and the PRVD sale is also a bonus for shareholders.

However imo, herein lies the current pressing issue upon the shareprice. There is uncertainty on how this will be returned to shareholders. SGI have never actually confirmed specifically how this excess cash will be returned. We know it to be either dividend or buybacks or a combination. We know roughly how much the stake is worth and thus how much cash they will have to play with (although what we dont know is how much profit they have made thus far). We also know there was a resolution passed to buyback 15% of the issued share capital. Shareholders and potential shareholders need conformation as to what is going to happen with the excess cash, there is undoubtedly suspicion that the money will be returned via a buyback, which unfortunately gets bad press in this country. I personally expect to see a combination of the two.

Whatever happens is a moot point in reality, continued growth is far more important an issue. The seminar on Wednesday, which I will be attending and will post some feedback here (I'll take some notes ;) ) is an excellent opportunity to get more information on SGI and the stamp market conditions in general.

All in all, one of the best long term investments there is in the market at the moment. Institutional support in at around 70p, an excellent management team and a great niche market set to experience some of its most productive years in the near future.

[xdavid] 28/5/2004 11:02

Well, it's the end of the month and I've scrambled all my loose change together. After Kael's find re the sales prospects I looked at the figures last night and I'm just about to dip in again for 4000 this time. Still get them at 69.45. Currently 67p bid price, mid 68 so MMs are pushing the offer up.
SGI are now the the _only_ stock in my 'portfolio'. I'll post some of my figures at the weekend.
Ok, I'll away and push the button...

[xdavid] 27/5/2004 16:26

Good find, Kael. The 'core' sales area is the Great Britain stamps so it's great to see them doing so well. Wonder if they'll be releasing these sort of figures in an RNS? Interesting that they are so recent - maybe they just have not got around to it yet... or plan to release it with other news? Certainly when they released news on the PRVD holding they also included news on the change to their dividend status so maybe they just like to roll everything up in one big RNS..? Juicy possibility!

For others looking, it's hidden away in their 'Investment' section:


I must admit to laughing at the Sarawak & Labuan figures...
CFO: "How many Sarawak stamps have we sold?"
Sales Assistant: "Ehhh... 13."
CFO: "My goodness! That's a 1,200% increase on the one sold last year!"

[kael] 27/5/2004 14:38

Well been away for a while, expect SGI to be back up by time of interims - here's an excerpts from the site to keep investors up to date:

Summary of Market Activity – to May 12th 2004: _____________________________________________________________________________

Great Britain:

Top three selling categories based on Stanley Gibbons retail results 2004 v 2003:

Queen Victoria surface printed (+96.1%)

King Edward VII (+77.8%)

King George V (+156.6%)

Other areas showing increased activity on 2003 sales figures:

Penny black plates (+469.3%)

Official stamps (+3602.3%)

Imprimaturs remain popular with a +1203.8% growth on 2003 sales figures.

The largest gain of the year to date remains the Queen Victoria embossed issues with sales +6425% higher than at this time last year. Demand continues to outweigh supply for these issues in investment grade quality.

A 94.7% increase in the value of sales of general Queen Elizabeth II Commemoratives shows that the stamp market in general continues to thrive. This increasing collector base continues to underpin the value of the investment grade items. We reiterate the Government prediction that by 2020, 48% of the adult population of Great Britain will be aged 50 or over. This compares to 27% in 1992 and 33% in 2002. This sector of the market has historically proven to invest disposable income in resuming childhood hobbies. The demand for stamps is likely to increase substantially over the next 15 years; with a defined number of classic stamps available the demand is sure to outweigh the supply and prices will rise accordingly.
_____________________________________________________________________________

Commonwealth:

Top Five selling countries based on Stanley Gibbons retail results 2004 v 2003:

Falkland Islands (+73.4%)

Hong Kong (+249.8%)

Cyprus (+171.6%)

Australia (+202%)

India (+203.9%)

Sarawak and Labuan have shown recent sales growth with +1212.4% and +1992% rises on 2003 sales,respectively.
_________________________________________________________________________________

In April Stanley Gibbons sold a mint Great Britain SG128 for £28,000 and a mint Great Britain SG186 for £40,000. Numerous other investment grade stamps have been sold in the £5,000 to £20,000 bracket as investors are encouraged by the bouyant market, which is confirmed by very high auction realisations.

The Australia 1926 Small Multiple Watermark 4d. olive perf 13.5 x 12.5 with the watermark inverted sold at four times pre-sale estimate for A$12,000 plus premium. The current Stanley Gibbons Catalogue Price? Just £1700!

[popgun] 27/5/2004 11:22

Agreed - it was wishful thinking and the nearest I've ever come to a ramp ;-)

[clocktower] 27/5/2004 10:20

Trouble is the whole market is a bit shakey.

[shuisky] 27/5/2004 09:42

popgun- I hate to come across a a serial pessismist, but I wouldn't be so sure. I HATE media tips. The MM's will mark up the offer, 'weak holders' will flush into to the stock. If there is any weakness in markets generally, and SGI tick down a bit then all those weak holders will panic and sell out.

Whatever! I'm ignoring the noise. I stick with a stock until the fundamentals change.

[popgun] 27/5/2004 08:25

Tony, thanks a lot for the article. It's good to see SGI in the blue this morning - there should be many more blue days ahead.

[tony5505] 27/5/2004 00:29

I Don't hold these but I thought I'd just let you know that SGI is a 'play of the week' in todays shares magazine.

STANLEY GIBBONS (SGI) – 69p BUY

Although its stamp catalogue was always the philatelist's bible, Stanley Gibbons (SGI)+ has endured a chequered career as a public company. This has included an unsuccessful merger and then a failed float when the LSE raised questions about the then management. However, Stanley Gibbons was demerged from Flying Brands (FBDU) two years ago and the future is now much brighter. The shares have been a favourite of Shares for some time, having been first recommended at 19p (17 March 2003).

The key to the company is really two-fold. The first is its ability to exploit a brand name, which is universally recognised. The second is the future of the collectibles market.

The Gibbons catalogue is trademarked, which prevents others from replicating it. However, the group recognises the importance of the web as a trading medium and has seen a dramatic increase in the number of hits on its site, which in turn, has led to additional advertising.

Because of its high reputation, the group helps many collectors build up their collections via the website. They then return to Gibbons to dispose of them. Although stamps are likely to remain the foundation of the business, there is an increasing market for collectibles and Gibbons introduced the Fraser Autograph catalogue.

The business is in a very strong financial position. Stamps held for resale are included at the lower of cost or realisable value and could command a premium of £10 million over the book value of £4.9 million.The group will not conduct a fire sale but will await appropriate orders. Interesting is the stake in Provide Commerce, a quoted US flower business. This is a legacy from Flying Brands, which Gibbons cannot sell until next month. It could raise over £2 million, compared with a book value of £223,000. This bonus is likely to be reflected in a return to shareholders – either in the form of a special dividend – or share buybacks.

Shares Summary


Maiden dividend to be paid this year.
Sale of quoted US investment could lead to return to shareholders.
Very strong brand.
Growth market.
Strongly improving profits.
BUSINESS: Retailer of stamps and collectibles.

VITAL STATS:
Market value:£16.7 million
HIistoric PE for 2003:19.6
Prospective PE for 2004: 12.9
Prospective PE for 2005: 9.8
Dividend yield: 2.1%
Spread: 5.8%
NMS: 10,000

[xdavid] 26/5/2004 20:47

Yet another strange day's activities from the Market Makers...
Down 1.5p (2.2%) on only 43,500 shares, of which at least 27,800 (64%) were definitely buys...!

According to trade records on Comdirect...

10.00am with mid price 68p, a purchase of 2,849 @ 69.5p
01.54pm with mid dropped to 67.5p, a purchase of 25,000 @ a whopping 70p !!!!
04.00pm mid price already dropped again to 67p, a sale of 12,842 @ 65p

The Big Question: was that buy at 70p by MSSL ? And are the Market Makers going through a tree shaking exercise for them ? Trying to flush out sellers by dropping the price when they already have an order book to fill at 70p (a profitable 7.5% spread) ?

So, tomorrow, do we get the price going back up a bit to get people selling "on the bounce"..? Or drop it even further to really panic people? All in all, just a side issue to watch with interest. Honest, it's not that I have nothing else to do - I just find 'market making' strange at times...

[xdavid] 25/5/2004 18:38

I totally agree shuisky. I've seen it shoot up 5-10% on little volume too often to be out 'waiting'. But each to their own. Actually I'm kinding hoping it stays like this for another week while my next wage arrives... Although I think it might be too much to ask that it's at same level on June pay day, considering the week beginning 14th June is the only dates for any post-prvd, pre-interims close period announcements. I'm really looking forward to any announcement - SGI in full flight is a glory to behold ! :-)

It would be interesting to know if MSSL are actually mopping up at this level. If they are, that will take care of any available liquidity. We'll see within next 3 weeks...

[shuisky] 25/5/2004 16:55

Forgive the mini-rant, but why on earth is anyone selling SGI now???

A bit of weakness in overall markets, and punters get nervy and sell out whilst trying to 'time the market' and get back in. I had thought that perhaps, recent weakness in PRVD might be just cause. However...



PRVD has been strengthening considerably of late, yet punters are selling SGI on a 7% spread whilst MM's are merrily dropping the bid price on them. You can bet that if the Dow closes strongly for a few days in a row the MM's will mark the offer up sharply and those who sold now could lose nigh on 10% getting back in, plus the risk of not geting in before the special dividend is paid (hopefully). All because of a moment's panic. It's barmy!

Rant Over.

[xdavid] 25/5/2004 16:07

mmm... a 50,000 trade just gone through at mid price. Morgan Stanley Securities Limited (MSSL) continuing to soak up ?

[nurdin] 21/5/2004 12:10

Thanks penpont.Todays RNS also makes an interesting read..:o)