Stm Share Discussion Threads

[boystown] 26/3/2019 12:20

Tipped in IC by Simon Thompson...

I highlighted the investment potential of Aim-traded STM (STM:48p), a company that is expanding both its UK and international self-invested personal pensions (Sipps) operations ahead of today’s annual results (‘STM’s building blocks for growth and acquisitions’, 6 Feb 2019).

At the time the directors revealed that their company would deliver a £500,000 increase in underlying pre-tax profits to £3.7m on flat revenues of £21.4m. The dividend per share has been raised by 11 per cent to 2p at a cost of £1.2m, and is covered more than three times by EPS of 6.2p. The payout is easily funded from a balance sheet holding net cash of £15.6m (26.3p a share).

The key take for me in today’s results is that STM has just completed the acquisition of Carey, a UK Sipp business that has over 4,000 members and assets under administration of £898m. This not only scales up its existing UK and international Sipps business (1,915 and 1,271 members, respectively, having grown by 20 per cent in aggregate last year), but it should generate £500,000 of cost savings this year and be earnings accretive in 2020. The acquisition also enables STM to offer niche Sipp products to the UK market with minimal outlay, such as property Sipps.

Interestingly, chief executive Alan Kentish pointed out during our results call that Carey’s UK distribution network and product offering “is significantly better than that of London & Colonial (acquired by STM in September 2016)”, suggesting potential for the combined operation to gain traction in a UK Sipps market that posted double-digit market growth in 2018 now that it has critical mass. Indeed, he pointed out that the combined Sipps operation is targeting a move from break-even this year to making an operating margin closer to the 15 to 20 per cent level on annual revenues of £3.5m to £4m. That’s well worth noting.

Strategically, the directors also see an opportunity for STM to act as a consolidator in the workplace pensions market by acquiring smaller master trusts in the same way that it has made bolt-on acquisitions in its QROPS business, an offshore pension scheme used by expatriates and internationally mobile employees whose tax domicile can change as a consequence of employment. The £400,000 earnings-enhancing purchase of a majority stake in a top 20 UK auto-enrollment workplace pension provider with 65,000 members is the first step, and STM is looking at buying up further sub-scale operators who have decided not to apply for Master Trust authorisation from The Pension Regulator. It wouldn’t take many bolt-on acquisitions to create a profitable workplace pension business, so this is where corporate activity is being focused.

House broker finnCap predicts an adjusted pre-tax profit of £4.1m on revenues of £20.9m this year, but has not yet factored in the Carey acquisition so this is before potential upgrades. On this basis, the shares are rated on a cash-adjusted PE ratio of four and offer a prospective dividend yield of 4.6 per cent based on a 10 per cent hike in the 2019 payout to 2.2p a share.

So, having first advised buying the shares at 35p (‘Tapping into a pensions payday’, 27 Apr 2015) and banked dividends of 4.9p a share excluding the forthcoming final dividend of 1.3p that goes ex-dividend on 30 May, I am maintaining my target price range of 90p to 100p ahead of news on further acquisitions and potential earnings upgrades. Buy.

[rcturner2] 06/3/2019 08:22

I bought back in here yesterday, mine was the 52k marked as a sell.

I think that this is now very cheap given the cash balance, the increases in the dividend and the likely profit growth going forward.

[montyville2] 08/2/2019 15:31

This is a sustained rise,8%, against a market that is heading south today. It sounds like someone knows something is happening, perhaps an acquisition? This was highlighted in the trading update last month....just speculating!!!

"2019 will be a year of consolidation and investment, but with a new enlarged and experienced Plc board, we will have all the building blocks in place for our ambitious short term growth and acquisition strategy."

[camerongd53] 08/2/2019 14:29

Glad to see that the share price is starting to move up at last albeit that there is still a low volume. The company has had an interesting year. If STM advises that it has no issues with Sipps investing in unregulated business, the share price should not rise back to 70p and then on to 100p.
There has been a lot less activity on the QROPS consolidation than initially suggested and there could be more movemnt on the UK SIPP market. As a potential consolidator this could be very profitabe for STM

[graham86] 06/2/2019 17:39

13390 buy today gone down as a sell?

[camerongd53] 30/1/2019 11:15

I liked this morning's RNS. It didn't show a big profit increase this year, but considering the events during the year a good result, just to match or possibly beat last year.. If the final results come in around last year, this company is on a p/e of under 10 and possibly as low as 8.
I saw in the wekend press that SIPP & SSAS operators are being held out to dry over custiomers who bought unregulated investments - unless the company has legacy issued on this, the future can be looked with optimism. I note the appointment of an experienced COO and an and management's hope for growth and acquisitions

[lammylover] 05/12/2018 22:36

Daft price falls earlier this morning on low volume. Put in a kill or fill buy at 51p and it was rejected. So 10 mins later bought at market for 48.9p - thank you MMs!! Hopefully a bargain at this price? Rich

[rcturner2] 05/12/2018 15:00

At the moment financial stocks are being treated with excessive caution.

[hiraniha] 05/12/2018 14:05

I managed to top up at 49 pence.Now breaking even at 61 pence.What an absurdly cheap stock.

[podgyted] 05/12/2018 12:08

Simon Thompson agrees.

[camerongd53] 30/11/2018 14:36

cannot comprehend why the share price is so weak - it has dropped from 70p ish to just over 50p
The latest interim results were good and there has been no recent real bad news - even today's update was not hat pessimistic to justify such a large drop - it mentions underlying growth as well as increased costs. If it prevents governance banana skins it is money well spent. The share price performance is probably reflecting general market sentiment etc rather than underlying business performance.

IMO this share is possibly absurdly cheap!!

[jaykaytee] 30/11/2018 10:18

Fall overdone in my opinion...this looking cheap
Wish I had some spare dosh.

[lammylover] 29/10/2018 09:40

Lets hope the Chancellor doesn't throw in any curve balls at 3pm, like he did last year...…...Rich

[smithie6] 12/10/2018 14:14

depressing

to make quick money after buying at a lower price yesterday

when/since one didnt buy enough !!


😢😢😢

[lammylover] 12/10/2018 06:56

Daft day on the markets yesterday, presents buying opportunities...STM around 56p. Way oversold. Rich

[rcturner2] 09/10/2018 07:16

Interesting acquisition.

A bit about the court case here:

hxxps://www.ftadviser.com/sipp/2018/05/30/carey-pensions-seeks-buyer-amid-legal-battle/

[camerongd53] 05/10/2018 16:39

Davros - I don't consider a drop from 70+p to 60.5p approx 15% as normal volatility as there has been good results announced recently and a positive update from ST. The price should still be about 70p when the results were announced


If my portfolio waS not so unbalanced I would be doing a small top up @ 70p
Lammylover I think you have made a shrewd purchase. I suspect it will take good news on QROPS consolidation project or other good news to get the price up to 80p on a 1- 2 year view

[lammylover] 03/10/2018 23:14

Bought back in today on weakness at 58p. Seeing as these were 74p a week ago and tipped again by ST in Investors Chronicle, target 100p, it seems a bargain to me. Just need to wait till next update in January.....Rich

[davr0s] 02/10/2018 18:45

Normal volatility atm imo

[camerongd53] 02/10/2018 10:58

Anybody got any ideas why the price is so weak and volatile since the results came out?
Results were in line with my expectation and I see no reason why the future is not secure.
How rosy the future is depends on how successful their acquisition of consolidating other QROPS. Am still nicely in profit on STM so still consider it a long term hold

[camerongd53] 13/9/2018 17:48

I have been a shareholder in this company for a couple of years and am sitting on a nice70% gain. STM has had a couple of major issues e.g. UK QROps legislation - hopefully the lost ptofit will be replaced by the sipps. The other issue was the governance issue in GIb was actually more concerning for me as it could be indicative of poor management. It appears that this has now been addressed and resolved.
The recent half yearly report was satisfactory. - it shows STM profitable and stable on a continuing basis.
The share price has been relatively static in the range 50p to 70p for the last 6 months. I see no reason for this to change unless there is the much hinted QROP cadmin Consolidation or corporate activity
I estimate NAV Of 53 p per share so share buybacks may be on the agenda. On the other hand the boardmay want to keep the cash for Qrop consolidation.

If the share price firms I may take some profits but will probably hold the remainder for the long term as there is still a good chance of a higher share price in the medium/long term.

[rcturner2] 07/8/2018 07:57

Holders of STM shares may well be interested in Octagonal (OCT), another small cap London financial services company that is lowly rated.

[brad1] 05/8/2018 21:16

What about the 13.5m debt? Doubt whether there will be any as any time soon. Doing well as the growing figures are good, but this really needs to break 10year high around the 75-80p mark else it could linger and probably drop