Stm Share Discussion Threads

[smithie6] 19/8/2020 12:29

quick reminder of some perf. numbers

(lifted from a competing website)

operating margin: 18%

return on capital employed: 30-33% over last few yrs

money raised by issuing shares : £22.4M

retained earnings : 12.5M ( & a good few more million of earnings handed out as divis)

shareholder funds: £34.5M

(those last 3 pts of data show a profitable business that made money for ppl who have "subscribed" for new shares; useful info imo)

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imo the cap. value is nuts for these numbers (the numbers show it is a very good business & expanding)

I guess the mkt doesn't value it highly since the organic growth is not there. That might change over time with the recent move to expand in the UK & various acquisitions.
...anyway, the shares are still underpriced.
(2-3 yr EPS might be 8p, if achieved that would give a forward p/e of just over 4 !, ie. 25% profit, compare with bank rates close to 0%).

[arthur_lame_stocks] 18/8/2020 12:13

I'm happy to see them grow through modest acquisitions for cash and then pay down any debt out of profit. Much better than issuing shares to buy another company imo.

[value hound] 18/8/2020 11:57

Likewise Smithie6; I have "review at 48p" entered with hope into my spreadsheet.

[smithie6] 18/8/2020 11:31

I think the shares should today be 45-50p, clearly the mkt doesnt agree, so far.
hopefully over the coming months we'll see the share price rise a bit, partly since there should be some new profit calcs published from analysts/tipsters over time.
..& phps some news that integration is going well, or new IT is progressing well, or another acquisition announced

[smithie6] 18/8/2020 11:27

btw
Strategy
STM is trying to increase its capability, distribution network, product range etc in the UK & to offer new clients the existing STM products/services including from overseas such as its Malta office.

imo if a lot of that can be done via small acquisitions rather than bigger ones then imo that's good news

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& imo smaller acquisitions are probably cheaper since some of these acquisitions with £1-3 million of turnover are operating at close to break even because of high % of income consumed by the management, mnmgt pensions, mnmgt cars, company accounts, co. regulation supervision staff, auditing costs, co. accounts,....

& after integrating inside STM some of those costs can be reduced. ('this year break even & next year 0.6M profit')

its phps dull but imo its 'good' from an investing viewpoint. One just needs some patience & the work of the co. to successfully do the integrations & succeed with getting more processes to be automated/on-line using IT/software.

[smithie6] 18/8/2020 11:14

perhaps I didnt explain my point enough

If a £1000M cap. value company borrow 250M to make acquisitions, when it has no debt, I think we'd all agree it is fairly significant transaction.

If a 20M company borrows ~£5M to make acquisitions it is also a fairly significant transaction.

I think you have to agree.

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a £10-20M acquisition by STM would be a merger & require issuing of new shares.
For 20M it would be a 50:50 merger.
1 new share for each existing one, given to the owners of the acquired company. (since STM couldnt imo borrow say 20M, & shouldnt !) Would infer a high amount of risk for STM shareholders & loss of control for the existing large shareholders in STM (& they probably wouldn't want that)

& such a share based merger would half STM's existing profit/share, while adding the profit of the merged co.

That's not the type of deal I would want.

[lundun42] 18/8/2020 09:35

Smithie6 you said "little debate here, surprising after the co. taking out a loan of 1/4 of the cap. value of the co......a significant step imo".
My point is that surely the cap. value of STM has little relevance to the new loan. Yes it's a step but imho it's not that significant in the context of STMs past borrowing levels and acquisition activities, more like business as usual given their regularly stated strategy of further acquisitions. Yes the latest one has helped the share price and another should do the same but as I intimated before imo so far these aren't of the transformational kind that would really get the share price motoring. A £10-£20m acquisition, now that would be significant! It will be interesting to see what their half year results look like next month.

[smithie6] 17/8/2020 16:02

if you are replying to me, you seem to be replying to points/arguments that are not the points that I actually made, I think you misunderstood my posts, or I wrote them badly.

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"I just took from the latest announcement that further acquisitions are in prospect and that what remains of the £5.5m after the Berkeley one gives an indication of the likely costs of any future one(s)."

...agreed.

(£1.4M paid now, from loan of £5.5M. So £4.1M left (if put aside future payments of £1.5M), so yes, at this moment there is a chunk of cash available for other aquisitions)

[lundun42] 17/8/2020 15:50

I'd have thought that any loan is based upon the lenders view on the company's ability to repay it - Revenues/Profits - rather than its market cap. If you look back over the previous company reports STM borrowed £3.3m in 2016 to fund the acquisition of London and Colonial. At that time revenue/profit was around £16m/£3m and now with 2019 revenue/profit at £23m/£3.9m and management reporting trading so far this year holding up, getting agreement to borrow £5.5m is surely hardly out of step from a previous borrowing/credit risk perspective. I just took from the latest announcement that further acquisitions are in prospect and that what remains of the £5.5m after the Berkeley one gives an indication of the likely costs of any future one(s).

[lundun42] 14/8/2020 13:11

Their website seems to be down today. Can't access company info.

[smithie6] 14/8/2020 12:41

little debate here, surprising after the co. taking out a loan of 1/4 of the cap. value of the co......a significant step imo

[smithie6] 13/8/2020 15:06

"In addition, finalization of the new bank facility will allow us to further continue to pursue our acquisition strategy for other opportunities."

"further continue"

The company couldn't have said 'expected another acquisition(s)' any louder !

(& 'perhaps' the bank has already run its eye over the financial numbers of another possible acquisition before agreeing the size of this new loan ???, fair amount higher than is needed now for this acquisition)

[smithie6] 13/8/2020 15:00

well done to the MD, the FD & the BOD.

[smithie6] 13/8/2020 14:58

well, I've been a fan of STM on this msg board for quite a few years

& Im very pleased with the acquisition news today.

& I like that a high % of the cost is deferred & linked to performance

& I like the use of debt, to provide some gearing

no new shares, no dilution, lovely.

one could argue that this share is just so boring, compared with say an app company or a virus testing company

but often in investing 'boring' can be very good.

the co. has a business model (growing by acquisitions & reducing costs to grow the profit (including by the use of more IT/software))

& we have to wait to see those things take place...

Im quite happy to wait, risk/reward wrt the share price in 18-24 months is excellent imo

(so, I upped my holding today by 50%)

[lundun42] 13/8/2020 14:13

Shame it's not exactly transformational for STM though which is what we need to see to really get the share price motoring. Odd that one of the companies mentioned - EBC - was only incorporated earlier this year so, as a ltd co at least, not "in existence for decades" per the announcement!

[value hound] 13/8/2020 12:50

Looks to be a complementary acquisition at a reasonable price - or am I suffering from a little confirmation bias?

[smithie6] 10/8/2020 12:05

pah. up 5% :-(

whereas it was up 10% on Friday.


;-)

[smithie6] 10/8/2020 11:31

increased my holding at 20p

those ones are up 50%, in ~6 months !!

20p was nuts. wished I'd bt a lot more. ah well.

[lundun42] 10/8/2020 09:51

Just read the RNS trading update from last week. STM didn't mention that they had a financial penalty imposed as part of their agreement with the regulator in Gibraltar as stated in the regulator's public announcement hxxps://www.fsc.gi/news/statement-on-stm-fidecs-gibraltar-377
Hopefully the fine was modest!

[smithie6] 09/8/2020 18:48

btw

was STM tipped somewhere at the end of last week ?

[smithie6] 07/8/2020 13:27

just checked

& ...my divi still hasn't been paid in to nominee account

brokers, pah.
:-(

[cwa1] 07/8/2020 10:35

LOL, you get the, unwanted, prize I reckon ;-)

[smithie6] 07/8/2020 10:34

anyway

the 2-2.5p price jump today is about 3 times the recent divi. :-)

keep on trucking

(& nice to see the recent RNS mentions that still considering acquisitions

[smithie6] 07/8/2020 10:32

I might beat you !!

7-10 days ago & mine hadnt arrived !, broker claimed that first cheque to them got lost in the post & that a new one was being posted.

(in 2020 are payments to big brokers where there might be multiple/some clients to receive a divi
...is a cheque really sent for each client's divi ?!

seems difficult to believe. Surely it should be 1 payment since the registrar inows the nominee holding as just 1 combined block & not as individual holdings of ppl inside a nominee account

& surely in 2020 it should be a bank transfer from the co. or co. registrar to the nominee & not paper cheques sent by the old fashioned letter system (although its surely the best & fastest postal system in the world ( in southern Europe its 3-5 days for delivery !; 1st & 2nd class ? dream on. 3-5 days for everyone unless you pay thru the nose for express (DHL type prices)

hopefully no one at my broker was pocketting/diverting the first cheque, hoping that I wouldn't notice 1 missing divi...hmmm