Tribal Share Discussion Threads

[chap1889] 14/1/2005 09:47

Sounds about right, but there's plenty of gearing available.
The earn-outs are typically on a share or loan note/cash alternative - at TRB's option. of course it depends on the acquisitions first hitting their targets and then if the share price is too low TRB could pay out in cash rather than shares.
They won't be doing any more acquisitions for some time now.
The architects you refer to are Nightingales - one of the top performers in the group. Extremely profitable in their own right and give the group a reliable function in the Mercury/NHS type work.
IMHO, DYOR etc etc

[hybrasil] 14/1/2005 09:20

Looks like I was right. 2 sells at the bid price and the price drops 3p. I think you will see the £1 or may be even slightly less.
I have been looking through the old rns on their acquisitions. They bought a firm of architects for 8 times their annual profits ( I accept subject to earn out) but I would have thought that was highly extravagant for a professional practise.

So far as I can work out they have raised from the market approximately £80million
Can any one tell if I am correct on this?

[hybrasil] 14/1/2005 07:44

I have been doing a bit of homework here.
I was initially attracted by the fact that the share price had fallen so far. So has it further to fall.
The group has made somewhere like 40 acquisitions with an awful lot of them under earn out provisions which means more and more shares will be issued radically affecting p/e.
Yes it has eventually signed the nhs 5 year contract but it seems to me that the early years of the contract will actually cost the company money.
So the story in the short term does not look very exciting.
I think now the fair value price is £1.00 (20% below where we are now) and I will buy if it falls to that level. It will then involve a lot of waiting but I think it will be worth it.

[craddo] 11/1/2005 13:15

The stocks roller coaster ride reflects over reactions in the market to news that will not fundamentally effect the core business. The 5 year contract secured, positions TRB in the market with a good lead of revenues, even though TRB will have to perform to earn those. A number of Institutional Investors have secured a reasonable position in the stock. I believe recovery will occur in 2005 probably past the £2 mark.

[chap1889] 11/1/2005 07:54

Many thanks DF. Could be wrong but it looks like the tail (Mercury) wagging the dog to me. Business is good (I hear) across the group as a whole (apparently no more profit warnings expected) so I do expect a rise in share price during 2005 - I am just concerned that it keeps going through so many floors on the way down with no obvious reason for stopping.
Longer term bet for me - still holding.

[ards] 10/1/2005 23:28

Desert fox

You clearly know what you are talking about thanks. Only recently in TRB trying to bottom fish but hit with the classic investors dilemma. should I stop out as my stop has been hit or hold. Chart looks dreadful but also oversold on rsi and also very low vol. I agree that drop an overreaction due to BMI and could be seen as bottom fishing. current p/e of 7 and rolling of 8 not particularly demanding for a company in growth area and paying dividend and with most of next years money in bag. I use sharescope and recently ugraded on consensus from hold to strong hold.

I agree with citywire about accounts difficult to fatham and pressure on margins not good news. Profit warnings also mean that risk premium in price. However on most ratios balance sheet looks good with low debt and good cash flow. there is also a saying that a share who has troubles in one year, as long as business sound, usally perks up next year as management address issues. will sleep on it.

[desert_fox] 10/1/2005 23:16

chap1889,

Couldnt work the link to timesonline.co.uk, so have posted whole article instead.

_______________________________________________________________________________

January 10, 2005

The giant of private care will bid for NHS work
By Nigel Hawkes, Health Editor





BRITAIN'S biggest private medical group has decided to bid for National Health Service patients. BMI Healthcare, which runs 47 private hospitals, hopes to win contracts to run independent-sector treatment centres for the NHS in the next round of bidding, which opens next month.

Ian Smith, chief executive of General Healthcare Group, of which BMI Healthcare is a subsidiary, said: "We'd like to be a very significant player in this market. We're the biggest in the private sector and we want to be a very significant factor in the public sector, too.

"The Government is trying hard to change the NHS. We think it is brave and very well-intentioned, and we are keen to be a core part of it."

Until now BMI Healthcare's involvement with the NHS has been small. As the largest operator of private hospitals, it has profited by the failures of the NHS, particularly the long waiting lists that have driven many patients to the private sector.

The new policy reflects an acknowledgement that the market has changed and the company could have been left behind.

When the first rounds of tendering for independent treatment centres was concluded, none of the established operators in the UK - including Bupa, Nuffield and BMI - won a contract, either because they did not try or because they could not compete at the prices offered by foreign companies.

"They weren't competitive," said Mr Smith, who joined the group in September and took over as chief executive a few weeks ago. "They were still thinking of the old private hospital model. We have to engineer something much more streamlined than that."

Mr Smith plans to split the management of BMI Healthcare, believing that the private hospitals that it already runs need a different style of management to the treatment centres that it hopes to win. He believes that the future for the private hospitals is to raise clinical quality and offer unparalleled excellence of care and service.

For the NHS business, which has to match NHS prices, he promises "a tailored service based on a low-cost operating model that will be run almost entirely separately in terms of sites and facilities, staff and branding".

The independent-sector treatment centres are part of the Government's plans to cut waiting lists for elective operations such as cataract operations and hip and knee replacements. Under patient choice, GPs will be able to refer patients to them rather than to NHS hospitals. The NHS will pay for the operations.

The first phase will see the establishment of 34 such centres, mostly in the South of England. The next phase will involve 250,000 operations, worth perhaps £500 million. Companies that tender successfully for the business will be guaranteed the income over a fixed time period (five years in the first wave) but will have to recruit all their surgeons from abroad.

NHS traditionalists see the establishment of the centres as the effective privatisation of the NHS, and BMI Healthcare's bid to join in will do nothing to ease those fears. From having been hate figures in the early years of the Labour Government after 1997, the private sector is now set to become an intimate partner, owning and running new hospitals built at public expense.

Last week John Reid, the Health Secretary, infuriated many in the NHS by saying that the treatment centres already operating were eight times as efficient as NHS hospitals in dealing with backlogs.

[chap1889] 10/1/2005 22:02

Thanks for the info. I can't find that announcement though - any chance you could post the link pls?
I really don't get the problem here though. If there is more competition for Mercury then that's fine and to be expected, but Mercury has a minimum level of guaranteed work and yet the share price is still significantly lower than before it even won that contract (I think that's the same point as your second).

[desert_fox] 10/1/2005 20:07

The reason for today's fall was the markets reaction to the announcement by BMI hospitals that they will now bid for NHS work in competition with the likes of Mercury. BMI represent the old private sector healthcare providers and decided not to bid for the wave of contracts that Mercury bid for. They have now realised their mistake and face the choice of watching their market disappear as the likes of Mercury not only compete for NHS work, but also for the insured market, which is what BMI are really worried about.

However, in my opinion, the market has heavily over reacted because of the following factors:

1. Mercury has guaranteed volumes from the NHS for five years. At the end of five years the NHS has the option to buy the sites from Mercury, so whatever BMI are up to wont affect Mercury revenues.

2. The fall in the share price due to worries about Mercury is significantly more than the share price reaction to winning the contracts in the first place. In other words, nobody in the City really understands what Mercury is about.

3. BMI are not particularly worried about NHS work. They are more worried about their insured work drying up. This could happen if the extra capacity results in the NHS achieving the target of 3 month maximum waits by 2008. Most hospitals are close to six months maximum wait already.

4. Mercury are able to compete with the NHS prices because they will operate more efficiently than most NHS hospitals (not difficult) but critically because they will pay their doctors less than the going rate for NHS doctors who also work private sessions. In other words, BMI will find it very difficult to compete with mercury or the NHS unless they can break the cartel that is the BMA. Without a significant reduction in private fee rates this will not happen. UK doctors will be very reluctant to drop their rates as private income can make up 80% of their salary. For instance, a good orthopaedic consultant will earn £80K from the NHS and up to £500K private.

Personally, I think that the City ought to be much more worried about BMI than a tiddler like Mercury. Remember, Mercury is only an offshoot of Tribal, whereas BMI only have one core business.

[fncb001] 10/1/2005 17:40

If you rely on fundamentals then 100p should be highly unlikely, if not impossible. I for one would be very embarrassed to have put so much faith in a company I am so familiar with. I would have thought at the current price there are some clear choices for Tribal to make (not all mutually exclusive):

- Clear out the top level management and bring in a team that some of the city investors have faith in and that they would back with investment.
- Borrow and launch a share buy back from employee shareholders & reverse the trend for this to be a tightly held share. People are selling at this level because they got them for nothing and anything is a gain. It makes a mockery of being listed on the FTSE.
- Go for an all out buy back. If top management genuinely believe that the share is undervalued then this would be a no-brainer.
- Sell out to a larger consultancy company that could take advantage of a low share price to buy a company with a strong order book, great reputation in the puclic sector and a reputation for generating large amounts of cash.
- Split off Mercury as a separate company and focus back down on the core business, growing it organically rather than through acquisitions.
- Bumble along as now, releasing pessimistic statements to the market frequently enough to keep the price down.

All but the last should lead to a turn in fortunes for the share price. I live in hope!

Have I missed anything?

Having said all that, if you want something for your pension fund that you wont touch for 20 years, this has to be a Stong BUY and probably was all the way back at 300p.

[chap1889] 10/1/2005 15:54

I thought the strength was at 140, when I topped up. Now seriously wondering if there's anything north of 100. July is a long time away and I can't see much other news coming out between now and then. Any thoughts?

[blackbear] 10/1/2005 15:42

Keeping a peeky eye on this now... waiting for strength , whenever that is.

[chap1889] 10/1/2005 14:43

As was rightly pointed out earlier, the shares have been tipped as a buy all the way down, so that doesn't mean too much. Quite a hefty fall today, with no bad news to pin it to (unless there's some in the pipeline?). My take on it is that there are hordes of employee shareholders, so there's always a ready supply of shares for anyone shaking the tree / shorting. It's an easy share to talk down in the absence of any good news (even easier as there's been quite a bit of bad).

As before, I'm relying on good March figures - if they're not good, it'll be an even longer wait (perhaps with new management?). Failing that, I could always bail out and grab some oil stocks - they seem to have a similar risk to TRB at the moment!

[fncb001] 10/1/2005 13:50

I've been buying into this share since it was around the £3 mark. It looked OK value then but looks a bargain now. Its constanly rated as Buy or Strong Buy wherever I look.

Whilst there is clearly a structural problem with management, I am an employee as well as a shareholder and when I look around there are not many quite people. Most people look busy earning money. What are Tribal spending there money on to erode the profits so much? - charge out rates are strong. I agree its time to start cutting the dead wood.

This is only anecdotal but it keeps making me go back for more.

Why do people keep wanting the sell this share so cheaply?

[gran] 10/1/2005 13:23

Down, Down, down! Where will this one reach the bottom? I can't believe it.

[chap1889] 06/1/2005 13:42

I finally bought in a few weeks ago (although having followed TRB since its AiM days) as I am struggling to see potential downside now. Definitely a long term punt for me and it'll be interesting to see what the management try to do to correct this position. I'd be surprised if anything happens before the March y/e results are published in June.

IMO/DYOR etc

[alexacj] 06/1/2005 13:00

I think that the management of this company have a great deal of credibility to "re-gain".That coupled with the markets apparent "dislike" of aquisitor company's and the profit warnings have certainly helped this share to reach lows that most of us would never have thought possible.
Having said this,the company operates within the government sector which should prove to be a "defensive" position whilst the economy decides which way it's going to go.My own belief is that whichever party is in power after this years elections the pressure for government to continue to outsource to meet it's targets will continue....margins may become eroded as more players enter the arena but this remains an expanding sector (AIMO).Tribal continues to grow profits and whilst it's results are somewhat clouded by writedown of goodwill,this is not lost cash as this cash has already been spent and is merely a figure on the books.So Tribal will continue to generate profits and cash.With a PE of down to 7ish then this makes for a very cheap share for your money even if the company were standing still!The company have stated that they will stop pursuing further aquistions and concentrate on growing and managing the current business's,this I think is a great move and will enable them to demonstrate their real ability to manage the business.The recent NHS win is a big step for Tribal and I think that this is also currently weighing on their share price as they will need to prove their ability to "perform" for the contract.Non the less it is still a 214 million pound contract and that is a huge slug of business to gain....I am somewhat comforted by the fact that they withdrew from some earlier contracts as they would not prove profitable for the business.....i.e. they want new business but not at any price.Tribal's business is somewhat skewed toward the second half and the next set of results will prove to be very important for the group and its share price.I have just recently bought in to this share and am obvioulsy bullish for the longer trem,short term I think we will see continued volatility.AIMO.DYOR.

[chap1889] 06/1/2005 12:21

80p or 180p by June results announcement? Can't believe it's still found even more room south to go since the November lot!

[ashmok] 24/12/2004 09:33

And now it's even cheaper.

[blackbear] 24/12/2004 07:55

Looks so cheap.

[roguie] 11/12/2004 11:47

Quite new to this share, but I have to say that I'm surprised that the gain was so small on this news. Still it seems to me that the success of this company and the share price depends on the management's ability to do something about the woeful profit margins - maybe withdrawing from some less profitable areas and REDUCING turnover would actually help if done effectively. I hope focus for 2005 is internal and not on acquisitions, and if so I would expect a v.good year for the tribal sp

[ards] 10/12/2004 18:44

city wire impressed but says 'have learned enough lessons with acquisitive groups not to switch my portfolio to buy Tribal right now but it is possible this is a turning point. Management must feel spurred to prove its mettle so I would keep an eye on progress.'

todays announcement is in my view good news as more than expected 190m and ends uncertainty over contract. This is a big deal for a fairly small company.

I think a projected p/e of 8-9 next year in a financially secure company in a growth area is too low imho. I would expect 180 in a few months depending on new year rally. with good news like too surely this must be the low. ouch, I wish I hadnt said that!

[blackbear] 10/12/2004 16:21

Look's good for the long term , but i guess the thought of waiting til 2007-2008 for profit's return from money to be layed out initially is holding real buyers back.

[scotswhaehae] 10/12/2004 13:36

Well i'm bullish too...but cant say too impressed with brokers views....Bridgewell has been bullish all the way down so why should anyone value their opinion on this one!

maybe a weekend press tip/comment will help get things underway!