Thinksmart Share Discussion Threads

[bwm2] 20/10/2020 07:27

New high set of Asd 105.8

[bwm2] 20/10/2020 07:11

Carosa
Thanks. Had a lie in this morning so great to read this
I would add that we should hope that it runs its course.
Apt closed at 102 Asd up 5%. On 15th Oct , Bell Porter raised their tgt to Asd 121 on the back of the US rollout expectations

[carcosa] 20/10/2020 05:39

AfterPay Share price currently up ~6% at time of writing as a result of this:



Which basically says that they are now in the online banking business now that they have a ‘collaboration agreement’ with Westpac Banking Corporation, under which Afterpay said it would soon be able to offer savings accounts and cash flow management tools to its 3.3 million strong Australian user-base.

This, following on from the recent finalisation of AUSTRAC external audit which essentially gave them the stamp of approval in complying with anti-money laundering and Counter-Terrorism Financing explains why the share price has increased significantly over recent days. Now at A$103.

kadvfn1: I think ST just made a small oversight wrt cash payment.

FarnesBarnes: The valuation ST uses is the same as the company calculates, comprising a discount of 20% for the lack of marketability of Clearpay as a privately owned company. Reducing the discount to 10% would increase the fair value by ~£7m. The argument for reducing that 20% discount centres on the mix of revenue and users. Experience shows that as time progresses users increase their sale value as they become more comfortable using the service. Last reported UK market represented 5.4% of underlying sales but 10% of active customers for Afterpay. As the relationship between maturity of customer base and underlying sales changes the discount should tend to unwind. As the Group has limited control over the setting of the price that it will receive for the transfer of the ESOP shares to the Clearpay employees, the Group has further discounted the valuation by 35% Bottom line is that TSL share price is dictated by Afterpay share price, which is very rich price at the moment, but the discounts currently applied to the TSL valuation of their shareholding in Clearpay provide a large element of comfort. However it is not until 2023 will we all know what the actual price will be. Given the fact that AfterPay can buy out the holding for chump change and the fact that the longer they wait the more it is going to cost them, assuming ClearPay continues to deliver the high growth rates, then there will be compelling logic for Afterpay to buy out ThinkSmart’s 10% equity stake far earlier than August 2023.

[farnesbarnes] 19/10/2020 17:11

Does the 94p include the 20% liquidity discount? If so, would the APT buyout include this?

[kadvfn1] 19/10/2020 16:25

Carcosa did you see ST is saying payout gonna be 3.3p cash dividend? Does that track with rns that TSL release?

[carcosa] 19/10/2020 15:02

I would like to believe that today's share price response is largely the result of ST saying an Early buyout is increasingly likely. He had mentioned this before in prior articles in passing, but on this occasion gave quite a lengthy description as to why.

[bwm2] 19/10/2020 14:56

Apt closed at 97.5 Aud +0.85%
Still note the 20% liquidity discount applied in the read through valuation
I am looking forward to reading the CEO presentation at the APT AGM on 17th Nov

[sphere25] 19/10/2020 14:42

Got the article now.

Oooh 94p! That's a mighty sparkly number. Follow the sparkly sparkly numbers!

Lovely breakout. Nice to see some more fireworks of late with this one now up 18%, but what is the correct discount to the 94p target?

Almost sounds like the end game is nearing.

[rolo7] 19/10/2020 13:34

OLD article

[1jbrisky] 19/10/2020 13:30

Gotta love ST.
Have been wondering how long TSL & the Afterpay share prices can stay so disconnected. Very useful tick up.

[kadvfn1] 19/10/2020 13:11

ST just tipped with revised target of 94p

[rolo7] 19/10/2020 12:59

tipped by who ic?

[sphere25] 19/10/2020 12:01

Tipped.

Not a subscriber but always obvious with quieter ones like this when you see a stream of buys out of nowhere.

EDIT: Blooming hek, someone just paid 12% through the offer of 49 to buy at 54.96 - change your broker that person :-)

[tomps2] 16/10/2020 10:45

TSL a David Thornton pick in yesterday's piworld interview (was live 1-2pm & video published at 8.30am today, not sure if that had an influence on share price moves). Hear what he had to say at 19m15s:

video:

podcast:

Next week on piworld, Thursday 22.10.20, 1pm, we have a Superstar interview with one of the two most popular interview guests, Andy Brough, Schroders, Head of UK & EU mid and small cap team, & Richard Leonard, from a Family Office. Register here:

[farnesbarnes] 16/10/2020 08:20

Great post from carcosa. In addition, share buy backs are in theory a more tax efficient way of distributing excess cash, although the mechanics are lost on me. It is a lazy way of creating shareholder value, and there is a school of thought that protracted buy backs don't add value.

[bwm2] 16/10/2020 06:30

Apt back on the front foot at 97 AUS$ +2%

[kadvfn1] 15/10/2020 15:04

Thank you for the detailed explanation. Much appreciated

[carcosa] 15/10/2020 14:33

Well today is a good example. At time of writing share price has increased on the day that the share buy back price was announced. So you have 'seen' it's effect already. Come the actual date in November the share price may, or may not, increase by ~2.5p.

A reduction in the share capital does not often result in a direct correlation to the share price, unlike a dividend which is real cash existing the company. i.e. on the ex dividend date the share price decreases by the amount of the dividend.

Share buybacks are generally good for one thing only (and even then, that is debatable) and that is to increase the EPS; which tends to favour share option incentive plans.. which often lead to more shares being issued. I have not looked at the share options TSL has because it is the overall discount to APT share price that is the reason i am invested here.

It is often said that share buy backs are a tool used by management when they have no idea what to do with the cash. i.e. a lack of imagination.

In theory... we 'should' see a substantially greater effect on the share price than simply the value of the reduction in the share capital. Reason being that if you assume the share price is driven by the discount to the APT share price then, for sake of argument, assuming we are at a 100% discount to the intrinsic value the company is buying back double the value of the share buy back for half the cost. So rather than theoretically seeing 2.5p share rise we should see 5.0p increase. But... we won't as the share price rarely reacts to a capital reduction in a logical sense; unlike dividends. It will however, assist long term shareholders over a period of time.

[kadvfn1] 15/10/2020 14:09

carcosa

Please could you explain why we will not "see" the share buyback?

[sphere25] 15/10/2020 13:36

We're shifting folks.

Time to test that high.

Can we smash through?

[carcosa] 15/10/2020 12:00

rolo7

"About 3.5p dividend return?"

No.
It's a about 0.8p dividend and a Capital return of about 2.5p which you will not 'see' except in theory.

Compared to last year's announcement todays's RNS is a bit of a slap in the face IMO

[rolo7] 15/10/2020 11:13

About 3.5p dividend return?