Uls Technology Share Discussion Threads

[onjohn] 29/7/2014 12:52

People trying to sell

13:46:12 43.00 2,000 O 41.25 44.75 ? 25,314 32,092
11:16:32 41.00 1,000 O 41.25 44.75 ? 0 0
11:09:20 42.00 12,500 O 41.25 44.75 Sell 25,314 32,092
11:08:55 42.00 12,500 AT 41.25 44.75 Sell 25,314 19,592


Just wait till it dips under 40p and hear the investors squeal

[simon gordon] 29/7/2014 12:22

FT - 29/7/14:

UK mortgage approvals increased in June for the first time since January, signalling the disruption caused to the market by new affordability rules may be dissipating.

Data released by the Bank of England on Tuesday showed 67,196 mortgages were approved in June, up 8 per cent on the previous month after four consecutive months of decline.

The jump will reinforce the view that the introduction in April of the Mortgage Market Review, which tightened affordability standards, may only prove to have a temporary slowing effect on the market as lenders grappled with the changes required to their processes and systems.

However, the number of mortgages granted remains low by historic standards: during the housing market boom in the mid-2000s lenders were routinely granting over 100,000 mortgages a month.

Samuel Tombs, senior UK economist at Capital Economics, said the figures contained "further signs that the constraint on the economic recovery from bank lending is loosening".

He added that the rapid rise in employment and the still-low interest rates should stimulate mortgage demand. However, as lenders face stringent stress tests later this year and the Financial Policy Committee has reduced expectations for house price increases, "the recovery in mortgage lending still looks likely to be a gradual affair".

[simon gordon] 29/7/2014 10:32

OnJohn,

67K for June. Did you miss that statistic?

Why do you keep repeating that old news?

Smells rotten? LOL! They got what the market was willing to pay, do you understand the stock market?

I could understand taking a pop at the story if it was on >20x, but it could be on a single digit p/e to 03/15 with net cash. Sure there is a lot of media noise about the housing market, but it's still clear of 50K per month.

[onjohn] 29/7/2014 10:05

Smells rotten if they have had to reduce the price to find any buyers. And nil premium.

I also see Hargreaves Hale has not bought

The number of mortgages given the green light in May dropped to its lowest level since June 2013, in a further sign that stricter lending rules are suppressing transaction levels in the housing market.
Mortgage approvals for house purchases totalled 61,707 in May, down from 62,806 in April, the lowest reading in 11 months, according to data from the Bank of England.

[simon gordon] 29/7/2014 08:58

Mortgage approvals for June 67K.

=====

Sunday Times - 13 July 2014:

Lloyds Banking Group's private equity arm is in line to cash in on the flotation of a comparison website for homebuyers and mortgage brokers. The Sunday Times said ULS Technology is working on a possible AIM listing, valuing it at up to £50m. Lloyds owns 38% of the business.

=====

Nearly a 50% haircut to get it away.

If business for April and May continued like it was for the next 10 months they'd probably be on a single digit p/e.

Good chance it will be a popular story with the tipsters: low p/e, dividend, operational gearing, new product pipeline and number one market operator with only 5% share.

[druinsky] 29/7/2014 07:51

Octopus looks a bit dodge

[geraldton1] 29/7/2014 07:04

PS..Simon G - you make some very valid points. Will be interesting to see how it all pans out.

[geraldton1] 29/7/2014 06:56

Ha, no. Its a decent one. David Crawford has a good record.

hxxp://www.cityfinancial.co.uk/node/415

[opodio] 29/7/2014 06:37

Is city financial a bucket shop ?

[simon gordon] 28/7/2014 20:36

Lonrho,

I'm a cautious guy. Hopefully, we'll get some forecasts in the coming weeks.

The operational gearing if they can scale up should be superb.

They picked up some quality new shareholders in the IPO:

~Schroders
~Herald
~Unicorn
~Octopus
~City Financial
~Artemis

[lonrho] 28/7/2014 20:08

just over 1% of shares traded on first day is peanuts. Simon just over 10% growth in net profits in current year sounds very conservative especially after first two months trading.

[onjohn] 28/7/2014 19:38

Not good news if that is the extent of growth here. It wont take much of a downturn in volumes to see a profit warning

And guess what!!

Lenders predict mortgage approvals will fall in the coming months

Britain's biggest lenders expect mortgage approvals to "fall significantly" in the coming quarter as banks reduce risky lending, according to a Bank of England survey.
The Bank's quarterly credit conditions survey suggested lenders were becoming more cautious ahead of an expected move by Governor Mark Carney and the Financial Policy Committee (FPC) to rein in the market. Banks and building societies said a desire for greater market share would be offset by a "lower appetite for risk" in coming months, resulting in fewer loans.



I see why so many people were keen to dump on day one

[simon gordon] 28/7/2014 19:37

Posted this on the GARP thread:

USL - floated today at 40p = £25.9m market cap.

Revenue Growth:
2012 - 80.6%
2013 - 26.6%
2014 - 53.9%
2015 - first two months* 31%

*Y/E 31st March

PAT - 2014 = £2.159m

Currently have market share of 4.5% year ending March 2014.

They are the market leader, biggest customer is Lloyds who own 20% of the equity.

Some snippets from the Admission Document:

The Group's business was founded in 2003 and provides a SaaS online comparison service for residential conveyancing and related legal services and searches through its proprietary eConveyancer platform. The Group was one of the first providers in this market and the Directors believe that by being a first-mover, the Group has secured important relationships with both distributors and solicitors and stands to benefit from increasing demand for comparison services for residential conveyancing and related services, driven by factors including end customers wanting better value for money and distributors needing to demonstrate that they are treating their customers fairly.

In 2011, the Group attracted investment from Lloyds Development Capital, a leading mid-market private equity house. This investment enabled the Group to accelerate the expansion of its operations and also to consolidate its long-standing relationship with Lloyds Bank plc.

The Group has experienced significant growth in the years between 2011 and 2014, with employee numbers increasing from 17 prior to the investment by LDC to a team of 53 in 2014 and the Group recording revenue growth from over £4 million in the year ended 31 March 2011 to over £16 million in the year ended 31 March 2014. The number of completions generated by the platform has increased significantly, from approximately 25,000 in the year ended 31 March 2012 to approximately 47,000 in the year ended 31 March 2014. In the year ended 31 March 2014, the Group estimates that approximately 82 per cent. of its growth in completions was driven by increased market share and approximately 18 per cent. by a recovery in the conveyancing market. In 2013, the Group's continued growth saw it included in the Sunday Times Tech Track 100. The Group has also diversified its business through the launch of standalone services which are complementary to the Group's existing products, including ID Checks, a web-based platform for solicitors to check their clients' identity; and Lease Extensions, a web-based tool for brokers and estate agents to help their clients extend their leases on residential properties.

eConveyancer 2, a new platform, is currently being developed by the Group. It is intended that eConveyancer 2 will replace both eConveyancer 1 and BM Conveyancing as the Group's core online conveyancing platform once all user groups have been migrated to the new platform. eConveyancer 2 has a number of improved features and functionalities which the Group believes will offer an enhanced experience to customers.

The Group is in the process of developing SearchHub, a legal search platform intended to complement eConveyancer Searches. SearchHub is intended to be a standalone platform which, not being linked to the eConveyancer platform, can be utilised by all users (rather than just panel solicitors who already use eConveyancer). SearchHub is also intended to be launched with additional functionalities, including a new user interface/user experience designed to meet the information product needs of a conveyancing solicitor, a casecentric (rather than an order-centric) design, and access to an enhanced range of conveyancing searches.

The Group's new product pipeline includes a new comparison platform which is anticipated to go live in 2015. This will allow customers to compare estate agents in the United Kingdom based on factors such as commissions, sale prices achieved and quality of services. This new comparison platform builds upon the core technology used in the Group's eConveyancer platform and is intended to provide customers with an integrated and seamless approach to the delivery of comparison services for the UK estate agency market.

The Group's strategy is to continue to increase its market share in the conveyancing market by increased use of the eConveyancer platform within its existing distribution network and by securing new distributors, particularly within the UK mortgage provider market. It intends to continue developing disruptive products in conjunction with existing B2B clients.

The Directors believe that there is the potential to generate significant additional transaction volume from focused marketing and education within the Company's existing distribution network. The Company has enjoyed a commercial relationship with Lloyds (formerly HBOS) since 2007, and is currently used in 853 branches and by over 4,800 brokers who access the platform through BM Solutions. However, there is still additional growth to be achieved from continued engagement with Lloyds and the Group has four account managers dedicated to this. The Directors believe that the new four year exclusive contract recently signed with Lloyds will assist the Group in achieving closer engagement with Lloyds. The Group has also entered into a nonexclusive contract for the supply of its services to TSB plc.

The Directors are keen to replicate the Company's relationship with Lloyds with other UK mortgage providers. The Directors are aware of a number of large UK mortgage providers that at present either do not offer a conveyancing recommendation service to their customers or offer an alternative solution (such as a tied conveyancing network). The Company intends to make securing a contract with a new UK mortgage provider a key focus of the sales team following Admission, though it should be borne in mind that such contracts are long term and difficult to move from incumbents.

The Group believes that following Admission, the Group's greater financial strength and increased independence as a result of the listing will be attractive to these potential distributors, who are also under pressure from regulatory bodies to demonstrate that they are treating their customers fairly, while driving returns for shareholders.

The Directors are pleased with the Group's performance during the current year to date, which has been in line with their expectations. The Group has continued to grow significantly, with revenue increasing by approximately 31 per cent. and profit before tax increasing by approximately 70 per cent. compared to the first two months of the year ended 31 March 2014. The Directors believe this is the result of both increasing market share and greater activity in the market. Gross margin was approximately 1 per cent. higher than the same period last year. The Directors are confident in the Group's future prospects.

=====

The biggest risk to growth would be a crashing residential property market as transactions would shrink. USL's main growth has come from taking market share and from such a low base there is probably more to go for.

After the IPO they should have net cash of c.£2m.

If they did £2.16m PAT in 2014, maybe they can do £2.4m PAT in 2015. £2.4m divided by 64.73m shares = 3.7p EPS @ 43.5p = 11.8x.

[onjohn] 28/7/2014 19:36

shouldnt have rushed in , feel this will be 30p in a few months when mortgages dwindle as expedtc

[simon gordon] 28/7/2014 16:27

UK Mortgage Approvals - 1986 to 2014:

[simon gordon] 28/7/2014 15:26

ONJohn,

According to the CityAM piece approvals are forecast to rise tomorrow by 1.3K.

The BoE want the market to cool down, above 50K a month is probably fine for ULS.

The main avenue for growth is gaining market share, they've got c.5%, if they can double that in the next five years they'll do very well with their operational gearing. Plus they are not highly rated.

Sure if the mortgage market cratered they'd feel it hard, but at the moment that doesn't look likely as the economy is still expanding.

With ULS now being a PLC, and not so tied to Lloyds, they have more chances of landing other banks as customers.

Even with April and May's 2014 mortgage approvals falling ULS are still growing in these two months:

"The Group has continued to grow significantly, with revenue increasing by approximately 31 per cent. and profit before tax increasing by approximately 70 per cent. compared to the first two months of the year ended 31 March 2014."

[onjohn] 28/7/2014 15:13

prices do not matter , its volumes -Mortgage approvals fall to 11-month low as housing market cools down

[simon gordon] 28/7/2014 15:11

CityAm - 28/7/14:

MORTGAGE approvals figures appear likely to show the housing market is moving again, after tough new MMR loan tests slowed lending figures.

However, house price data due on Thursday suggests prices may not be soaring as much as earlier this year. They are expected to have risen 0.5 per cent month-on-month in July – the smallest monthly increase since midway through last year.

Economist Howard Archer of IHS Global Insight said: "Data tomorrow from Bank of England are forecast to show that mortgage approvals rose modestly to 63,000 in June having moderated for four months running to be at an 11-month low of 61,707 in May. This was down from 62,806 in April, 66,507 in March and a 74-month high of 75,901 in January."

[geraldton1] 28/7/2014 15:11

Hi Simon - it was a figure I was given, but don't want to go into it on a public forum if ok (soz).
ONJohn - if that's your view, then why are you on here? Maybe rod off to the LSL board.

[onjohn] 28/7/2014 15:08

RMV interims weds, opened a short there and this could sympathetically sink too

[onjohn] 28/7/2014 14:50

daily mail - New mortgages slide to 11-month low as tough new rules bite
I remember a solicitor had to lay off 11 of his 12 staff in 2008
No wonder the clever money has dumped these out
better off buying LSL

[lonrho] 28/7/2014 11:27

one key paragraph is that in the first two months of this financial year sales are up 30% and profits up 70% compared to the first two months of the year to march 14.

[simon gordon] 28/7/2014 11:21

Even if the residential property cools down, which the BoE are trying to engineer especially in London, the growth prospects through gains in market share appear more critical than a hot property market.

From the AD:

The number of completions generated by the platform has increased significantly, from approximately 25,000 in the year ended 31 March 2012 to approximately 47,000 in the year ended 31 March 2014. In the year ended 31 March 2014, the Group estimates that approximately 82 per cent. of its growth in completions was driven by increased market share and approximately 18 per cent. by a recovery in the conveyancing market.

----

Net of cash I think they are priced at around 11.5x to March 2014. Though the tax rate was 14.4%

From the AD:

Current Trading and Prospects

The Directors are pleased with the Group's performance during the current year to date, which has been in line with their expectations. The Group has continued to grow significantly, with revenue increasing by approximately 31 per cent. and profit before tax increasing by approximately 70 per cent. compared to the first two months of the year ended 31 March 2014. The Directors believe this is the result of both increasing market share and greater activity in the market. Gross margin was approximately 1 per cent. higher than the same period last year. The Directors are confident in the Group's future prospects.

-----

Gerald,

How did you work out a yield of 5%?

Seems a bit high to me.

[bartolozzif] 28/7/2014 10:04

Bank of England warns housing market boom may turn to crash
Toughest warning yet from Bank about rising property prices, as one in 15 London homes now sell for £1m or more
)

Bank of England warns housing boom may turn to crash
Nationwide's latest house price index showed the average house price in the UK is now £183,577. Photograph: John Stillwell/PA
Britain's booming housing market could be heading for a fresh crash, the Bank of England said in its toughest warning yet about the dangers of the return of rapidly rising property prices.

Sir Jon Cunliffe, Threadneedle Street's deputy governor for financial stability, said it would be dangerous to ignore the momentum apparent across the country and dropped strong hints of new measures to slow down the market in the months ahead.

On a day when it emerged that one in 15 London homes are now selling for £1m or more, Cunliffe said Britain had a history of booms turning to bust. "This is a movie that has been seen more than once in the UK."

The Bank's deputy governor said that there were always risks to financial stability "blinking on the dashboard" but made clear his concern about the possibility that borrowers taking on large mortgages could find themselves in trouble when interest rates inevitably rose.

"The growing momentum in the market is now in my view the brightest light on that dashboard", Cunliffe said. "It has not yet been accompanied by a substantial increase in aggregate mortgage debt, though gross mortgage lending is growing and there are signs that debts are becoming more concentrated."

Cunliffe said the housing market could have a "soft landing" as houses became less affordable and lenders tightened up the conditions for granting homes loans. "But other outcomes are very possible and the financial policy committee [FPC] will need be both vigilant and ready to act."

He said the risk was of "a major overshoot in prices and buildup in debt followed by a sharp correction with negative equity and an overhang of debt for many households", adding: "Unfortunately, there are more precedents in UK for periods of a rapidly growing housing market to end in this way."

The FPC was set up by George Osborne with a view to preventing the economy being destabilised by the sort of asset price bubbles that emerged before the crash of 2007-08. Cunliffe said the decision about what to do about the growing momentum would be its top priority in the months ahead.

Figures from the Nationwide building society showed annual house price inflation at a seven-year high of 10.9%. Cunliffe said: "There is good reason to believe that a ... combination of strong demand, weak supply and expectations of a rising market could lead to a period of sustained and very powerful pressure on house prices in the UK."

Earlier this week, Threadneedle Street announced stringent stress tests designed to ensure that lenders could absorb a 35% drop in house prices, a fall that would be unprecedented in the UK. Cunliffe said the Bank was worried that more and more people were getting into debt that could pose a risk to the economy's year-long recovery.

"Given their sensitivity to a change in economic conditions, a long tail of highly indebted households could represent a vulnerability for both the banks and the economy. The data suggest that the size of this tail is increasing."