Compound Income
  • Blog
  • Scores
    • Subscribers Scores Access
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact



End of Week Catch up.

11/12/2015

0 Comments

 
A quick note today to catch up on what was out yesterday and today's news. Stocks which featured that I have covered in the past included Micro Focus (MCRO), Photo Me (PHTM),
S & U (SUS) and Sprue Aegis (SPRP
). While today we have had announcements from Bellway (BWY) and Polar Capital (POLR)..

Read More
0 Comments

A Couple of stocks up with events?

15/7/2015

0 Comments

 
In brief we have had an update from Intermediate Capital Group (ICP) - which I have held and written up in the past. The last time I wrote I felt they were probably fairly fully valued at around 590p. Since then they have fallen back a bit with the market, so does today's update change the view? Not really although to be fair they saw very strong inflows into existing funds, but did warn that Q2 would slow as they launch new funds which take longer to gain traction with investors compared to those with a longer track record. They also suggested that the current Eurozone uncertainty could have some impact on their business and the weak euro may trim some of the interest income, although fee income is hedged.

So overall a reasonable update which has seen the shares up by 2% or so today to 578p. It seems it should support the shares, but probably not enough to send it through resistance from the recent price highs around 600p. However if they continue to progress as the year goes on and the European situation calms down then they could progress more in the medium term.

Otherwise late yesterday we had an announcement from Microfocus (MCRO) about an accelerated book build for a placing of 20m shares from Wizard as the lock up post the recent deal ended. This was done at 1350p and leaves them with a stake of around 30%. This suggests they think these shares are now up with events perhaps and obviously there could be more placings to come in due course. So on that basis this one may well also be capped around here for now I suspect given that and the 16x PE and 2.5% yield.


0 Comments

A quiet start to the holiday shortened week....

26/5/2015

0 Comments

 
...after the excitement at the end of last week with PLUS500. Today we have had a couple of trading updates from Cineworld (CINE) and Micro focus (MCRO).

Cineworld saw pretty good growth across the board in both the UK and emerging markets in which it operates. They also opened a few new cinemas with lots of screens in the UK and overseas with 16 planned for the rest of the year split evenly between the UK and overseas. This together with what looks like a more attractive film schedule for this year means they are probably well set to deliver decent growth again. However, the rating anticipates this to a certain extent with the shares standing on over 18x with a sub 3% yield and an earnings yield of less than 5%. So overall not cheap, but looks like it should continue to grow well against an improving consumer background so I guess it could continue to show some good price momentum despite the rating. However having been bored by the Marvel Avengers Assemble film on TV last night I still remain somewhat bemused by the attraction of all these comic book films but each to their own.

On Micro focus today we have had a new piece of management speak. In the past I have pointed to managements saying they are trading "broadly in line" which is code for slightly behind. In today's statement they say: "
At the Interim results presentation in December 2014, management provided guidance of combined pro-forma full year* revenues of c. $1,330 million and combined pro-forma full year* Underlying Adjusted EBITDA** of c. $500 million, based on the exchange rates then prevailing. The Board is pleased to reconfirm that the Group expects to report revenues and Underlying Adjusted EBITDA comfortably in line with this guidance on a constant currency basis."

So I take "comfortably in line" to mean were confident of meeting or slightly beating expectations but don't want to upgrade them at the moment. On this basis I assume the forecasts will be fine but with scope for upgrades especially if the integration of last years acquisition goes better than expected as is sometimes the case. They may need this as these are also looking more fully valued now on around 16.5x with a 2.5% yield and an earnings yield of close to 3% so probably a hold up here. Hmm comfortably in line - puts me in mind of a song appropriate for post bank holiday blues...
0 Comments

Micro Focus International Merger

15/9/2014

0 Comments

 
Micro Focus (MCRO) has today announced a merger with The Attachmate Group, Inc. which technically for the purposes of the Listing Rules amounts to a reverse takeover by Micro focus given the size of the deal. They are paying a total enterprise value of US$2349.8 million for a Company which In the year ended 31 March 2014 generated revenues of $956.8 million and Underlying Adjusted EBITDA of $312.8 million. So it seems like a reasonable 7.5x EV/EBITDA multiple and the company say that they expect it to be significantly earnings enhancing in the current financial year ending 30 April 2015 and thereafter, with scope for further benefits as operational improvements are realised across the combined entity.

I would take this to mean 10% plus and it seems the market likes it as the shares have been marked up by nearly 10% first thing this morning. You can read the full announcement at the link above, but otherwise the Company summarised some more of the benefits for the merger as follows:


-    The Micro Focus Board believes that the proposed Merger presents a rare opportunity to achieve a significant increase in the scale and breadth of Micro Focus, through a merger with a business operating in market segments adjacent and complementary to Micro Focus and sharing the same characteristics of high recurring revenues, high operating margins and strong cash conversion; and with the potential to deliver Total Shareholder Returns ("TSRs") that are superior to those likely to be achieved on an organic basis.

-    Creation of an enlarged global infrastructure software company with a top three global market position in a number of key segments, including off-mainframe COBOL, mainframe modernisation, host connectivity and Linux.

-    The Enlarged Group's combined annual revenues amount to approximately $1.4 billion, with combined Underlying Adjusted EBITDA and cash generated from operations each amounting to approximately $0.5 billion p.a.

While they explained the rationale under the following headings:

Strategic rationale and operational benefits
The Board believes that the proposed Merger presents a rare opportunity to achieve a significant increase in the scale and breadth of Micro Focus, with the potential to deliver TSRs that are superior to those likely to be achieved on an organic basis.

The Directors consider that the businesses of Micro Focus and the Attachmate Group share a number of important attributes:

§ both are well established enterprise software vendors operating at a global scale with a presence in all significant international markets;

§ both are characterised by high Underlying Adjusted EBITDA margins (Micro Focus 45.4 per cent., Attachmate Group 32.7 per cent.)(3) and high recurring revenues (Micro Focus 66.3 per cent., Attachmate Group 71.3 per cent.);

§ both hold a portfolio of software solutions organised into different product groups which address specific aspects of the infrastructure software requirements of a substantial installed base of large enterprise customers, with no material customer concentration; and

§ both the Attachmate Group's and Micro Focus's respective product groups are (with exceptions) predominantly mature solution sets which are embedded within the IT infrastructures of large corporate customers.

Integration benefits
§ The Board believes that the principal benefits of the Merger will arise mainly from the delivery, over the medium term, of operational improvements across the Enlarged Group.

§ Given the scale of the Enlarged Group, the Board believes that the operational efficiencies will be achieved in the medium term, primarily through reducing duplicated central costs and combining corporate support functions where appropriate. The Board will also seek to reduce or reverse areas of revenue decline, accelerate revenue growth where achievable, and enhance operating margins. 

The financial effects, over and above the earnings enhancement are on the balance sheet and the level of debt. They state that this will take the combined net debt up to 3.3x the combined EBITDA which is above their previous 2.5x upper target / limit. They say they will look to get the debt back down to those kind of levels in the next two years from cash flows. On the back of this they say they are suspending further returns of value and share buy backs, although the recently proposed 60 pence return is still scheduled to go ahead and they are talking about a progressive dividend policy going forward.

Summary & Conclusion:
Seems like a sensible deal which is not only enhances earnings but also takes them into new products and markets related to their existing activities. However, they are buying off of VC's and the financial risks are increased given the size of the deal, integration risks and the levels of debt being taken on as a result. So this gives some pause for thought, but on balance it looks like a deal worth backing.
0 Comments

PFG revs up, MCRO  special dividend &  CINE - Interims

14/8/2014

0 Comments

 
Updates today from three stocks I have written up in the past - see the categories list to the right of the blog for links to these.

In pole position on the grid we have an acquisition of Duncton Group from Provident Financial Group (PFG) and a small placing of £120 million of new stock to finance it. The Moneybarn operational brand that comes with it was founded in 1992, provides car finance to non-standard customers in the UK, operating mainly through brokers with additional distribution sourced through independent car dealers and from its website directly to customers. The business offers secured car loans, predominantly through conditional sale agreements and with the car typically used for necessities such as travelling to work rather than for luxury or discretionary purposes.

Provident Financial said in its announcement about the acquisition:

"
The acquisition of Moneybarn broadens the product offering to the group's target customer base and creates a third leg of earnings that complements the organic growth opportunities available to the group. Moneybarn's origination has been muted recently, given funding constraints, and this leaves scope for growth going forward. The board believes that the business is highly scalable, given the strength of broker relationships and market leading credit decisioning, combined with the strength of the group's balance sheet. Potential opportunities for synergies with the group's existing businesses, including enhancements to underwriting and collections capabilities, the development of a business-to-consumer proposition and leveraging the Vanquis Bank customer base, will be evaluated post-acquisition."

They also mentioned that it will be immediately accretive to underlying earnings just on the basis of refinancing the £144.8 million of debt that comes with it. The price of seems reasonable at around 6x the stated pro forma EBITA of £20.3 million.

Overall seems like a sensible addition to their range of products at a reasonable price which enhances earnings immediately and provides scope for further synergies from enhanced underwriting, collections and cross selling to opportunities to existing customers.

Meanwhile Micro Focus (MCRO) have
announced an in line interim management statement and
a proposed return of value to shareholders of 60 pence per share, totalling approximately £84m ($140m) in cash. This is equivalent to around 7% of the recent share price of 864 pence - nice. The shares will undergo a consolidation when this is paid and shareholders will be able to choose whether to receive it as income or capital. This is in addition to the 3%+yield from the regular dividends that they are also expected to pay this year. On the outlook they said:

"Management's outlook remains unchanged from that given in the preliminary results for the year ended 30 April 2014 issued on 19 June 2014. We believe we have a strong operational and financial model that can continue to provide strong returns to shareholders. The model requires low single digit revenue growth in the medium-term and we remain confident that this can be delivered.

If the exchange rates experienced in the year to date were to continue for the remainder of the year, the comparative revenues for the year ended 30 April 2014 would increase from the reported $433.1m to $435.2m on a constant currency basis.
"

Finally today we have had interim results from Cineworld (CINE) - which seem to be fairly steady as they go about integrating after the merger with Cinema City. The figures are therefore a bit messy but they seem to have outperformed a fairly subdued cinema market in the period which was hit by the World Cup and a slower release schedule as a result. They have also suggested that synergies are now expected to be £5m of which £2m has already been achieved, although that doesn't seem that bigger deal in the context of an £800 million+ market cap.

They edged up the dividend by
2.7% to 3.8p on a rights adjusted basis and they are expecting a strong second half release schedule so they seem OK if a little dull on a P/E of 14x and a yield of 3.4% but they do have some more growth opportunities in less developed markets now.
0 Comments
<<Previous

    RSS Feed

    Archives

    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    August 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014

    Categories

    All
    32Red
    Aberdeen Am
    Admin
    A G Barr
    Airtel Africa
    Alliance Pharma
    Alternative Telecoms
    AMEC
    Amino Technologies
    Amlin
    Anglo Pacific
    Ashtead
    Asset Allocation
    Auto Trader Group
    Barclays
    BA Systems
    BATS
    Behavioural Finance
    Bellway
    Berendsen
    BHP Billiton
    Bloomsbury Publishing
    Bodycote
    Books
    Bovis Homes
    BREXIT
    Britvic
    Caledonia Mining
    Capital Ltd.
    Catlin-group
    Central Asia Metals
    Centrica
    Character Group
    Churchill China
    Cineworld
    City Of London Investment Group
    Clarkson
    CMC Markets
    Commercial Property
    Compound
    Computacenter
    Connect Group
    Croda
    Currencies
    Demographics
    Diageo
    Diploma
    Directors Dealings
    Dividends
    DotDigital
    Easyjet
    Economics
    Emerging Markets
    Emis
    Empiric Student Property
    Etfs
    Fairpoint
    Ferguson
    Ferrexpo
    Finsbury Foods
    Food Retailers
    Forterra
    Games Workshop
    Gateley
    Go Compare
    Goid
    Greene King
    GSK
    Hargreaves Services
    Hays
    Headlam
    Hedge Funds
    Hikma Pharmaceuticals
    Hill & Smith
    House Builders
    Howden
    HSBC
    IG Group
    IMI
    Imperial Tobacco
    Indivor
    Inflation
    Insurance
    Intermediate Capital
    Interserve
    Investec
    Investment Trusts
    It
    ITV
    James Halstead
    Jarvis Investment Management
    JLT
    Jupiter Fund Management
    KCOM
    Kingfisher
    Legal & General
    Lloyds Bank
    Luceco
    Macfarlane
    Maintel
    Man Group
    Market Timing Indicator
    Market Valuation
    Marston's
    Matchtec
    Media
    Merlin Entertainment
    Micro Focus
    Mining
    Mitie
    Miton Group
    Moenysupermarket
    Mondi
    Moneysupermaket.com
    Morgan Sindall
    Music
    National Grid
    N.Brown
    News
    Next
    Nichols
    Norcros
    Oil
    Page Group
    Paypoint
    Pennon
    Persimmon
    Personal Finance
    Pharmaceuticals
    Phoenix Group
    Photo Me
    Photo-Me
    Plus500
    Podcasts
    Polar Capital
    Politics
    Polymetal
    Portfolio
    Portmeirion
    Provident Financial
    PZC
    Qinetiq
    Ramsdens Holdings
    Rank Group
    Reckitt Benckiser
    Renewable Energy
    Renew Holdings
    Renishaw
    Research Papers
    Restaurant Group
    Retailers
    RIO
    RM Group
    Rolls Royce
    RPC
    RPS
    Safestore
    Sage
    Sainsburys
    Savills
    Schroders
    Scores
    SCS Group
    Sell Discipline
    Shareholder Yield
    Share Picks
    Short Interest
    Somero
    Spectris
    Sprue Aegis
    SSE
    Stock Spirits
    Strix Group
    S & U Plc
    Sureserve
    Sylvania Platinum
    TalkTalk
    Taptica
    Tax
    Technology
    Telecoms
    Tobacco
    Trading Ideas
    TSB
    TUI
    UK Market Update
    Ultra Electronics
    Unilever
    Utilitywise
    Value
    Victrex
    Vodafone
    VP.
    Water Utilities
    Watkins Jones
    WH Smiths
    William Hill
    Wynstay
    XL Media
    XP Power
    Yield
    Zytronic

    googleda4a17cac6d02bb9.html
    File Size: 0 kb
    File Type: html
    Download File

Powered by Create your own unique website with customizable templates.
  • Blog
  • Scores
    • Subscribers Scores Access
  • Portfolio
    • Table of Returns
  • Resources
    • Check list
  • About
  • Contact