Tclarke Share Discussion Threads

[dozey3] 06/5/2017 16:34

Rivaldo is right when he says this is an illiquid stock, it's also a micro-stock as far as institutions are concerned, mkt cap £38m currently. The spread is often ridiculously large and unfortunately it has been accident prone over the last few years. Add in Brexit and a possible slow down in UK construction and one can see why many would steer clear.
On the positive side the emphasis on quality and reliability leads to customer loyalty, and enables (hopefully) margins to be maintained at sensible levels. I like their attitude to apprentices, and an engaged work force generally.
I suggest they would do us all a favour if they transferred to an AIM listing. That takes away the 0.5% stamp duty on purchase of shares, but more important it would also make holdings eligible for Inheritance Tax relief and immediately come on the radar of many old buffers (like myself) who are lucky enough to be facing that problem.
I am a holder btw, but not adding.

[cc2014] 06/5/2017 14:56

N+1 Singer - are they credible? I see various comments that the new forecasts look light and the management must have alot of confidence to already say they will be expectations. If you read back the RNS's you'll find the management said that 2 months ago as well so why?

New N+1 Singer forecast is £6.5m PBT.
Page 84 of 2016 annual accounts shows a £6.2m PBT before one-off costs of £2.5m related to the fraud.

So, N+1 perceive hardly no increase in PBT despite:
a)22% increase in order book over the last four months and even more since this time last year
b)improving margins as we exit the recession
c)less interest payments due the increased cash in the bank

It's no wonder the management can state so clearly they will beat expectations. So, are we looking at £7m PBT, £8m?, £10m. Who knows but whatever that figure, after corporation tax and the dividend you get a minimum of around £5m cash from operating activities. £14m cash even with a £20m pension deficit begins to look very interesting.

2 or 3 three years on that cash is going to turn into a significant dividend increase or an acquisition stockpile

[allstar4eva] 05/5/2017 20:18

I thought we'd see a 20% rise today. Never mind I think we will see that and more over the coming months. The revised forecasts do look light however it is early in the year so hopefully we can look forward to seeing further ahead statements as the year progresses.

[opodio] 05/5/2017 19:59

The problem is the cash isn't theirs

[gdjs100] 05/5/2017 17:50

These new forecasts look light to me. They must have a great deal of confidence saying they will beat forecasts of 11.6p just four months into the year - so for Singers to say only 11.9p seems like they are setting them up to be beaten. They wouldn't have issued a bullish statement like this if they were just 2%-3% ahead. I am looking for more like 13p.

[flagon] 05/5/2017 16:17

N+1 Singer forecast revenue of £310 million for this year.

Broker N+1 Singer has revised its forecasts higher for the current year to 31 December 2017. The broker now expects 2017 revenue to hit £310m, up £10m, while profit before tax estimates have been revised 7% higher to £6.5m. The broker anticipates 11.9p of earnings per share (EPS) rather than the 11.3p previous forecast.

Link ->

[interceptor2] 05/5/2017 14:59

I did buy in here at the open after the strong AGM statement this morning, and then after some research decided to double my investment here.

There are negatives to this company, one is a fraud of £2.8m detected last year at one of it's subsidiaries, one employee seems responsible and some of the money could be recoverable. £2.2m one off charge was deducted from accounts in March and they say they have tightened up procedures since. So I am not too concerned by this issue which is historic.

They have a pension deficit of £20.6m which increased this year due to lower returns from bonds, they say they are addressing this issue and I do take comfort of their strong net cash position of £9.3m (£6.7m)and as pointed out the nature of bond investing does fluctuate both ways.

The thing in todays AGM statement that made me sit up and take notice was the order book at £402m now, that is a 22% increase in 4 months from year end figure of £330m, the year before the order book stood at £300m. So the increase is rather impressive, and this is while they are focussing on winning higher margin business.

The reason I doubled my investment was after I tried working out likely earning for current year, not easy to know what revenue figure to use as a starting point, because of the large increase in the order book, but even by using a conservative approach I was surprised by the potential to beat estimates this year.

Net margins are low but improving and are a focus for the company, last year they increased to 1.75% from 1.40%, so I could see net margins perhaps at 2%. Increasing revenue and margins is strong combination imo.

[onjohn] 05/5/2017 14:10

China tells people to get out of North Korea

[effortless cool] 05/5/2017 13:49

CC2014,
Thanks for that. All sounds good.

[cc2014] 05/5/2017 13:45

Not much I want to say EC other than everything that I heard persuades me the future looks good. I'm interested in margin growth and order book improvement and I see no reason to suggest that there won't be a great future for this company.

With regard to the £2.9m fraud a statement was made that the directors are optimistic that a reasonable proportion of the losses may be recovered.

[effortless cool] 05/5/2017 13:16

Confirmed: ONJohn = idiot

ONJohn
5 May '17 - 13:13 - 1909 of 1909 0 0 (Filtered)

[rivaldo] 05/5/2017 13:16

Cheers CC2014, looking forward to further details :o))

This is normally a pretty illiquid and volatile stock. There's obviously a seller out there. Once he's cleared (which shouldn't be long as he's been around a while imo) then there could be a very quick re-rating.

[effortless cool] 05/5/2017 12:41

Do tell ....

[cc2014] 05/5/2017 12:34

Just returned from the AGM. I am very pleased with what I heard

[jaf111] 05/5/2017 12:23

Really struggling to understand why this hasn't moved a lot higher....the 10% rise on the back of the TU is pretty miserable response IMO....

[mcfly79] 05/5/2017 11:57

Very good update this morning. Rare to have an ahead of market expectations statement only 4 months into the year.

It's been on my watchlist for some time and I bought in this morning.

[effortless cool] 05/5/2017 11:40

ONJohn,

Brexit is two years away. I think it is very unlikely that bond yields will be lower in two years time.

Therefore, I think that you are wrong.

[onjohn] 05/5/2017 11:24

pension deficit will be bigger post Brexit

[rivaldo] 05/5/2017 11:21

Thx EC. I don't place so much weight on the pension deficit as it will fluctuate heavily over time, but I understand those who do. I also look slightly further ahead to next year's 12.4p EPS forecast given the secure and fast-improving order book.

N+1 Singer project £310m turnover this year, so not too different from your projection and probably pretty conservative.

[effortless cool] 05/5/2017 10:43

rivaldo,

I base my valuations off earnings 6-18 months from the last published, i.e. 2017 H2 and 2018 H1 for CTO. After normalising for tax and finance income these give me a base target valuation of 133.9p.

I then adjust up or down for cash excesses or deficiencies. This is based off historical drawdowns from the cash flow statement. It is the nature of CTO's business that it needs a large cash buffer and, even with a projected £14.0m in the bank at the end of 2018 H1, I still consider this a small deficiency. This deficiency is increased by the projected pension deficit but reduced by crystallisation of the tax asset and cash from exercise of in the money options. I then adjust up for pipeline dividends in the period from now until my valuation date (2018 H1).

The end result is my valuation of 108.7p.

Do you have the revenue projections from n+1 singer?

[ivancampo] 05/5/2017 10:27

This is happening - at last! £1 today