Stm Share Discussion Threads

[smithie6] 18/1/2017 09:56

0.9p divi in previous 12 months

Aint 4% imho....about 2%

Future...wait & see...imho not 4% in 2017

[qs99] 18/1/2017 09:40

forward p/e of c.8 and 4% yield....nice to hold and let the sellers finish before it moves onwards and upwards IMO...

[catsick] 17/1/2017 02:13

Nice simon thompson driven spike, hopefully we can retain the gains ....

[qs99] 16/1/2017 19:51

70p would be a nice first stop!

[rivaldo] 16/1/2017 15:50

Cheers ragehammer - it would be good to have details of what ST said, apart from the 70p target price, if anyone has them.

Good to see the two 50k sales this morning nicely absorbed following this afternoon's buying, with the price on the up again.

[smithie6] 16/1/2017 15:22

hit strong resistance at 50p area....
and high % of sales volume today has been big sells imo, 50k/trade
so...imo the big seller of recent months is still there

(460k traded today so far.....high for STM...and 4% price rise.....there are sellers imo...noting that most shares in hands of few big hldrs imo)

[ragehammer] 16/1/2017 13:05

Tipped again by Simon Thompson in the IC. Target price 70p.

[rivaldo] 16/1/2017 12:49

Lovely strong turnaround today....

[rivaldo] 16/1/2017 09:43

Another positive review:



"I concluded in August on shares in cross-border financial services provider, STM Group (STM) that for those looking for a small speculation, I reckon you could do a lot worse – and reiterated that in October. The company is now “pleased to announce a pre-close trading update”…

This is with, despite a first half-year profit warning, pre-tax profit to match 2015’s £2.7 million. The announcement adds that “the integration of the acquisition of London & Colonial made in October 2016… continues to run smoothly, with the anticipated integration gains and contribution to profits expected for 2017 starting to come to fruition” and that “the pricing initiative taken by the board in the earlier part of the year has significantly increased the take-on of new business for its QROPS international pensions product with new policies for the second half of the year up by circa 50% on the first half of the year and 27% on the second half of 2015”.

This is significant since, whilst the pricing results in a reduction in first year profitability, the increased business means increased recurring revenue for future years, with the company concluding that this leaves it “well placed to deliver significant growth in revenue and profit in 2017”. The shares were 38.5p on my August review and 48.5p on my October one, though commenced this year falling back towards 40p.

However, they are currently back up at 47p on the back of the latest update. This though still only means a market cap of circa £28 million – which continues to look good value, particularly given the stated 2017 outlook. I continue to rate the shares a speculative buy."

[smithie6] 13/1/2017 11:55

..I think that's arguably a bit of a ramp...


& ignores to mention any negative pts or risks...to give some balance..

- QROPS ditched 1st yr entry fee...due to competition...making QROPS less profitable...arguably reducing the value of STM

- is STM QROPS accounts increase partly due to QROPS accounts included in the acquisition ?...if so then its not all organic growth ....& included a special offer...(officially its part of STM & hence can be included without mentioning)

- turnover down 5% at H1....will that continue ...appears so "in poor perf. divs.".....

- the acquistn doesnt have a history of growth or profits....nor does H1 5% fall in STM turnover show growth for STM

- hoped for profit growth to come from laying-off staff due to acqn rather than organic growth which imo excited the mkt in 2015

...not trying to be negative...just give some balance...always pros and cons to any shares.
..I think it's a hold around 47p...

(Be useful if one worked in the sector....to know more about what is happening & also know about any FCA and UK/Malta/Gib/Brexit regulations & any possible future changes & impact on STM in short & medium term)

[rivaldo] 13/1/2017 09:55

The key here is that growth has resumed, with H2 new policy take up 50% higher than in H1 and crucially 27% up like-for-like on H2'15.

The City in particular loves strong recurring income, and this is one business where that is precisely the case.

With recurring income building fast, STM merely has to be seen to be putting past disappointments behind it. The L&C acquisition appears to have gone well, and if this delivers the large synergies which are expected then STM will strongly re-rate accordingly.

[paleje] 13/1/2017 09:41

I suppose if the whole industry dropped charges it would become the norm and no longer an advantage to anyone, definitely a time limit imo. Absolutely agree about LTH spooky.

[spooky] 13/1/2017 08:29

Not sure that enough questions are being asked about the underlying business. If you could boost business so easily by dropping the upfront charge why doesn't the whole industry operate that way. Why is it only until March, will they extend it, what are the costs of extending it, what will the competition do, what will happen to demand if the competition replicate their offer. Not sure there is a lot of understanding of the business going on here, just a lot of staring at brokers forecasts. Don't always need to understand the business to make money trading the shares but the longer you hold the more important it is.

[paleje] 13/1/2017 07:39

Thanks rivaldo, not sure what Neary's last sentence is all about, ST has had a 70p target on these since before xmas.

[rivaldo] 12/1/2017 22:51

Graham Neary, Paul Scott's small cap write-up partner, likes STM:

http ://www.stockopedia.com/content/small-cap-value-report-12-jan-2017-part-2-sdm-stm-gym-pmo-sgp-166428/

"STM (LON:STM)

No. shares: 59.4m
Market cap: £26m

Trading Update

Another "in-line" trading update (generally, I will cover trading updates more briefly than results statements, especially when they are in-line).

The Board is pleased to announce that the Group has traded in line with market expectations of profit before tax of £2.7 million for 2016 (2015 actual: £2.7 million).

Kudos to the company for quantifying market expectations in this announcement, rather than inviting readers to look it up somewhere else.

Some positive sounds that growth might ramp up in future years, after the flat result in 2017:

As was anticipated, the pricing initiative taken by the Board in the earlier part of the year has significantly increased the take-on of new business for its QROPS international pensions product with new policies for the second half of the year up by circa 50 per cent on the first half of the year and 27 per cent on the second half of 2015. As previously indicated, whilst this strategy resulted in a reduction in first year profitability, it does result in an increased level of recurring revenue for future years. This leaves STM well placed to deliver significant growth in revenue and profit in 2017.

QROPS is a type of overseas pension scheme, which is a bread-and-butter product for STM (a cross-border financial services provider, catering to high-net-worths and corporates).

Checking the STM website, I see they are offering a "zero establishment fee" on QROPS until March 2017 (and presumably until after then, if it is working?)

Tolerance of short-term losses on customer acquisition and customer set-up is a key part of the competitive dynamic in some industries. It looks as if STM have realised that their business model still works with higher losses per customer on set-up.

I have seen first-hand how some businesses will accept customers which won't become profitable unless they stick around for 5-6 years. That works sometimes with long-term products, e.g. with pensions and other financial policies which could be in force for several decades.

STM shares look good value to me against profitability, and the business looks to be in pretty good shape. So I'm not sure what the "catch" is yet. There is usually a catch!"

[smithie6] 12/1/2017 16:52

thanks

---
that is a massive increase in PBT, PAT and EPS....
where from ?
if achieve 1/5M profit from the acquisition (0.75M targetted....but unlikely (gteed wont imo) to achieve over 12 months so close to acquisition..Oct 2016....)
..still leaves a big chunk missing to achieve the EPS you've given...

and cant ignore fall in turnover in H1...and poor perf. in some divisions...and perf. was less than expected....and they had to modify their QROPS marketing due to competition....who knows ..maybe on going pressure on QROPS profit margin (and who knows....maybe instead of just getting 1st yr for free...maybe the industry will start offerring a free flat panel TV !!)

[rivaldo] 12/1/2017 15:45

Analyst forecasts are for historic 3.8p EPS after a 19% tax rate for 2016. IMO this may be a bit toppy and STM may end up paying only 15%, as in 2015 and as forecast for this year in the 5.9p EPS forecast.

[smithie6] 12/1/2017 15:28

has anyone got a good view on tax payable for 2016 ?

co. says 2.7 M PBT.....but PAT and EPS....are after tax...
how much tax ??

[smithie6] 12/1/2017 15:26

....see what happens

but personally I dont see 2p divi happening for 2017 (1.2M pnds) or 5.9p EPS

imho such a divi would imo be too high a % of profits...but up to dirs to decide...
---

Are Finncap the co. broker ?..... pushing the co. a bit
..just checked...yes they are co. broker.....they either push the shares or....get replaced as broker !!

and if I recall correctly 2016 was supposed to show a big jump in PBT...and hasnt happened, with H1 being under expectations...

H1 report seems to indicate 1.1p underlying..DOWN from yr before...(but I would need to dig to see what that includes and excludes)....so the co. broker's 5.9p for 2017 looks over cooked imo

H1 turnover was DOWN....and they had a fall in new QROPS accounts H1 before they dropped the entry fee....so imho there is some competition......for any share, always pros and cons and risks...

H1 "STM experienced a downturn in the number of new QROPS applications received
during the first four months of the year. This was largely due to competitors’ more aggressive pricing
strategies "

[rivaldo] 12/1/2017 12:53

To clarify, Finncap's 2p dividend forecast is for the current year (2017) - the divi for the year just gone is forecast to be 1.3p.

Historic EPS will be 3.8p, with this year bringing 5.9p EPS.

The EV/EBITDA - reflecting the cash pile - is a historic 4.4 dropping to a ridiculously low 2.9 for 2017.

[smithie6] 12/1/2017 11:50

Welcome Riv & sailor

Nice buy at 40p......quick on the buttons...


----
Divi

Imho 1p/yr...not 2p

Was 1/2p at interim stage

& big cash lump gone for the acqn.
----

Poor service from the co. wrt informing its owners......after dissapointing H1.....silence..till today....far too late...

The share chart shows the result of keeping shareholders in an illiquid microcap in the dark...esp. after a poor H1....a wandering share price

..with the savings from interest costs & staff costs in 2016....to only equal the prior year is phps not as positive as the RNS....due to some divs. doing poorly as reported in H1.

----
Imo
47p hold
40p buy
& wait to dig thru the results
Incl seeing how much tax is payable

[spooky] 12/1/2017 10:25

'through 50p on the bid, nice', has me slightly confused, the bid is 46p.

[qs99] 12/1/2017 10:21

Agreed Riv. how do you get your research out of interest?

[rivaldo] 12/1/2017 10:19

Finncap have a 65p price target. They're very positive as you say QS99 - they say STM is a "unique opportunity for investors to be able to buy this quality situation", given 50% growth this year to 5.9p EPS and with a 2p dividend.

Worth noting also that STM should have a year end cash pile of around £6m-£7m even after the initial LCH acquisition payment (with some obviously required for regulatory requirements), against a £29m m/cap.

[qs99] 12/1/2017 09:47

through 50p on the bid, nice