Stanley Gibbons Share Discussion Threads

[kael] 09/7/2004 13:02

Has anyone got online quote sizes?

[cambium] 09/7/2004 12:59

Two weeks then, T10 country. Roll on the 30th

[kael] 09/7/2004 12:57

Aye ukhawk:

"Hopes of a special dividend sent Stanley Gibbons up 6½p to 85p as the AIMlisted stamp collecting specialist announced the sale of its stake in Nasdaq-listed Provide Commerce. The company said it will give details of plans to return cash to shareholders at its first-half results on July 30.
"

Expect something in the FT tomorrow methinks.

[ukhawk] 09/7/2004 12:48

Mmmm..up again. Nice coverage in today's Times. Piece in the small-cap market report and highlighted in the Days Biggest Movers table.

[kael] 09/7/2004 12:21

xdavid, can you remind me how much SGI valued its collection? ;)

[kael] 09/7/2004 12:04

Well, well. Don't mention the interims LOL! All good things come to those who wait :0

[nurdin] 09/7/2004 12:03

Offer at 90p...lovely! :o)

[xdavid] 09/7/2004 11:23

In a high growth company you can discount the 'historic' PE, because it is always being overtaken by the PE growth. Frankly, this is why I like SGI as "no brainer" stock. Even if the PE does not change, on an earnings growth of 50% then my stock value will rise 50% - as long as the predicted growth beyond that allows it. With a 32% growth estimated for 2005 then I can look forward to a cumulative 98% increase in price "sometime in next 2 years". That's about as speculative as I get, i'm afraid :-) but I have found that patience has it's own reward.

For fun though, remember that by the end of this year, the PRVD 9p should be discounted from the price (whether as divi or buyback). Add in 1.5p divi and we have a 'real' current price (at time of writing) of 86.5-10.5 = 76p. 2004 'real' PE 14.3. By the end of the year we should also be looking at 2005 EPS 7p. Therefore, calcs should be made on this forward looking basis.

E.g. Ignoring 'real' PE complications to start with, the price at end of year for a 2005 forward PE of current 16.3 would give a price: 114p. By that time however the stats will be showing that price as PE 14.3. So go figure... ;-)

God, I love this company...

[nurdin] 09/7/2004 11:13

Id go with that but then I am biased :o)
But SGI havent been rerated yet to their fair value.A company growing eps at 50% year on year deserves a peg rating of 0.5 as a minimum,much higher if you take into account the companys asset base,cashflow and the strong position in a large and a growing market.That suggests fair value pe of 25 against current forward(05) pe of 12.Ok perhaps 25 is high given the short history of their earnings growth record...and the vagaries of the collectable market.18x next years earnings would discount that adequately giving fair value share price of 126p
All imo of course

[cambium] 09/7/2004 10:05

xdavid, excellent post and nurdin too. The question is anyone like to hesitate a guess of the share price from here.

My guess is a forward pe of 18 giving a target of 108p by the end of the year.

Comments welcome

[nurdin] 09/7/2004 09:29

Wise to be conservative than too bullish david...as I have occassionally found to my cost :o)

[xdavid] 09/7/2004 09:25

You could well be right, Nurdin. Seymour Pierce did mention all the points you made but comparing the web sites to the way they were last year shows a marked improvement - particularly in the autographs and coin 'packaging'. These (like the advertising) are coming from a low starting point and therefore should feed through very quickly to the bottom line. Personally, I like to remain conservative and be surprised rather than other way round. Frankly, "just" a 50% growth would be outstanding - I wish I could find more companies like SGI!
People tend to overlook them because "they sell stamps" - a bit boring at times they may be (between periods like these), but what an outstanding company!

[nurdin] 09/7/2004 08:37

Good analysis xdavid but somehat conservative imo.Three factors which could put the brokers forecasts on their head are:
-rental income.Empty offices have now been let and should contribute to earnings this year
-Frasers Autographs.This side of the business contributed little to last years results primarily because of the lack of stock and the unexpected(I think) departure of the Manager in charge.Autographs are one of the highest growth sectors withnin the collectibles market and I understnd SGI have now got their act together here.Could be a surprise winner this year.
-advertising revenues.SGI had little or no revenues from their websites last year.Now that the websites are up and running and with over 8m hits per month,theres growing demand for space on their sites.Advertising revenues are likely to contibute significantly to this years earnings specially as income from this source will fall straight to the bottom line

In additions to higher turnover comapared to last year I expect a marked improvement in operating margins..close to perhaps 15% against 13.6% last time.
That alone could add 11% to earnings
All a guess mind but trends and newsflow gives confidence.

[xdavid] 09/7/2004 00:48

JUST FOR FUN...

CASH: By my calcs, excluding the £2.2M from PRVD & allowing for £1.1M buybacks, SGI will still have over £1.3M in the bank by interims. If the trading pattern of 2003 is repeated, £2.2M by year end. These are intentionally conservative. To put this into perspective, the estimated 1.5p divi for 2004 will only cost them £0.37M (+tax & costs).

TRADING OUTLOOK: From 2003 annual report: "Despite a challenging trading environment in the first 4 months of the year, the benefits from the implementation of our business plan have come to fruition as the year progressed cumulating in the best two months trade during November and December that the group has experienced in it's recent history." So despite a 'poor' start, they achieved a 79% growth.
From AGM statement in April: "Trading has been in line with the expectations of sustained growth of the Company in both turnover and profitability. We have continued to enjoy strong market conditions in philatelic trading and retail operations..."
Add to this the positive Seymour Pierce report of March and the upbeat trading in the 'Investment Department' section of their web site then I am happy with the Seymour Pierce estimates of a 50% growth in EPS this year.

EARNINGS ESTIMATES: However, it is true that Seymour Pierce have always underestimated earnings. For 2003 they estimated £1M profit before tax and it came in 23% higher at £1.22M.
For 2004, Seymour Pierce estimate a 10% increase in turnover to a nice round £9.5M, resulting in 5.28p EPS for year.

I have gone over the Seymour Pierce figures, entering a +12% turnover figure and working though other adjustments (just for fun, obviously). Basically, for every 2% added to the turnover (e.g. 10% to 12%), you can add another 0.27p onto the eps.
Therefore... 12% increase in turnover = 5.82p EPS (53.7% eps growth).

Regarding difference made by buybacks, I am mighty confused by the net effect of these. The estimated EPS is calculated on Fully Diluted share total. I.e. shares in issue adjusted for all potential dilutive share options. At end of 2003 there were 24.3M "weighted average" shares in issue, 25.2M fully diluted. That's 865K possible 'diluting' shares. However, in March to June there were 1.4M options granted and issued for trading..?? Where did the 600K additional options come from? Anyway, Seymour Pierce (SP) estimate is based on the fully diluted share issue coming down from 25.20M to 24.68M. If you want to reduce the 2003 figure down by the full 1.3M buyback, you can add in a net extra 0.17p over the estimated 5.28p earnings from share price

Summary: 12% increase in turnover = 5.82p EPS, 14% increase= 6.1p (excluding 0.17p extra potential for buybacks)

[xdavid] 09/7/2004 00:43

You just reminded me, dwnash, the re-valuation of the reference collection should be announced in the interims too! Won't change the balance sheet but will push up the NAV nicely.

[dwnash] 09/7/2004 00:22

I may be repeating what I've said earlier last year, but in the early 1990's, Gibbons started to be very selective in what they bought for auctions, this was for them a good issue as they have now built up a substantial holding of perfection.

I have on the occasion purchased the odd "specimen" stamp, who's orrigin is known only to the collector.

So all the rubbish has gone,and only the quality left..this reflecting in the NAV on the balance sheet. A great deal of people who invested on the markets have now walked away, and are playing with their old hobbies of stamp collecting
and are now pushing up prices, they know a good stamp will hold onto its value.

Ebay stamps are pushing new heights all the time, and if you care to drop in you will find prices realising big gains.....

[xdavid] 08/7/2004 23:08

Aaaah! Thankyou, Timblie! LOL!

[timblie] 08/7/2004 22:53

xdavid - Wasn't that Gerald Ratner?

[barnetpeter] 08/7/2004 19:56

Is it time to wake up? yes, I see it is! Another assault on the 90p level coming soon.

[kael] 08/7/2004 18:04

Good to know that the brokers didnt upgrade SGI during their last review, Im confident they may need to in the future, but of course this is where the private investor has the upper hand. Do we have any analysts on board that are prepared to give a run down of what they expect to see at interims? I have done some sums myself and am expecting them to produce an EPS at least 5% ahead of expectations. But Im an amatuer when it comes to accounts and would welcome other estimatations.

[xdavid] 08/7/2004 17:57

I just saw SGI's broker/analyst, Richard Ratner of Seymour Pierce on Bloomberg (he was talking about M&S). I had always thought, worryingly, that this was the same Mr. Ratner of cheap jewelery fame. I was very relieved to see that it was in fact a different Richard Ratner (unless he's put on a lot of weight since his jewelery days!)
:-)

[xdavid] 08/7/2004 17:29

What the... !!!! ;-)

[kael] 08/7/2004 17:22

Self explanatory really, break from previous triangle was positive ( orange line) and also coincided with 29/50 averages. Current break is sitting just above resistance line, so any further rises would be indicative of a new range. Also not highlighted on the chart is resistance at 85 from mid march.

[kael] 08/7/2004 17:00

Although SGI is an illiquid stock, the chart is indicating the share price is at the beginning of a new uptrend, Ill try and post up some kind of chart later, with what I mean. Atm there is an uptrend since Jan04 which is holding and today has just broken up from a triangle (upper side from March high). Again take with pinch due to illuquid nature, but it is a positive indicator. A few more days above the top part of the triangle and it looks good for further conformation.

[xdavid] 08/7/2004 16:56

ukhawk, nice call on the RNS being out today! I was expecting tomorrow.