Stm Share Discussion Threads

[jay083] 27/10/2020 11:59

looks like someone took 1m shares @ 27p yesterday

[smithie6] 19/10/2020 10:19

from 40p to 27p for that trading statement

to go back to 40p would be a rise of 50%

this fall is over done imo

cheap as chips at only 27-28p to buy

[smithie6] 15/10/2020 12:40

However, if EU trade negotiations do not result in a favourable outcome in this respect STM Life has other options for this client portfolio."

uh, Malta.

(Someone already posted that option. ;-) )

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looks likely (g'teed imo) that a chunk of reserved regulatory capital is going to be freed up in coming months :-)
..whatever happens with the EU

if it is enough then maybe the bank loan taken out can be paid off, or a bigger aquisition made

[lundun42] 15/10/2020 10:17

Thank you Smithie6.:)
My comment below about an update to Brexit risks was simply based on the statement in the Annual Report earlier this year where STM said the following but I couldn't see any mention about new business - "The Group currently has two Gibraltar based life assurance companies, with the original intention of relocating one of these to Malta. Given the length of time that has passed, and with no successful outcome in sight, it has been agreed that a more efficient use of capital can be attained by initiating a portfolio transfer of policies from one life company to the other. This will ultimately allow a release of capital once that company no longer carries on insurance business and surrenders its license. Currently there is agreement from the European regulators that Gibraltar insurance companies are able to continue to service existing EU policies. Discussions are taking place to allow this to continue post 31 December 2020. However, if EU trade negotiations do not result in a favourable outcome in this respect STM Life has other options for this client portfolio."

[smithie6] 15/10/2020 08:14

"came from EU countries so even if existing customers can still be kept on there is a risk that if no new business is allowed under a no deal (or even a deal come to that)"

my post 993
I understand that Malta is in the EU
so whatever happens with Brexit & any possible problems with licences/papers for financial services from the UK I dont see any problem for STM (since they have subsidiaries in the EU that can, I assume, front/route any contracts thru them

& STM has a small presence in Spain

(apparently the BOD know that Brexit is coming. ;-) )

[lundun42] 14/10/2020 14:17

But if you look at the 2019 new premium numbers published on the website for the STM insurance company over 66% of that new business (at least £37m of £55m) came from EU countries so even if existing customers can still be kept on there is a risk that if no new business is allowed under a no deal (or even a deal come to that) surely that's a massive impact?

Having said that, disappointment for some is an opportunity for others so at sub 30p time to get back into some STM shares methinks! :)

[smithie6] 14/10/2020 11:42

I don't see a problem

surely, if actually needed, any new EU trade can be routed via an STM subsidiary in the EU such as the existing ones in Malta

existing contracts should be unaffected imo

[lundun42] 14/10/2020 11:29

Oh dear, another disappointment. Let's hope they start under promising and over delivering as it would be nice to surprise investors in a positive way. No mention so far on latest re no deal Brexit risks which could still impact many Fin Serv firms with EU business of course.

[smithie6] 14/10/2020 10:09

uf, dissappointing to see such a price fall & after the share price perf. was doing nicely over recent weeks/months

at least it has a lot of recurring turnover to support many costs while it navigates this

[jay083] 14/10/2020 09:32

obviously a disappointing update. on balance I think this is a good entry point for those prepared to wait. Looks like a circ. £0.5m hit to 2020 profit - so previous finncap forecast was £2.5m now say £2m so on a pe of ~9. mcap back at cash level, 0.55p divi to come for those holding on 23.10. With most of the revenue recurring I think the downside from here is limited (notwithstanding the risk of loosing the appeal case)... the upside we'll have to wait and see....

[smithie6] 15/9/2020 11:22

but "today" its only up 1/2p
:-(


;-)

[cheshire man] 14/9/2020 11:04

Share price up on a run of buys this morning I see :-)

[smithie6] 12/9/2020 14:16

some data per share performance over recent years

A) yr to Dec. '14. 2014.
no. of shares 53 million & 63m diluted
turnover = £15.9m
per diluted share = 25.2p

net cash £5.7m. per diluted share = 9p

B) yr to Dec. '19
no. of shares 59.4 million & 60.4m diluted
turnover = 23.3m
per diluted share = 38.6p

net cash £17.2 m. per diluted share = 28.5p

------

performance

- turnover per share up by about 50% wrt 2014 (25.2p to 38.6p /diluted share)

- net cash per share
up from 9p/share to 28.5p/share
(& if had retained cash paid out via divis it would be 28.5p+ ~7p = 35.5p !; from 9p to 35.5p cash/share in 6 years, impressive !)

about x3 what it was !!

& 28.5p/share is 75% of the share price, whereas it was perhaps 24% in 2014 (if take the share price as 38p, share price rose to 70p at which time the cash/share as a % was much lower of course)

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at many small AIM cos. they keep raising money by issuing new shares...while the perf. data "per share" normally/often keeps falling
at STM you can see that the number of shares is about the same in 2020 as it was at Dec 31 2014.
So the various acquisitions made during the intervening years have all been basically/overall funded from profits !, improving the per share data. Excellent.

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good numbers imo
with the high cash /share surely giving good downside protection for the share price, coupled with the high recurring revenue

...hopefully the profit numbers will improve over the next 2 years as the BOD expects (with the share price following along)

[smithie6] 12/9/2020 11:43

interesting

in March 2015 the co. reported annual eps as 2p (a big jump from previous year)

& in 2015 the share price climbed up to 70p in the months after those results

yet now the turnover & profit per share are higher (turnover up 50%) but yet the share price is just under 40p !
undervalued imo.

[smithie6] 12/9/2020 11:33

STM group as a possible acquisition target

possible buyers
- XPS pensions ? lse:xps
cap. value of about £246m
- other pensions companies
- AJ Bell (& off pensions/STM products to big number of clients
- Abbey wealth, do stuff for expats

but I'd prefer for STM to keep growing as it has since at least 2012, doubling turnover !! (excellent) & increasing
the profit

compounded on-going growth will produce much bigger gains than a one off gain due to a takeover

(if you want to get rich, just clock in 15-20% gain per year (doesnt sound so much) & after 20 years you will be a lot richer. & even more after 30.

[smithie6] 12/9/2020 11:14

2012 Revenue GBP 11.6m
2013 Revenue GBP 13.4m

----------------------------- --------- ---------
Earnings before interest, taxation, depreciation
and amortisation ("EBITDA")

2012 GBP 0.9m
2013 GBP 1.0m


Compare those numbers with now !
the co. has produced excellent growth in an environment where growth is difficult to find/achieve.

& imo such past growth & hoped for future growth (borrowed ~£5m for acquisitions & 1 has been done & other(s) is being looked at) is not at all reflected in the current share price.

[smithie6] 12/9/2020 11:06

Hi Brian

interesting

I've been in STM for some years as well, going back to when they didnt pay any divi & a divi was a hoped for future event ! (2011-2014 I guess !!) (which started again in June 2016)

& since then they have paid about 7p in divi, & still got good numbers for finance & stability/risk, =very good imo.

it might be a dull wait for cost cutting (& implementation of new IT) to increase the EPS & the share price
but for me its a very good risk/reward situation noting the very high level of recurring revenue.....by just turning the handle over some time it should happen imo.

[smithie6] 11/9/2020 17:16

btw
the RNS from 27Nov. '19 makes an interesting point about the price increase in Prof. Indemnity insurance creating opportunities for acquisitions "as some firms will look to exit the market as a result of these increases"

so hopefully STM will pay less
& at some time we should get an RNS for another beneficial acquisition


"Outside of our control, there has been a seismic change in the Professional Indemnity insurance market capacity resulting in disproportionate increases in premiums. Certainly, this is likely to remain the case for the next couple of years until the insurance cycle moves on. Ironically, opportunities will arise for acquisitions as some firms will look to exit the market as a result of these increases"

[smithie6] 11/9/2020 13:45

cameron

I re-visited an older post of mine & added more praise of the benefits to UK Plc of tax incentive things like private pensions, SIPPs, ISAs, VCTs....all of which I'm in favour of

while personally I think that places like Cayman Islands, Switzerland, Panama should be closed down

(those places have been used by the super rich to avoid paying taxes they should be paying (& even used by the previous Spanish king, 60 million €; which might cause the downfall of the monarchy in Spain in the coming years)

[smithie6] 11/9/2020 09:32

good points

(Im a big fan of things like private pensions, SIPPs, ISAs, since imo they to get ppl to think & plan for their financial future (an area where the UK is light years ahead of imo all of the rest of Europe) & hence to be responsible & plan ahead; & having ppl being more responsible is good for UK Plc (those 'responsable' ppl will also hopefully also think about their career & more learning/education which is good for UK Plc; whereas ppl living day to day wont be).

(the highish annual UK allowance for CGT also encourages ppl to phps put some money in the stock mkt & that is good for funding business & hence jobs & UK Plc; in most/many countries in the UE there is no CGT allowance or ISAs & hence the general public do not invest in shares 'cause they pay 50-70% on any quick gain, so, in those countries many new ventures or growing companies can not raise money)

(& I mentioned that the tax incentives of things like VCTs help provide funding for high risk small companies (often involved in new products/technology) which are important for the economy of UK Plc).

(you put "evasion" 2 times in 1 sentence near the end of your post & I think you phps intended to use "avoidance" the second time)

[camerongd53] 10/9/2020 23:56

We should be more careful in the use of language a things can be misconstrued.

Some locations or tax havens can be used for evasion of taxes in other locations which may be and is often illegal.
Off shore locations can be used for avoidance and or tax deferral and is not necessarily illegal.
When discussing taxation compliance etc. , the term evasion is assumed to be illegal. Avoidance which may have the same effect as regards payment of tax is however legal. Sipps Isas and pension schemes are if used correctly are all legal forms of tax avoidance.
I do not believe that STM offer tax evasion, but may be (ab)/used for tax evasion. If STM were involved in tax evasion, I would not be investing in them as their business model is not likely to be robust in the long term.
Subtle but fundamentally important

[smithie6] 10/9/2020 20:52

anyway

Brian, you seem very knowledgable about STM history & details

you hold STM shares or not ?!!

[smithie6] 10/9/2020 20:50

Brian

can you tell us more about the Aussie Superannuation Scheme

...I didn't know about that

======

that a co. that "was" based in Gibraltar, a famous tax haven,

& involved in 'trusts' & keeping assets out of the hands of the tax man

& then Malta, another tax haven

had a run-in with regulators

is/was not such a big shock imo

----

Gibraltar lives from avoiding the taxman, which usually means avoiding the Spanish taxman

I think Spain claims that 20% of cigs smoked in Andalucia come from Gibraltar, tax free.
& then there is hard alcohol

(Gibraltar needs/wants its tax haven status in order to stay alive !! & not require never ending funding from the UK Govt to stay afloat; scenario repeated globally (Bermuda, Singapore, Bahamas (USA ?), Caymen Islands, its the way it is sadly, (personally I think all tax havens should be closed down, including Switzerland, but the rich & powerful hide their riches in these places so it looks unlikely to happen !!; but Govts could require prior Govt approval for any transfer to/from these places & close 'em down tomorrow but they don't, so Im sure they will go on for decades.)
---

Europe has been the spawn/home of tax havens for decades ....& its still the same...Monaco, Channel Islands, IoM, Andorra (Spain's own tax haven), Lichtenstein, Malta etc etc
(& with the UK & Holland leading the way for having created overseas tax havens)

although things have tightened up & changed a bit

X decades ago Brits had their bank deposit accounts in Gibraltar, all correct, & ads for it in the UK Sunday papers, that all stopped years ago.

---

STM Plc
registered office is in the IoM, a tax haven, we all knew that, no ?

----

interesting
that a SIPP is a form of tax avoidance (100% correct & legal of course)
as is an ISA
as is having a private pension
& AIM shares have tax benefits
as do new shares in VCTs

....all things light years ahead of most other countries, really; & to be applauded & all helping to provide jobs & help create/fund innovation (& since the UK can't compete with countries with lower wages we "need" to give tax incentives for innovation & stuff that is 'new')

that other European countries are too stupid to copy these excellent British iniatives & instead they concentrate on creating as many additional taxes as they can so that innovators are just stifled so that they don't bother or just go abroad. (Siemens, Marconi etc all came to London to get backing to develop different patents of theirs, & helped London be at the forefront for electric lighting/power, metro, telegraph, wireless telegraph.....all providing jobs & tax in the process).

[briangeeee] 10/9/2020 20:01

Good evening and welcome TC! I don't post here much, but look in from time to time, and remember you from DGC days.

STM has its quirks as you'll no doubt find. It's on a relatively low rating for reasons relating to:

a. An investor suspicion that it lives at the slightly more aggressive end of pension interpretation and tax planning.

b. It's still significantly associated with QROPS, which clearly is no more, and the administration fees available there are not sustainably replicable in the SIPP market.

c. The Aussie Superannuation scheme plan didn't play out.

d. Trafalgar issues with Angie B slinging mud, and more recently the Carey court case.

e. The Company's brush with the regulator, and Alan's encounter with the old bill in Gib.

That said, it is working hard to clean up its act, but that means added cost and has made organic growth more challenging without the wild west of QROPS IFA recruitment.