Trainline Share Discussion Threads

[bpoole] 06/1/2003 10:56

Shame about Investors Chronicle tipping Trio. I was going to buy but now I will wait until IC say sell.
I don't see why Trio should be in a rush to get rid of their cash. Today cash is king. For someone to take them over people who own the shares would have to sell them. I don't think they would get very many takers.

[farsight] 04/1/2003 14:45

Here's what Investor's Chronicle said:

LONDON-BASED MONEY BROKER TRIO RECENTLY reported a sterling set of results - the best since it came to public life in 1993. Trio thrives on volatility, has an active private investor following and, with good profits and plenty of cash, is well-placed to pay good dividends.
Trading as Martin Brokers, the firm was founded over 100 years ago and specialises in forward foreign exchange, domestic sterling, arbitrage and equity derivatives. Having moved to new offices last year, Trio has invested in new state-of-the art IT, and has plenty of scope to grow through recruitment.
The move to single trading floor helped improve communications significantly. Relocating also brought a £645,000 windfall from its landlord. A couple of years ago Trio also made a £2.6m profit from the sale of its investment in City Networks. So, with a significant cash sum on the balance sheet, it's not averse to paying special dividends.
Trio has established an electronic transaction-based dealing service for local authorities, building societies and banks as well. Trading has improved month-on-month and it is profitable, though small in relation to the rest of the group. A 21 per cent stake in Air Charter Exchange is paying off too. This is an airline communicaiton network allowing airlines and cargo handlers to transact business.
Always keen to launch new products, later this month Trio plans to move into credit derivatives. Chairman David Hagan refers to current trading as 'subdued normality'. Although no forecasts are in the market, Trio looks set to turn in a reasonable performance this year. At current levels, the shares are worth a closer look. Buy.

[farsight] 03/1/2003 18:24

Thanks maywillow.

[santangello] 03/1/2003 11:52

Currypata Kai

Haven't managed to thumb through ic...what does it say ?

[currypata kai] 03/1/2003 08:39

tipped in ic

[thismonthonly] 03/1/2003 08:37

I'm not sure if anyone here is interested or not, but if you want to increase the exposure a bit for this or any other stock you own, you might want to consider starting a new chat board for it at Investor's Hub. Memberships are FREE for the next month, so there are lots of traders chatting there.
Here's the link if anyone wants to check it out for themselves.


Best of luck with your trading. :)

[maywillow] 03/1/2003 08:32

Farsight,i see you are having a good start to the year.

i hope this is a preview for the rest of the year, for you ,and us one and
all.

Here`s to a Super 2003.

[thecleaner] 03/1/2003 08:22

On the loose from the off.,

[verymaryhinge] 02/1/2003 10:27

Started moving again today - I have this one as my office pick for 2003.

[profitaker] 01/1/2003 16:20

Just a few observations.

After last years finals were published on 11th December 2001, and after the market had time to digest the bottom line EPS of 1.66p, the stock finished the year at 12p, on a P/E of 7.22. This year, after the market has had time to digest the bottom line EPS of 2.66p we finish the year at 19p, on a P/E of 7.14. Pretty much the same earnings ratio, so on a historic P/E basis, it looks fairly valued at 19p.

Interestingly, from January to end of April 2002 (just prior to interim release) the stock rose from 12p to 15p giving a P/E of 9. On this (P/E) basis we should see 24p just prior to interim release end of April. Further forward, and always assuming that EPS will grow by the same 60% to give EPS December 2003 of 4.2p, then using the historic P/E of 7 would see a share price of 30p, December 2003.

Of course a company growing profits at this rate deserves a much higher earnings ratio. 15 wouldn't be out of the way IMHO for a company like this. But what it deserves and what it gets of course are two completely different things. Being such a small cap, the institutions won't take an interest for a while.

They really need to do something with that cash pile, and quickly. A bidder could quite comfortably take £ 9 m cash from the bank without it adversely affecting liquidity – net cost of acquisition £ 6.8 m – for a company producing pre-exceptional profits of £ 4m – and growing. I'd buy It myself if I had a spare 16 mill !

What to do with the cash ?

A share buy-back isn't the best use of surplus cash. If they could buy 57.9m share @ 19p (cost £ 11m) the P/E would drop to 2.2, yield rise to 12.9%. Pure theory, as pointed out by Farsight, since the share price would rocket. Shareholder value begins to be destroyed once they start paying 32p or more per share. Net asset value per share reduces whatever price they pay, albeit partly compensated for by improved return on equity.

Special dividend, well we've already had one, so clearly management aren't adverse to the principle. Interestingly they could pay a special div of 10p per share without adversely affecting liquidity. Well worth remembering.

The net interest received in the year of £ 267,000 represent a very poor return on the cash position of just 2.3%. So whatever they do with the cash, it can only enhance shareholder value.

Undervalued and too small to be spotted – for now. I'm certainly very comfortable with my holding, which I intend to increase substantially before end of April.

[farsight] 31/12/2002 20:51

I don't like share buybacks, Cleaner. I see them as a sign of an unimaginative company, and the money can be stolen by market makers. A dividend is er, cleaner, and is the right contract between shareholder and company.

If TRN were able to spend the £11m buying shares at 19p, you'd have a company with a market cap of £4m and profits of £5m. The dividend would then be 20%, enough to treble the share price. But of course the share price starts rising as they buy, so they get fewer shares for the money, so the share price would only double. Call it 40p, which is what TRN are easily worth. And the MMs know it. Note the widened spread today, and NMS is still very small at 3000 or about £600. They don't want you buying this one.

[thecleaner] 31/12/2002 20:29

A share buyback would be good. What would that do for the p/e and share price???

[thecleaner] 31/12/2002 08:25

A takeover in current markets would be no bad thing. Trio should be able to obtain a good price. There are a lot of cheap businesses out there at the mo.

[santangello] 30/12/2002 16:38

More nteresting momentum today.

MMs trading as well.
I picked more up this morning and done so on the fundamentals of this gem, plus (and I am sorry Jeff H), the chart is SCREAMING for 22-24p in the short term if volumes continue- which I am sure they will.

Comments ?

[danielk] 30/12/2002 16:05

if it takes a worthwhile aquisition to make people realise this companys true value then so be it

at the moment and as always it is still indervalued

annoying isnt it when a solid company such as this remains undervalued yet there are hundreds of companys in the ftse with overinflated share prices and dodgy accounting practices

one by one they are coming to light mytravel being a recent example

annoying thing is they put downer on all the good companys this being a better example of a good company

[stewjames] 30/12/2002 13:50

Fair enough. I agree if the opportunity's there than they should grab it. IMO the motivation has to be 'this will improve the business' rather than 'this will improve the markets perception of our business'. Market perceptions change like fashion trends.

[qwazi] 30/12/2002 13:45

Not disagreeing with you -- but I would not be surprised if there isn't an 'irresistible opportunity' around somewhere which will enhance earnings at only a small cost to the cash pile. I am not suggesting an acquisition for acquisition's sake - but that sentence in the annual report makes it seem as if something is afoot "seeking opportunities across a broad horizon".

[stewjames] 30/12/2002 13:40

Personally I'm happy with them as they are. I'd rather they continued their superb management and development of the core business and their dabbling with small projects on the side with the comfort of a whopping great cash pile if either things go a bit wrong or if an irresistible opportunity presents itself. I'd rather not see them make an acquisition simply to pander to a fickle market. I'm also pretty chuffed with the hefty capital gain and tidy dividends they've sent my way this year already. If it ain't broke...

[qwazi] 30/12/2002 13:24

At the moment, the market does not rate Trio very highly.
It is trading at a P/E of 5, or pre-ex P/E of 7. This does not take into account the Net Assets of 11.3m£ of which 11.5m£ is cash. On a pre-ex Enterprise Value/EBITDA basis, they are trading on a quite ludicrous 1. The dividend yield for 2002 is 5.4% or 1p/share, well covered by pre-ex earnings of 2.7p.
So why are they so lowly rated? My guesses are:
- The small market cap
- The inherent risk for money brokers of further monetary union.

In the results, the chairman stated:
On the financial and corporate side, we will continue to nurture the present
strength of TRIO Holdings PLC, in markets that may become more difficult. There
remains a climate of consolidation amongst our customers and amongst our
competitors, and we will tread carefully, from this position of strength,
seeking opportunities across a broad horizon.

This says to me that they are looking at acquisitions, which makes perfect sense since the market does not appear to be valuing their substantial cash pile. Now, if they were to acquire a complementary, yet diversified, business, this would go someway to addressing point 2 above, as they could ensure that their earnings were coming from other sources. In the current climate, let’s assume that similar sized and type of business to Trio are valued around the same. Let’s say for example that Trio find a nice business which is generating around 600k£ profit per year. If they were valued like Trio, they would be worth around 4.2m£, but Trio have to pay a premium and pick them up for around £6m. The net effect of the transaction? EPS goes up by 0.7p, cash goes down by £6m but it is safe to say that they would acquire some assets in the transaction so Net Tangible Assets would probably not go down substantially. If the market continues to value Trio purely on P/E, then EPS is now 3.4p giving share price of 23.8p (note: I haven’t included the loss of interest on cash here). Deduct a little bit for the decrease in assets. But what if the market now decides that the business is safer since it is more diversified? Also, with the move to new premises completed, dividends and earnings growing, why not put it on a more deserving rating, perhaps like ICAP? Well, maybe not, since ICAP trades on a P/E of 18 suggesting a TRN share price of 61p which is definitely too bullish. But maybe a P/E of 10 or 11 – giving share price 34-37p.

DYOR - not advice, just thoughts.

Q

[thecleaner] 29/12/2002 21:31

The eps pre exceptionals was published in the results at 2.66p

[the jitters] 29/12/2002 12:35

Hi Richard,

Didnt know you were into these.....one of yours and my better picks too! LOL

Whats happened to HS, has it finally collapsed under the weight of all Compos posts?????????

Phil