Volvere Share Discussion Threads

[zoolook] 25/10/2024 11:05

PE of 8 doesn’t sound unreasonable given track record of growth (factoring in low margins, small customer base and lack of moat)

[eezymunny] 25/10/2024 09:24

Spot on tanners, though I suspect a sale of Shire at your valuation might be tough given thin margins, small customer base, lack of moat etc. Nevertheless you'd think £20-£25/share is a sensible range (with what we know today). Moving target of course...

[tanners] 25/10/2024 08:41

Rivaldo - to answer you exam question, personally I would value it slightly differently, i.e. cash + freehold property asset + enterprise value of Shire, the subtle difference being that I don't think it is prudent to separately add back in fixed assets of Shire that are required to generate the income for that business.

Therefore, if we think of Shire a separately listed entity, with profits as you have defined, what would a fair enterprise value be?

If we were to apply say, on a debt free, zero cash basis, your P/E of 8, then it would give a m/cap of approx. £30 M, which if say paying dividends of £1.5M pa gives a yield around 4.5%, and dividend cover of over 2.5 times....that stand alone proposition would in my eyes look a reasonably compelling investment (esp given the year on year growth), and therefore if sold not unrealistic to expect a minimum 20% premium, which would take care of the family stake of 20%.

Being ultra simplistic and without any sale premium, then it's a net value of £24 M to add to Volvere's cash and property asset, of c. £28 M, therefore £52M in total, or c. £24 per share.

That's my rough attempt at a very conservative valuation, which still makes the shares at today's price significantly undervalued.

[boadicea] 24/10/2024 15:43

Hi Rivaldo - I follow your general thesis that the value of Shire is effectively ignored in the current valuation of the whole but I haven't checked the detail of your calculations. One point I did note that the words 'per share' don't belong in line 3 of the header which quotes the "Balance Sheet figure of £38.6m .... of NAV at 30/6/24, including £24.3m cash".

Another unusual point I note about VLE is that the number of shares in Treasury is nearly twice the number in issue. (Is this a unique feature in the market?) The fact that they have been acquired at below NAV (and vastly below a reasonable practical valuation) is one of the reasons for the boost given to the asset backing of shares in market circulation. The other is, of course, the turn-round in the fortunes of Shire under their stewardship.

The turbulence expected in the coming months (US election + UK budget) could throw up some interesting anomolies on which VLE could possibly capitalise.

[rivaldo] 24/10/2024 13:17

New all-time highs now I believe.

I've updated the thread header post/calculations. The two measures of true value ranging from 2200p-2850p per share are simplistic for reasons of brevity, but I'd be grateful if anyone could either point out stupid errors or have a civilised debate giving their own beliefs on the value/upside here.

[rivaldo] 23/10/2024 12:25

Two larger buys today totalling £35,000 at 1600p and 1595p. Maybe these have been in the works and caused yesterday's rise.

[rivaldo] 23/10/2024 07:37

New multi-year highs here after yesterday's rise.

Given that there was only one decent-sized trade yesterday, and that was a 400 share sell at 1500p, there's presumably background demand for shares causing the MMs to lift prices, be it from investors or VLE buying in more shares yet to be RNS'd.

[rivaldo] 11/10/2024 08:29

A decent buy reported after the market closed yesterday - £32,319 (2,100 shares) at 1539p.

[rivaldo] 10/10/2024 12:41

RNS - VLE have a new 3.44% shareholder. Edward Moyse now holds 76,000 shares after a transaction on 30th September:



Coincidentally, he also disclosed just yesterday that he holds 2.86% of TST, another company I have a decent stake in (he had to declare sub-3% as TST is undertaking a strategic review - it's well worth a look imho). He evidently has similar good taste in small cap shares....:o))

[rivaldo] 10/10/2024 09:17

Good to see VLE moving up to 4-year highs after a couple of buys totalling around £6k yesterday.

And still excellent upside from here imo.

[rivaldo] 20/9/2024 08:49

£150,000 of shares just bought back at 1499p by the ever-prudent VLE/Nick Lander hopefully reflects the value and upside here.

[zangdook] 13/9/2024 17:10

Or perhaps I should say, buybacks are better for those who want to stay on board.

[zangdook] 13/9/2024 17:05

At the risk of seeming cold-blooded, I stand by my earlier comment. If you have a large holding and want out you should contact the company - buybacks don't have to be done on market.

edit: I'm assuming that a way can be found for a private buyer to buy stock out of an ISA.

[scorpione] 13/9/2024 17:00

i take your point Rivaldo, but VLE is a very, very illiquid share! By doing a tender offer would befit everybody not just sizeable shareholders who for one reason or other want out. I personally have been a holder since 2010 with 10,000 shares held in an ISA and share buy backs are not sufficient. As you quite rightly said above, even by todays announcement VLE shares are grossly undervalued and every time someone sells the price drops significantly. I would like to use these funds towards a mortgage that matures in 2026 and I am not in mood of giving my shares away at a considerably undervalued price!

[zoolook] 13/9/2024 16:33

A tender offer pitched at the right price is advantageous for sellers and holders

[zangdook] 13/9/2024 14:03

buybacks are better for everyone who stays aboard.

[rivaldo] 13/9/2024 12:39

Presumably they'll continue with the buybacks. Especially given today's results.

Perhaps there aren't any sizeable shareholders left out there willing to sell to make a tender offer worthwhile - VLE must know them all personally by now.

[scorpione] 13/9/2024 11:20

Amazing H1 results! But no sign of a 'tender offer' hinted in previous communications by VLE. Why!!!!??

[rivaldo] 13/9/2024 08:03

Nothing's like Nvidia :o))

Shire's PBT margin last year was almost exactly 9% - and was 13% in H2. Margins in this H1 improved to 9.4%. I imagine with the H2 weighting that margins will be considerably better than even that in H2.

And with Shire on course for over £50m turnover this year and say £60m-£65m next year, with economies of scale continuing to grow, £10m PBT becomes a viable target over time assuming ceteris paribus.

Whatever the case, VLE is still very undervalued despite today's rise.

[eezymunny] 13/9/2024 07:42

Very simplistic indeed IMO Rivaldo.

Even if Shire makes an historically high 6% margin, to make £7.7m PBT would require revenue of c. £128m. That's an increase of c. 150% on this year's likely number. They might do that over 5-10 years but not 1-2 IMO.

Big increase in H1 profits is down to operational gearing, increased investment returns, not magical pie performance.

Great stuff from VLE and should be north of £20/share IMO but this isn't Nvidia!

[rivaldo] 13/9/2024 07:21

A very simplistic extrapolation shows that £10m PBT isn't so far off in time (I too had similar reservations initially about this!).

Shire made £2.1m PBT in H1, up 180% from last year.
It made £3.1m PBT in last year's much seasonally stronger H2. A similar 180% rise this H2 means £5.6m H2 PBT.

That's a total ££7.7m PBT this year. At the current rate of growth it's possible to see £10m PBT for Shire next year or the year after.

As an aside, there's been an early cold start to September, which will also be beneficial to Shire.

[rimau1] 13/9/2024 07:10

Bit undercooked that. Try 12x

[elsa7878] 13/9/2024 07:04

Bit fanciful.

£5 million seems possible x 80% (to reflect ownership) x 75% (tax)= £3 million. Stick it on a mean PE of 8 = £24 million
Add £24 million cash and investments.
Ignore interest on cash and PLC management charges and costs.

Total assets = £48 million / 2,219,000 shares = £21.60 per share.

[rimau1] 13/9/2024 06:54

Just a pre coffee look at Table A Shire stepped up from 0.6m to 3.5m last year. We just did 2.0m H124.