Stm Share Discussion Threads

[smithie6] 23/4/2019 17:46

looking strong still
..buys going thru at 52p
..hopefully this wk it'll rise to 52.5 or 53p
..bit by bit

[smithie6] 17/4/2019 13:45

underpriced for 6p of EPS

& the very high % recurring revenues

[montyville2] 17/4/2019 13:35

Agreed Smithie, would like to see the share price consolidate above previous support around 50p, and then test previous highs of 57/8p.... It looks poised to move up as far as I can see

[smithie6] 17/4/2019 13:26

hopefully the share price is now starting its next leg up

with the previous zone at ~45p being pegged in as support & a change of direction of the trend

[arthur_lame_stocks] 11/4/2019 14:27

It might be worth holding off an investment in these until the outcome of the Berkeley Burke case is known finally.

[smithie6] 04/4/2019 19:54

btw..the co. mentions it is looking to exit insurance management...
..if that brought in say 1mn...that wld help in providing cash for any new acqn.

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EPS for fin. yr 2016 4p
EPS for fin. yr 2017 & 2018 6p
..mostly due to acquisitions..& synergies (resulting cost reductions)

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for the acqtn of London & Colonial in 2016 a loan of 3.3 mn was taken out...so the co. is willing to borrow if needed...while of course it must also comply with the regs. for regulatory cash

[smithie6] 04/4/2019 19:47

anyone read the accounts ??

"...that will allow for further improvements in our operating margins"

(up in 2018 from 16% to 18% )

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"The above three areas ....underpin an ambitious three year growth strategy of growth both in terms of revenue as well as profitability"

[smithie6] 04/4/2019 09:07

"after 5 more years of EPS of >= 6p (& track record says that it will increase)
shareholders will have 5× 6p =30p more of nett assets per share (some paid as divi, some retained by the co.)

which at the current share price of 52p leaves 22p of nett share cost (52p-30p= 22p)

22p to get >=6p/share eps
27% !

just too cheap


while admittedly its NOT a loss making jam tomorrow stock producing lots of rubbery RNSs promising that things are about to get much better...paying no divi..which many punters seem to prefer !!...like 7DIG, AO. & many more

STM is a jam today stock !!
6p EPS, now !
& 4-4.5% divi !

[smithie6] 02/4/2019 14:11

not sure what you mean

phps you are thinking of problems last year with regulators/inspection....but that is the past and the co. has adjusted its processes and taken on more staff to keep the inspector happy...& I think the MD will not be in a rush to ever go thru that experience ever again !

& he's got 3-3.5mn invested in STM

so Im very relaxed that he'll not take on excessive risk or debt

& if I recall correctly the acquisitions in last 5 years have all been funded without taking out any bank loan (but I havent checked) & in the last few years the co. has held on lots of nett cash
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the bod are almost all finance guys...
bean counters
with a co. safeguarding the assets of other people of >1bn pounds

...not suddenly going to all have brain transfusions & suddenly become wild risk takers !!

although, yes, I did write that perhaps the co. might take on some debt to fund an acquisition, supported by the history of high cash generation....so you are probably responding to what I wrote...Im probably more in favour of gearing than the bod, since Im more inclined to taking risks than they are

[camerongd53] 02/4/2019 10:38

sMITHIE
I think we agree but the board needs to be careful and not ignore financial, operational and integration risks any of which could have very serious implications

[smithie6] 02/4/2019 09:40

fair/good points

your calc. shows ~ 2.6mn of new cash being generated each year after paying the divi. (of around 4-4.5%)...which is available for acquisitions one assumes since its above the regulatory cash reqd

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& generating 2.6mn/yr of cash after paying the divi & very high recurring revenues allows the co. to borrow money if it wanted

if the co. borrowed say 5.2mn....it could pay it off in <=2 yrs & also pay the divi...(& with the profit from any acquisition the 2 yrs payback reduces further)

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the co. has been making acquisitions & has said it is looking for more
...g'teed to happen imo at some time in 2019...

(in last 12-18 months the management were busy with the regulators. 😕
but still managed to do an acquisition...& integration of Harbour Ltd in Malta
..now that the regulation topic is fixed I think the co. mngmnt will have more time to look at poss. acquisitions....although phps they'll wait till Brexit farce is a bit more defined & known...& hopefully the PM Teresa May is out of the way (incompetant imo).)

we'll see...

[camerongd53] 01/4/2019 17:47

From the annual report, it appears that acquisitions have been beneficial.
With expansion of the business either by acquisition or by organic growth, there may may be an increased regulatory cash requirement - it may not be much but together with the cost of expansion (capital cost),it could create a ceiling for future growth.
On the other hand, I may be overcautious. Currently STM have £3.4m unallocated cash. which increases by after tax profits of £3.7m p.a less dividends of approx £1.12m p.a.
Hopefully the directors will be prudent in the future

[smithie6] 01/4/2019 14:38

Im not in the sector...but I get the feeling that the UK SIPP sector is awash with small cos. selling out at cheap prices due to not having the size to cope with new arriving regulations

beneficial for STM

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Im a fan....
..time will tell what happens...

[smithie6] 01/4/2019 14:21

I was thinking the same

& it is a good point to mention

but !

look at the cost of last few/2 acquisitions

well well below 3.4M

& despite being 'small' they are expected to noticeably increase the STM free cash generation...as a good % of situation before acquisition...

(Carey. £400k....cost savings in STM SIPP division...500k
Harbour. Malta. acquisition price not revealed ! (any calculations ?; is it detailed in cashflow report ??)
<£3.4M imo )


& with the surplus cash generation....by 31 June the co. will have more cash !

& it is a stable cash generating co. so borrowing is an option if needed

(listed cos. generating surplus cash normally always borrow...since they can normally borrow at X% & get a return of 2X or 3X
...MD has big stake so he'll be prudent imo)

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note that any acquired finance co. probably/definitely includes its own statutory holding of cash ...which would move across in an acquisition...

[camerongd53] 01/4/2019 14:08

One point I forgot to mention earlier -in the preliminary statement financial review, it states Net cash of £15.6m of which £12.2m is required for regulatory purposes leaving only £3.4m free to use. The policy is to consolidate by acquisition. There is not much scope for acquisition Unless stm borrows or issue shares by a placing or to pay vendors. This may cramp STMs growth.

[smithie6] 01/4/2019 13:49

5 year chart

hopefully heading to re-test the resistance at 70p

fingers crossed we get some +ve news in 2019 to help it go up thru it (yet another acquisition that produces cash ! ? :-) )

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'Skin in the game'

btw..the MD has 3-£3.5M of investment riding on the success, or not, of STM
...his interests are 'very aligned' with those of shareholders
(& year on year he gets the underlying eps & underlying cash generation to be higher :-) )

[smithie6] 01/4/2019 13:27

3 month chart is interesting

volume jump & spike at 47p ..on way down...failed to hold it

on next low at 45p....it bounced then fell back...with jump in volume.. & sideways..

last week's 45-46p was 2nd visit to that area

again a vol. jump

this time it has jumped a fair %...to 51-52p..

so, one could say that it looks like a double bottom at 45-46p...support...&amp; looks like a change in the trend directn is highly possible/prob.

and last low looks to be a low on a long trend of rising lows
(strange to see the high % change in the share price in previous years....for a co. with high % of recurring revenues...I guess due to news such as problems with Gib. regulator last year; no big deal in the end)

charts dont predict everything....but useful sometimes to see if they give signals that agree with fundamentals....I think that is the case here....cheap on fundamentals & low risk co.-share

[rcturner2] 01/4/2019 13:25

I think fair value for this is at least 87p = PE of 10 on 6.2p earnings plus 25p cash on the balance sheet.

[smithie6] 01/4/2019 12:21

super illiquid today

only 1 buy at 52p of only 2000 shares....
and next buy was at 53p

!!

looks like the insti that reduced last week(s) is not selling any so far today...

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+7%
not bad for 1/2 a day !! ;-)

looks like lunch out today !! :-)

[smithie6] 01/4/2019 11:37

indeed...everything rising would be good !!

(but noting of course that the share price generates a corresponding p/e...and not the other way around)

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under 50p was a bargain...
I think the Insti that reduced their holding will feel a bit silly....having sold at the minimum price for the year
but maybe they had some vital reason pushing them to reduce.....like pay wages of fund mngr or a social security bill !!

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imho this is worth 60p now today....and then slower rise upwards from there....
6p earnings....at 5% that equates to 120p

at 7.5% its 80p

what are banks paying ?....2 %
(sure STM doesnt pay out all of its earnings....but they do stack up inside the co....and each share owns a part of that)

[camerongd53] 01/4/2019 10:23

Glad to see the share price back to 50p
The company is in as good shape if not better than when the share price was 70p
Consolidation progress has been slow and hopefully this can pick up soon. Very little movement in individual items in the balance sheet over the past year

Smithie

The EPs has gone up - the p/e has gone down which has had a bad impact on the share price A high Pe ratio can be a expectation of future prosperity. What we want is a rising EPS and a rising PE ratio to go with it!!

[smithie6] 01/4/2019 08:23

...very cheap p/e...and for/with the recurring revenues
and the track record of increasing the p/e and shareholder assets/share

..can surely only go up...

[rcturner2] 01/4/2019 08:09

Interesting RNS today showing large reduction in holding for major shareholder, they have sold over 1.5% of the shares, this probably explains the recent weakness.

I think this is primed for a significant rerating now.