Stenprop Share Discussion Threads

[martin44] 02/7/2010 22:34

Think oracle28 you are being a little too pessamistic and perhaps don't understand the contract type that Spiritel are winning with the new technologies including VoiP and fixed contracts that offer something that others don't or don't understand!

[oracle28] 02/7/2010 10:04

Oh dear.....the downward path continues!!!

Not looking good with all those local government contracts.... margins!!

[longshanks] 30/6/2010 09:03

come on li'l fishes - keep on selling - longshanks wants to pick more of these up on the cheap.

O/T: tara7 - if you are watching - take a look at SCE if you get a chance. Interesting situation developing with MMs horribly short and house broker aggressively bidding for stock. Issued an upbeat statement "ahead of market expectations" at the beginning of June with a promise to give more detail of improving situation with the results in July. Looks like it could explode with the right type of encouragement ;)

[oracle28] 29/6/2010 16:35

Yet again still on a downward path and yet again it has failed at the 200 m.a.

It is following the downward line of this average!!

I believe this will continue falling, there is just no appetite for STP!

[longshanks] 28/6/2010 16:35

news on their website of another prestigious Hotel contract at the St Andrews Golf Course:




No details of value - but this is a big client to have garnered.

The quote that took my attention:


The contract was won against competition from larger service providers, and is another example of the Group's ability to deliver complex converged communications services for major corporate clients.

[tara7] 28/6/2010 09:06

Well , 15,000 sells over two days and the price is firm as a rock.!!

[martin44] 22/6/2010 15:35

longshanks - an excellent summary and well thought through which exactly sums up STP in the current climate but with everything to go for and moving forward we should see some excellent returns, maybe sooner rather than later.....

[longshanks] 22/6/2010 08:55

Daisy group have announced results this morning for their 15month period since starting their own active market consolidation.

They have EBITDA of £11m for the 15 month period and a market cap of £272m. There is a presumption that EBITDA will improve as they digest their acquisitions but the current market cap represents a multiple of 5.3 on the 15 mth gross profit figures (£52m) which prices them pretty highly when compared to STP.

STP is looking at having gross profit of around £10m for the full year (£12.5m for 15 months). Admittedly the scale of STP's growth is less ambitious than that of Daisy but still, if you apply the same multiple on gross profit over a 15mth period a similar market cap for STP would be £66m or £3.70 per share.

That said we need to also consider STP from a different perspective: the acquisition rather than investment case.

Currently acquisitions of smaller (subscale) telco's are priced at 4.6 times EBITDA (both by STP and DAY). I calculate that current underlying EBITDA for STP is around £5m, so that would put an "acquisition price" on STP of £23m if STP were forced sellers.

As business is growing for STP, they are not forced sellers and they represent a significant competitive pressure to DAY in the business telco market. More importantly though they are an increasingly irritating competitor in making decent acquisitions of those smaller, subscale telco's.

Given this a premium would need to be applied to any STP takeout. I think a multiple of 2 can be applied giving a value of STP to DAY of around £46m or around £2.70 per share.

In both valuation examples (investor and takeover case) we need to consider the underlying debt which conservatively accounts for around 80p/share. I therefore estimate a fair valuation on STP of between £1.50 and £2.50 per share.

Like I said above, these are cheap as chips. They are unloved and untrusted. Love is fickle though and when it returns these will appreciate handsomely.

The market needs to be convinced that STP can hack it in the competitive telecoms environment but the strength of support from both Clydesdale bank and their largest shareholders, is indicative that this confidence will return at some point.

[longshanks] 18/6/2010 13:34

me again. Seems to be a bit more stock available in the market - but it is also well bid.

The thing to remember about STP is the statement from the half-year results about current trading: On a standalone basis, our Business Division is now delivering an annualised underlying EBITDA* run rate in excess of GBP3.5m

Revenue for the first six months was ~£8m. Anticipated revenue for the second half was ~£15m!!

This was before four further acquisitions and a substantial contract win. I estimate annualised revenues to be currently running at around £42m with underlying EBITDA of around £5m.

For a £10m market cap this is stella performance.

At the moment these are unloved but boy are they cheap - I am hoovering up as many as I can before the news breaks.

[tara7] 18/6/2010 13:21

Yet more buying, what"s the news then Martin?

[martin44] 16/6/2010 22:15

More good news on the way that is going to put this into orbit....

[longshanks] 16/6/2010 13:51

me. Limits getting very tight - thought I would get my "last orders" in before the show comes to town.

[tara7] 16/6/2010 13:05

Yet more today.

[tara7] 15/6/2010 17:16

More buying today.!!

[longshanks] 08/6/2010 10:15

welcome back tara7. Haven't seen you around much recently - been anywhere nice?

[technically it is only 3v1 - the fourth you refer to is the WINS+ (PLUS markets) which tends to always follow their LSE position. Still SCAP have joined WINS and HOOD - leaving just LIBC on the offer.]

[tara7] 08/6/2010 07:16

Level two now 4 V 1

[longshanks] 03/6/2010 12:12

Moved from 1v1 to 2v1 with Hoodless joining WINS on the bid

News/results must be imminent IMO.

[longshanks] 03/6/2010 08:41

somethin' is cookin'....10% increase on a couple of small trades...

Mind you the spread for each MM is crazy here. Each one has 10p spread - meaning that moves like this are almost inevitable when one of them goes on the bid or offer aggressively (as is the case with WINS moving strongly onto the bid here).

[longshanks] 30/5/2010 21:04

Your argument doesn't seem to make much sense 2JohnAdams.

What is the point you were trying to make...that they can only make profits by consolidating, increasing revenues and reducing costs....hmmm...yeah...pretty much what all businesses do in competitive market places.

I agree that there are some issues. Debt is not a particular problem though as they only have £4m first tier debt. They do also have £10m of convertible bonds which I agree gives the prospect of some stock overhang but not a debt crisis. The balance sheet is actually very strong and I think your argument misses the whole point of the leveraged position occupied by STP.

If the business can return 30% ROCE then the value of the business will be enhanced by the leveraged position not damaged by it. Such leverage has risks but when it works it transforms company performance and we could see a massive re-evaluation in due course. At least that is what I am banking on.

[2johnadams] 29/5/2010 08:36

I have to agree with snickerdog and George about PINN, which I openly admit that I hold. However I have looked and looked at STP for years, I have loads of research and still haven't taken the plunge.

The issue for me is the debt, the bebt for equity swaps, the critical requirement to get the integration bang on and the extremely fragile nature of its profit/loss.

Should it even be aloud on AIM with Penta Capital owning more than 80%?? and so the questions go on...

There is a school of thought that suggests - if you keep acquiring, then eventually you'll create profits, however, those profits will only come through consolidation and cutting costs through integration of the acquired businesses - and there's the problem (very same issue for Daisy Telecom).

Just convinced myself to stay on the otherside of the fence. GLA

[martin44] 28/5/2010 09:18

Acquisition of Housing Communications Limited this acquisition is strategic and will open up huge potential to what is happening in the market place I do look forward to hearing of upgrades etc to come!

[longshanks] 28/5/2010 06:50

Another decent acquisition for STP.

I have been doing some maths.

Since November last year, STP have made six acquisitions. In total they have spent some £14m on these and in the process have bought historic turnover of these six businesses of some £17m and combined EBITDA of some £2.3m.

Much of this £14m is funded on loan notes paying 10% interest so I estimate profit before tax on historic earnings for these six businesses at some £0.9m.

One could say therefore that the acquisitions are pretty much at fair value representing a return of some 6.5%.

However looking at the ability of STP to sweat assets through cross-selling and the picture improves somewhat.

We can anticipate revenues and to increase some 18% on these businesses to around £20m for the coming year and EBITDA to increase by some 22% to £2.8m. This would give a profit of £1.4m and a return on the borrowings of nearer 10%.

Given the extreme levels of leverage that they are exploiting the picture in terms of ROCE is even better - with the overall business looking to deliver in excess of 30% with the share price at the current low point. Should the loan notes be converted ROCE will drop but still be impressive for a growth business such as this.

It will be interesting to get some figures for the full financial year but at the moment the share price looks cheap.

Free float is only about 2.7m shares... When this starts moving it will move very quickly.

[george57] 19/5/2010 14:27

Longshanks,

The spread here is a bit gruesome isn't it? I find that very offputting.

You are of course entitled to your opinion on PINN,

If any of you get a chance,pop into the PINN board and have a look at the recent RNSs.

£1900 buys you 500k!

George