Thomson Intermedia Share Discussion Threads

[wjccghcc] 18/4/2007 20:19

Nope, they pay interest and tax on Billetts. Forecast EPS is 6.8p so PE of 17 for 15 months.

[nfs] 18/4/2007 18:26

if ebit is to be 3.3mln wouldn't that give approx 11.5 p for eps(albeit 15 months) thus PE is now about 10?
Or put another way EBIT 3.3M and no tax(losses still) then mkt cap of 35m is again about 10

[green sand] 21/3/2007 15:12

Looks as though a couple of institutions have taken the opportunity to load up with a few. 2nd Interims due in Apl?

Edit: make that three, I wonder if we will get know where they got them from?

[green sand] 09/3/2007 12:37

It would be nice to think that it is the only reason why:-)

[jeff c] 09/3/2007 11:44

After the January profits warning there was much criticism that THN hadn't broken out the predictable revenues from the unpredictable revenues. Now we have a new Finance Director.

Any connection, I wonder?

[ben gunn] 01/2/2007 14:41

GS
I agree that events may be over blown here and opportunities result.
BUT does it not imply that the market generally is more risk averse going forward than we would like with our "adventurous " portfolios?

[pugugly] 28/1/2007 15:49

JeffC. Your forward price of say £4. at a realistic p/e of say 16 would imply normalised eps of 25p which is way way byond any broker estimate around. I still expect a further price fall on normal pricing crieria but THN may not be a normal stock - however WPP tend to drive very hard bargins and I wonder how much MS has srewed them down on price or retroactive discounts which no one seems to have considered.

[jeff c] 28/1/2007 13:49

This is all a bit of a blow! But I'm not selling – and will add to my holding once the price has stabilised. Once you've sold THN, it can be very difficult picking a re-entry price. Its a very difficult share to trade, due to the way the MMs manipulate the price on very little volume.

Personally, I think a lot of short term volatility is just noise created by things such as "profit warnings". I can't help feeling a lot of its done deliberately ... to shake out one phase of investors ... to make way for the next phase.

I see THN going a very similar way to WNN, which was wacked very severely last June - on a "profit warning". Now 6 months on – WNN is looking like it'll make a full recovery.

Looking at the 3 year chart for THN; technically 150p should be a strong support level. (But its difficult to use a chart based on such light volume.)

In a year or so (or maybe a lot sooner) when the MMs have sneaked the THN shareprice upto around the 400p level, people will be saying, why-oh-why did I sell at 150p!

[wjccghcc] 27/1/2007 11:27

I think the market has punished them so severely because they were considered a bit of a golden boy stock and given a high rating. They should have previosly broken out the stable/predictable revenue stream from the unpredictable development revenues so the market could accord a different valuation to both. Then the warning wouldn't have been so unexpected.

Personally, I don't think this is the start of a series of profit warnings purely because the recurring revenues are predictable, growing well, and they have a high renewal rate and the WPP contract makes them a must-have information supplier for the whole of the sector. However I suspect it will take quite a while for them to regain market confidence.

[diogenesj] 27/1/2007 09:58

Can't answer that, jadetici. But experience suggests that once over-optimistic promises begin to be exposed for what they were, the first profit warning is often only the start. Apologies if that sounds gloomy. I've now sold out, and the price drop suggests a lot of others have done the same.

[jadeticl] 27/1/2007 09:37

I was stunned by the events of this week! Not just the fall in share price (though that was staggering), but in trying to understand why it was so severe. I re-read the previous announcement of results for the half year to end July 2006, which were issued 18th Ocy 2006. These were very upbeat. Everything was fine and the outlook was excellent. Not a cloud in the sky. So what has changed? There is no statement in the recent (January) announcement that anything else has changed, other than that Development Revenues are "unpredictable". They assert that there is "a significant pipeline of Development Projects, and that "the Group expects to close a high proportion of these during the current calendar year". If that actually occurs are we then back to where we were a week ago, and everything is fine? Or is there something else that I am missing? Can any-one out there explain whether this company has lost its way in the last 6 months, or whether it is simply that Development revenue, which was £2.2M for 12 months to Jan 2006, will be £1.5M lower for this 15 month period to April 2007? Help, please.

[kirkthrust] 26/1/2007 19:09

you can bet datamonitor's bankers will be number crunching their proformas this weekend..ovum deal now digested, continued rating expansion since then at DTM.....250 take-out?

[pugugly] 26/1/2007 09:25

Forward p/e for 07 based on normalised estimates as per Bridgewell I still make 30.38 at current £1.58 to buy - Still not seen an 08 estimate.
Anyone check my figures?

[ok,yah] 26/1/2007 08:51

Still on a hefty p/e ratio for a company that has just disappointed - i'm expecting further falls

[wjccghcc] 25/1/2007 20:11

Not really. They've deducted a chunk for share compensation and interest but they should be in a net cash position by the year-end if you exclude the loan notes. On the positive side, it means the tax losses will last longer.

It would be more interesting to see the forecast for the following year.

[pugugly] 25/1/2007 19:17

From IC this evening:- Even worse than our calculations - Though no data on the adjustments made by bridgewell: ". Brokers Bridgewell Securities forecast adjusted pre-tax profits of £2.5m and adjusted EPS of 6.5p for the 15-month 2007 financial year."

Plus account should be taken of the hefty loan note due re billetts.

"Thomson Intermedia is pleased to announce that billetts achieved the maximum
earn out for its results for the year ended 30 April 2006. As a result, on 8
August, the Group issued loan notes to the value of #3.7m, net of shareholder
bonuses paid, with a maturity date of April 2008."

[wjccghcc] 25/1/2007 16:33

That directors sale was 18 months ago Pug. Also, the lack of dividend is more because of the expansion opportunities, particularly in the US. They are after all, still a young company.

Personally I would assign a PE of 20-25 to the recurring revenue business (cf Datamonitor) where profits have grown 96% on an organic basis in the last 12 months and a PE of 5-7 to the volatile adhoc projects. That gives a fair value of about 170p on a historic basis. For the year beginning April, if growth continues at the current rate, then they'll look pretty good value.

They are after all unique in the UK market and with WPP coming on board, will become must-have data for any serious player in the industry.

[pugugly] 25/1/2007 16:16

WJ & GS. Was the directors sales re Billetts that had caught my eye. Cash requriement was directors' persoanl requirments or a sensible need to diversify their assets. Agreed they still look OK but (imo) forward p/e and valuation at still too high for a media services company especially one where there is currently no dividend support and growth has slowed substantially. I would suggest that a provisional forward p/e of 14 max would be more appropriate - but the market will probably prove me wrong. No real volume hwever unless there are some very large delayed sales inthe pipeline. The recent T trade at 192 looks like a worked sale rather than a buy as marked.

[green sand] 25/1/2007 15:39

As one who as also increased my holding today I understand what Pug is saying. It may well be later in the year before the benefits of the new deals start to appear on the salient radar screens.

The trades today are interesting and illustrate and possibly explain why the market gets annoyed with surprises. During the early day buys outstreached sells. The stock the mms would be carrying would not be on the books at these levels so they are going out at a loss. Any sizable sells do not appear to be welcome and are being taken below bid, either in an attempt to balance or is there a large sell to come through? All good interesting stuff and likely to be way off the mark, but none of it so far taints my long term view of THN.

good luck

GS

[pugugly] 25/1/2007 14:25

having had a quick look as a result of the fall I have a horrible idea that it may be justified as the figures projected by WJCCGHCC - 25 Jan'07 - 08:35 - 284 of 291 suggest that predicted growth rate has slowed very substantially.

Bridgewell were forecastign £4.92M for 07 - WJ now (by calc from Bridgewell) £3.32M - for 08 Bridgewell £6.14 WJ PBT to £4.5mm AND no dividend. Add back in Director sales to "improve liquidity" usually means "we need some cash or think price is too high" The market does not like surprises.

[wjccghcc] 25/1/2007 12:46

Agreed GS. The share price is now back to Jun 05 levels whereas the company has built a considerably stronger global niche for itself. I think it's a combination of several events - the delayed timing on various one-off projects, Germany switching from a license fee to a profit share basis just as it's breaking even, the move to an April year-end, the lull before the WPP partnership kicks in and the starting to pay tax which has really confused everything. I suspect the company/broker will be a bit more conservative in their forecasts going forward which is good thing IMHO.

[green sand] 25/1/2007 11:35

Having read the TS many times my reaction to this morning's move has amazed me. I never thought that the day would ever dawn that I would react calmly to a 30% reduction in the share price of one of my holdings. As far as I am concerned it is an opportunistic over reaction. The basis of my investment in THN has not changed, in fact the ongoing revenue growth is better than I expected. I have always seen THN as longterm so in for another 1.5k at 185p and back to yawning.

"Over the longer term, the analyst remains enamoured of the group's products,
strategic positioning and growth opportunity."


Good luck

GS

[wjccghcc] 25/1/2007 11:09

Yup ben, he bought 17500 shares at 250p.

My main criticism is that management should have split out the reporting into the two revenue streams - recurring/consultancy and the one-off development projects at the time of the interims. Then the market would be less surprised and the reaction less severe.

The daft thing is the one-off development projects will increasingly become less significant for profitability going foward as the recurring revenue growth continues. I also think the fall in development revenue been exaggerated by the move from retrospective vouching to current online vouching and the ending of the license fee from Germany whose contribution in 2007 will be based on profitability going forward (and they're only just reaching breakeven).

The underlying business is growing fine but ss GS says, I think this is a rude awakening for management as well in how they communicate with the City.