Tp Share Discussion Threads

[arf dysg] 18/9/2017 16:03

It looks as if the first IC recommendation hit the streets on the first of June. The share price is now back down to the pre-recommendation level, or maybe an eighth of a penny higher.

This second recommendation by IC isn't having the same effect on the share price, I wonder why?

[bullster] 18/9/2017 11:03

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Are we seeing strength on the back of the Investors Chronicle article, who knows.



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[fillipe] 15/9/2017 15:49

Today's paper copy of the IC has a good article on TPG, culminating with a BUY recommendation, which I've just now done.

f

[pavey ark] 14/9/2017 08:29

From IC
"The markdown that followed the release of these figures seemed a bit harsh given the transformation under way, but is probably explicable in terms of the historic trading performance of the group’s previous cash-consuming incarnation as Corac. TP is evolving into a very different beast. We reiterate our buy advice. Buy."

This is at the end of a reasonable, short analysis of the results.
Nothing that is not obvious from the results but still good to see in print.

Edit: it seems the £300k admin charge was due to integration cost from the recent acquisitions.
The house broker is predicting a further £200k to be spent in H2.
This expenditure is not only to integrate the recent purchases but to make additional purchases easier to bolt on.
The cost of the recent purchases seemed low and the company is saying that they are performing well so it's just a pitty that the £300k couldn't come from capital expenditure but I suppose it all comes to the same thing in the end.

[pavey ark] 13/9/2017 19:20

The trouble with valuing the company at this point is the disproportionate amount of cash which certainly distorts things.
As I have a 50% compound target for share price growth from my mid 2015/16 average of 3.6p , starting from Jan 2016 I was going along nicely 3.6p,5.4p and 8.1p for this year end.
Without the distraction of the fund raising we would have EBITDA of £2.75m ( average of brokers estimates) X 10 + cash of £7m divided by 420m shares and hey presto 8.2p

The large cash pile could improve things considerable especially when you see the the February acquisitions are expected to pay back costs in only four years.
The management obviously believe they have significant advantages when negotiating with small private companies that now find themselves struggling with the new MoD way of doing things and have said that they can pick up these companies for 4 to 6 times earnings.

If we leave the current cash pile in place, bring in the new share and use my valuation (above) for TPG the target share price drops to 7.3p for the year end which is more or less where we are but if the management can acquire companies on something like 5 times earnings then the share price moves to c.11p and that is without the existing businesses improving next year.

Some may point out that I'm valuing TPG at 10 times EBITDA but expecting to buy companies for half that figure but that is why management wanted to raise the cash in the first place.
As TPG moves to being a tier 2 defence contractor this multiple become even more appropriate.

When anyone tries to put a share price value on TPG they simply cannot ignore the Maritime unit or lump it in with the rest of the business as the value of this unit alone is edging towards £45m or 6p a share !!!

Cash adds 3.7p per share.

After this there is still the services unit that has moved into profit and the engineering unit with a £10m turnover and heading in the right direction.

[cerrito] 13/9/2017 14:51

Just had a look at the figures. Share price about right and do not see myself buying or selling.
Two reasons for the adjusted EBITDA fall in H117 from H216: the increase in admin costs and the reduction of the gross margin from the historically very high 33.9% in H2 16 to a more historically normal 27% in H1 17.

[pavey ark] 12/9/2017 17:24

Little bit of hard info now.
Managed to get a look at the Cenkos (house broker) update ,out this afternoon.

As we know the four units have been rearranged ( again ! )into engineering and services.
The interesting thing is that Cenkos are saying that services will be in profit for H2.
This unit contains the dreaded compressor business and the MS unit so the profit from the MS unit is greater than the now reduced losses from the compressor unit.
The Engineering unit is the Maritime unit and what the rest of us would call the traditional Engineering unit.
With the Maritime unit making money hand over fist it only remains for the revamped engineering unit to turn the corner and EBITDA of the company is lifted very significantly.

[pavey ark] 12/9/2017 16:22

Well I did get out to the garden and three hours without rain!!
Back in to have a little laugh.

Both analysts covering this company had been guided to £7m cash at the year end so add in cash raised recently and we get £28m.
On today's share price the market is valuing THE ENTIRE COMPANY at £20m.

For your £20m you get a world leading Maritime unit that could generate £5m EBITDA on its own or you could just take the year end EBITDA of close to £3m and wait for the other units to chip in.

As far as the other units are concerned MS is predicted to be highly profitable ( as I type ?) , the D&T losses are way,way down and Engineering is certainly a work in progress.

£20m!!! .....good old AIM,

These are the sort of things I was saying when the share price was half of what it is today.....you can take a horse to water...and all that.

[bullster] 12/9/2017 10:21

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Investors sat on the fence working out was it good or bad.

Traders sell on news, creating a negative mindset to waverers who then sell , share price goes down.

Then it's back in lower, for the early buybacks.
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[richie32] 12/9/2017 10:18

Interim report looks solid to me.

Rushed acquisitions can end in tears so I am not fussed if they take their time.

[tiltonboy] 12/9/2017 10:08

It just needs a little patience, let the story build. I would have hoped that the first acquisition was a little closer, but I'm pleased that they are not going gung-ho trying to do multiple deals at once.

I think the price will hang around here for the majority of the final quarter, and while I agree with PA price targets, they are probably six months further out than expected.

[kilgallp] 12/9/2017 09:59

Got that wrong!

[kilgallp] 12/9/2017 09:59

Added to my holding yesterday, expecting a price rise following the Interims.....

[pavey ark] 12/9/2017 09:48

At my place in the Lakes waiting for the garden to dry a bit (the high fells are sodden and not on) so will bore you all a little more.

Just to show that this management looks like getting things right again:

"On 6 February 2017, the Group through its parent company TP Group plc, acquired 100% of the issued share capital of ALS Technologies Limited ("ALS") and Flexible Solutions Software Limited ("FSS") on a normalised working capital and cash free/debt free basis, for a combined initial consideration of GBP1.25 million and a maximum further discounted deferred consideration of GBP1.8 million based on the combined performance of both businesses. The acquisition costs have been paid in cash from the Group's existing cash resources. ALS and FSS specialise in providing consulting services to both the public and private sectors. Payback of the investment is expected within four years.

The principal reason for this acquisition is to support the Group's evolution as a diversified engineering group providing not only design and manufacture of bespoke engineering solutions but also technical support and management to both the public and private sectors. Both FSS and ALS now form part of the Services business segment."

The revenue in MS will be almost entirely from the new contracts and the acquisitions as the revenue in 2016 was from the old MoD contract and this had dropped to almost nothing in H2 2016.

This unit now has Revenue of £2.7m in H1 and the company are saying that the £3m acquisition costs should be paid back in four years.
So after bedding in and seven months of operation management are predicting £750k profit a year.

Now if they can replicate that a few times !!!

[kiwihope] 12/9/2017 09:25

Results are OK. The main business is doing well. I'm in no rush to hear about acquisitions - we don't want money to burn a hole in management's pockets.

I figure the drop today is due to headline figures. The results show a company around break-even with a market cap of £50M, that's pretty steep. OK there is lots of cash on the balance sheet but I bet not many investors bother to work out enterprise P/E.

I've noticed recently that if companies disappoint in any way their price gets hammered. Maybe this is further evidence we are at the top of the current cycle. Valuations in some companies are really stretched (I mean is RSW really worth £3.6B!!! An excellent company but really...).

I bought my full quota in the fundraising plus a few more. Even with that I have still effectively top-sliced into the rise this year. Time to sit tight and see what happens over the next couple of years.

[pavey ark] 12/9/2017 09:12

I would agree that there is no immediate catalyst for a share price rise but when you look at what has been achieved in H1 then look at the share price movement during this period I doubt if there would have been any reaction anyway.
The sad fact is that the biggest jump in the share price was after the IC tip.
Private investors do a fair bit of mumping and moaning but are seemingly unwilling to sit down and go over ALL the info available to them and then make a judgement.
For well over a year this company had a market cap of c £15m(3.6p average) over £7m cash and a maritime unit that was worth £30m but even though this was pointed out most still didn't buy.
When IC simply stated the obvious this somehow made things OK.
The cash, order book,client list etc make this company almost bullet proof.
TPG has a material advantage over its peers and is looking to exploit this advantage.
The existing business looks very capable of an EBITDA of £3m this year and £4m next and with £7m cash this would justify 8/9p this year and 11/12p next.
(These figures exclude fund raising and new shares.)
The above was my model, with selective acquisitions along the way.
The management obviously feel that they can do better than this and have raised £21m to go after profitable private companies that find themselves at a disadvantage due to their size and the new MoD way of doing things.
Time will tell but Cartmell and his team don't overpay and have got all their acquisitions spot on up until now.

[napoleon 14th] 12/9/2017 09:06

Traders/punters disappointed first thing.........

Given back yesterday's rise!

[napoleon 14th] 12/9/2017 09:03

The figures are fine - growth is not only by acquisition & they have brought the business under control to the point of putting a stop to the expensive past...

I agree with PA; I'm glad we're not having a mad spending binge, & if deals are given time perhaps we'll pick up 4 companies instead of 3 just by not overpaying if you see what I mean.

I always saw this as a LTBH, but hope/think 2018 will see it really come together.
So far, so good.

GLA.

[trentendboy] 12/9/2017 08:50

Decent results and a good outlook (excellent orders)

Happy to keep holding here and may even look to snaffle a few more on any pull back

[pavey ark] 12/9/2017 08:09

Although I expect most were looking for acquisition info these results are about H1 and there are lots of positives with a few niggles.
The thing that jumps out at me is the £305k restructuring cost at D&T.
The old compressor business has its last bite but EBITDA loss is way down so surely this is the end of the drain on the rest of the company.
MS looks good but difficult to get a true picture as the new companies were acquired in February and the old,10 year, MoD contract came to an end part way through.
Looks like a very sound buy and profits should rise in H2.
Maritime just ploughs on and looks like it could have an EBITDA of close to £5m for the year ( with contracts in the bag and prospects of many more,the value as a stand alone unit continues to rise to close to £50m).
The engineering unit continues to make a loss and that was disappointing but the order book is rising rapidly and the new precision manufacturing unit is just coming on stream so I expect this to improve.

Maritime going from strength to strength.
MS should make a real contribution in H2

Old compressor business no longer draining off vast sums.
Engineering looks very likely to improve significantly.

The two brokers covering give an EBITDA for the year of c.£2.7m but I suspect it could be a bit higher.

I think the company gave the wrong impression in earlier announcements regarding the time scale of the acquisitions.
As I said before, August is the holiday month and negotiations and due diligence take time.
I for one was uncomfortable with the prospect of three or so acquisitions in rapid succession coupled with the recent large MoD contracts,the MS acquisition in February and the work going into building the engineering unit.
I think this management team it pretty good but there has to be a limit to what can be taken on.

[tiltonboy] 12/9/2017 07:46

Outlook good, but no immediate catalyst for the share price.

[timojelly] 12/9/2017 07:34

Excellent growth story just need more recognition.

[timojelly] 12/9/2017 07:19

On track then... Hopefully a slow tick up in the share price from here on.

[timojelly] 11/9/2017 09:21

I see a few diving in before tomorrow