Tp Share Discussion Threads

[pavey ark] 01/6/2017 16:18

Don't usually like to comment on day to day price movement (and still don't) but it looks like the mms have walked the price down to where they can get some action.

[pavey ark] 31/5/2017 11:53

CCNP, I agree with you up to a point and my long term analysis is certainly looking good.
I predicted a 50% year on year increase in the share price based on a very full average of the share price (3.6p) from mid 2015 to mid 2016 (when I was telling everyone on here that the company was massively under valued BASED ON CAREFUL ANALYSIS !!)
So starting with this average and taking it from Jan 2016 I predicted a 50% gain year on year.
I now have to up my prediction slightly from 8.1p to 8.5p by the year and I consider the company to be even more undervalued than before.
From the house broker Cenkos 4th April Share price 8.37p

Stockpriceup.Thestock;maybeᙦ7;up28%Ƚ47;YTDbut7347;there‐ratinghasleftᙦ7;thestockonanundemanding7347;rating(2017EEV/sales0.9x;andEV/EBITDA10x).ᙦ7;Theoperationalleverage will mean the earnings multiple will rapidly decline from this point. Thecompany is well positioned to establish itself as a meaningful defence contractorand weare;Buyersof7347;the71%compoundȽ47;EBITDAgrowthoverȽ47;thenexttwoyears.


(Sorry about the words running together but cut/paste from a PDF)

"Valuations are based on ratios and analysis of accounts."

As I said , I agree up to a point, it is not working here but it will eventually.

Just a point about the broker's forecasts (Cenkos and Panmure Gordon)I consider them to be rather conservative and fully expect the £2.5m/£2.6m EBITDA forecast to be increased to at least £3m this year which certainly gives a valuation (and ratios) that support my 8.5p year end price.( 10x EBITDA + Cash (£6m)= 8.5p/share).

One could certainly make the case that this valuation is OK for a rather staid, steady as you go sort of company but it must be remembered that I for one expect the EBITDA to rise to £4.5m next year supporting a 12p share price.

Almost no matter how one values this company the current share price does not reflect its current worth never mind its potential.

[tday] 31/5/2017 09:17

Just sit on your hands, relax and be patient. All will come right eventually.

[ccnp] 30/5/2017 20:59

Or ramping

[ccnp] 30/5/2017 20:59

No. Valuations are based on ratios and analysis of accounts.

[timojelly] 30/5/2017 19:15

Yet we still sit at this massively undervalued price.... Getting irritating, would a move onto the main market correct this?

[septblues] 30/5/2017 12:11

Thank you for the excellent posts

[qackers] 29/5/2017 21:56

Nice find Cerrito

"Our goal is to create a strong tier 2 engineering and services provider
delivering sustainable profit and cash flows from annual revenues of
c. £100m"

[cerrito] 29/5/2017 20:43

Look at middle of page 6 of the AR

[pavey ark] 29/5/2017 19:13

Thanks qackers,

If they repeated it at the AGM they must be serious about it.
I doubt if someone like Simon Kings would get it wrong or get ahead of himself.

It does seem a tall order but they must have a plan.

[qackers] 29/5/2017 18:19

Re "having annual revenue of £100m by 2020". This was mentioned at the presentation given by Simon Kings during the Growth and Innovation Forum organised by Shares Magazine and Cenkos at the Business Design Centre in London Feb 2017.

I cannot see it on the slides but was part of the commentary he gave to the slides.

[trentendboy] 29/5/2017 11:01

Excellent posts, thanks.They do not scream out buy buy buy but show the ambition and potential.Tempted to pick up a few more.I like the defensive nature of the business combined with some outside chance of big gainsDefensive in every sense

[pavey ark] 29/5/2017 09:34

Cerrito, thanks for that, very informative and helpful.

I've just returned from a three day golf trip with twenty other guys and I'm rather fragile this morning but although I can remember the £100m t/o being mentioned here in the past I can't find it in the report,so some help would be appreciated.

The move to 50/50 engineering/services gives an indication as to where the management see this growth coming from.

At present the ratio is 90/10 but this isn't quite straightforward.

The recent broker's report said that design and technology would be rolled into Managed Solutions and I suspect the recent service contract for the navy would also be included but then again this will involve spare parts/replacements so is this set against the engineering unit ?

The Maritime unit is worth £40m and continues to to shine.
Trident, the Australian submarine build order to a long standing customer of TPG, the advances in fuel cell technology, the Mod supply contract.

The Engineering unit has moved to higher margin ,more specialised work and has certainly turned the corner.

The Managed Solutions unit is where they appear to be focusing now.(D&T unit to be added to MS)
I remember Simon Kings waxing lyrical about thin prime contracting (Feb 2016) and their close relationships with major defence contractors and the MoD so they may be looking to expand there.

I like the idea that any risk now looks like being spread across these three units and the cash they have should enable them to buy and enhance the purchase by integrating it into their existing setup.

If they are now openly talking about £20m unrelieved tax losses then I assume they have got some sort of HMRC decision/ ruling on the matter.
Almost all of these losses are down to Corac compressor days and although I hoped this figure would be higher (the losses certainly were) I suspect that the business is now so different that HMRC did not allow full carry against the business as it is now.
This is still a very handy sum and should always be taken into account when valuing the company.

All in all I consider this to be very positive and where I agree that £100m t/o (confirmation required)does seem rather high we should remember that they expect a 40% increase in t/o this year so we have organic growth and acquisitions.

Even if a lump of the current £6m cash pile was used in an acquisition further acquisitions could be funded from profits in subsequent years.

Whatever some posters say about this management I doubt if anyone could say they were stupid.
On a personal level I would like to see a small additional £2m purchase, bed in , then another and so on but I don't have the facts and a big deal may present itself.
It has been their style to go for small additions.

[chorister] 28/5/2017 23:07

Cerrito - thank you for the summary. I could not make it so am very grateful to you.

[cerrito] 28/5/2017 22:17

I made it to the AGM on Thursday; the big picture is that it was a very positive experience-unlike the rather flat one in 2015 the only other AGM I have made it to since I became a shareholder in early 2013. The Chairman and directors went out of their way to be friendly and too bad that there were only two other private shareholders there.
All the voting resolutions passed with 99%+ in favour except the allotting shares and buy back ones with 94%+. There was no resolution on remuneration-perhaps AIM listed companies do not need them. I was focusing on that to see what the level of opposition was and am not too agitated on the options granting and agree with the Chairman that they need to be able to tie management in.
184m of the 442m shares were voted .I am interested with AIM companies to track voter turn out as it shows how closely shareholders are tracking the company. Given the shareholder composition I was expecting a slightly higher turn out. Incidentally for me it is a plus the fact that there has been so little change in their shareholder structure in the last three years
We were told the market expectations they referred to in the RNS were
Revenue £28.9m-ie a very useful increase over the £21.2m of 2016 even allowing for the Wincanton acquisitions. Incidentally did not find out if these acquisitions had closed so were now on the books of TPG.
Ebitda of £2.5m compared to the £1.1m adjusted ebitda profit in 2016. I normally regard ebitda as pretty mickey mouse but it is different here; they are paying no interest, they have £20m of unrelieved tax losses so will not be paying tax any time soon; and they are not all that fixed asset heavy and d and a plus impairments were just over £1m last year.
Cash of £5.9m ie down from £9.2m at 12.16 Page 22 of the AR discusses how the 12.16 figures were flattered by the good cash collection of some high figure receivables just before year end and discusses capex and human resource investment in 2017(there was no discussion of this at the AGM). This cash forecast apparently anticipates that earnouts of the Wincanton acquisitions will be paid in 2017.

Other points
Interested in how Kings answered quite a few questions and gave the impression to me of being COO.
Asked about role of O&G; Cartmell confirmed that he was steering the company away from that area which as far as I understood accounted for 25% of Engineering Division Sales. I note that their O&G sales are in the downstream sector.
They referenced in the AR that the business model of the Engineering was fixed price project based but they did not flag this up in the Risks and Uncertainty Section. They all seemed relaxed on this; Kings said that for their MOD work they go on a fixed margin basis. The MOD has recently reduced the fixed margin on the bigger orders(and 2 of TPG’s deals fell into this category)but both were struck before the new lower margin came into effect.
Flagged up the ambition of having 50/50 split between engineering and services by 2020.
Cartmell made a comment that one of the things they had been focusing on in the last years under the radar was exiting from loss making legacy contracts in such a way as to avoid legal action.
A question asked of implications for them of hard Brexit. They were relaxed and indeed saw it as somewhat of a positive. The only trading arrangement they have with the EU is with the submarines.
I am pleased that once again the discount rate they have used in Goodwill valuation is a very conservative 12%.
Inevitably things I wished I had bought up.
The most important and unfortunate was that I had missed the mention in the AR of the goal of having annual revenue of £100m by 2020. This was bought up in the meeting and I did not question it. My mind boggles and one has to ask oneself if they have the management infrastructure to handle this-let alone the financial structure and to me is so ambitious that it turns me off buying more shares-even at this reduced price.
This explains the references in the AR about refreshing the board and it had not been clear to me what was wrong with the old that the new has corrected. I see that both NED’s are from a finance background and I would have thought it good to have a NED with industrial experience. Cartmell did make a comment on many companies finding it difficult going which would present them M&A opportunities.
More important no real discussion as to what needs to happen for them to make serious money.

PS Interesting that there were no mug shots of Directors/Management. I personally like to see passport sized photos of Directors but alarm bells ring when we are given even ¼ page pictures of the CEO.

[david77] 25/5/2017 17:36

Elderly investors may be sticking to AIM shares for the inheritance tax benefits. I am nearly 78 and had open heart surgery a year ago. I feel ok, but aware that I could drop dead at any time :-(

[timojelly] 25/5/2017 09:50

Lord knows why we are still milling around at this price. Does anyone have any thoughts about why TPG is still trading on AIM and not the full market? I would of thought that the increased regulations and costs are more than offset by increased recognition and respectability of our dynamic young company. In the eyes of the market, funds etc....

[pavey ark] 25/5/2017 08:07

Cenkos and Panmure Gordon both have very positive outlooks and warn that their estimates (EBITDA C. £2.5m ) " has a risk to the upside"

On a personal basis, as a serious and ACTUAL investor here , I expect an EBITDA of at least £3m and this statement makes me suspect that even this could be low.
Management said at the analysts' meeting that they expected the engineering unit to produce a profit (from a £1m loss) but one broker still penciled in a small loss and the other break even.

Reading this statement suggests to me that the engineering unit is doing well.

Both broker reports were after the results in April and before the second MoD long term order and the subsequent order of £9.8m starting immediately.

It looks like everything is slotting into place and further, careful, earnings enhancing acquisitions are on the cards.

[septblues] 25/5/2017 07:23

Broker 2017 forecasts took EPS down from 28p to 19p over the last month but still remains a strong buy.

AGM statement says better than expected.

Wonder who is right.

[chickenrun1] 23/5/2017 20:28

TPG will catch you out when they bounce A.D.

[tday] 23/5/2017 16:02

Just bought another 100k

[arf dysg] 23/5/2017 12:27

No, just chilled.

[arf dysg] 22/5/2017 16:37

Oh dear, oh dear, oh dear. It's going down.

Oh, dead.


Did I say "dead" instead of "dear" ??? Good luck, amigos.