My Shares

MOUNTVIEW ESTATES: £90 Shares Trade 12% Below NAV — Steepest Discount For More Than 10 Years — After FY 2024 Admits Third Consecutive Sub-60% Gross Margin And Re-Emphasises Subpar Gains From Post-2014 Purchases

02 November 2024
By Maynard Paton

FY 2024 results summary for Mountview Estates (MTVW):

  • A reasonable FY performance, which showed revenue up 8%, profit up 22% and the final dividend up 10% after buyers looking for “improvement potential” paid “good prices” for a more normal “profile” of properties.
  • Sales by larger landlords allowed MTVW to spend a substantial £48m on new properties, but the advance to net asset value (NAV) was just 2% after MTVW took on greater debt, paid 6%-plus interest, incurred higher tax and sold properties for £59m.
  • The absence of another formal estate valuation remains frustrating, especially given properties purchased after a 2014 valuation continue to realise subpar ‘reversionary’ gains and the overall property-sales gross margin was less than 60% for the third consecutive year.
  • The board continues to be well paid, attract 30%-plus protest votes and enjoy entrenched support through a family concert party… although not every family member seems a die-hard shareholder and recent AGM remarks even hinted MTVW could one day undertake a trade sale.
  • The £90 shares offer a 5.8% income, trade 12% below NAV — the steepest discount for at least ten years — and may be worth £182 if the group’s properties were all sold today at their vacant possession value. I continue to hold.

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BIOVENTIX: Record H1 2024 Reveals Profit Up 15% Despite Slowing Troponin Growth As Encouraging Alzheimer’s Work Attracts ‘Significant Attention’ And Research-Test Availability Through Quanterix

22 October 2024
By Maynard Paton

H1 2024 results summary for Bioventix (BVXP):

  • A record H1, showing revenue up 13%, profit up 15% and the dividend up 10% as greater sales to China helped offset a “temporary” slowing of troponin growth.
  • Positive long-term progress continues to rest upon Alzheimer’s R&D, in which a study involving pTau212 suggests BVXP may enjoy a research edge beyond an increasingly crowded pTau217 field.
  • BVXP’s Alzheimer’s work on ‘brain-derived tau’ has attracted “significant attention” for helping identify significant, near-term “cognitive decline”, and is now available through Quanterix for wider research purposes.
  • The economics of successful antibodies remain superb, with this H1 displaying a terrific 77% operating margin, net cash equivalent to a hefty 40% of revenue and capex of just £5k.
  • The £37 shares yield a trailing 4.3%, trade at a possible 22x P/E and might — using some very basic assumptions — value the R&D pipeline at £23m. I continue to hold.

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TRISTEL: New Chief Exec’s Financial Targets Keenly Awaited After Record H1 2024 Announces 30% UK Growth, 100% Dividend Jump, Bumper 84% Gross Margin And ‘$100m Opportunity’ In North America

01 October 2024
By Maynard Paton

H1 2024 results summary for Tristel (TSTL):

  • A record H1, displaying revenue up 20%, profit up 28% and the dividend up 100% underpinned by remarkable 30% UK growth and notable price increases accepted by the NHS.
  • North America is now deemed a “$100m per annum opportunity” for TSTL’s initial FDA-approved foam, although competition now involves an FDA-approved UV-light machine that may strengthen the wider argument for automated disinfections. 
  • The new chief exec ticks a lot of boxes for marketing healthcare products in the US, but his stint at LiDCO was unspectacular and shareholders keenly await his strategic ambitions, financial targets and details of his LTIP package.
  • Although employee productivity has flat-lined, the financials remain in good shape with a bumper 84% gross margin and net cash approaching £12m that could lead to another special dividend.
  • A near-term 32x P/E is not an obvious bargain, but a premium rating could be justified by further meaningful growth within established markets, the prospect of lucrative US royalties, the ongoing ability to raise prices and the possibility of successful R&D. I continue to hold.

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S & U: FY 2024 Confirms 41% H2 Profit Slump And 17% Final-Dividend Cut After Enhanced ‘Forbearance’ Regulations Prompt 74% Impairment Surge And Collections To Slide To A Pandemic-Like 69% 

19 September 2024
By Maynard Paton

FY 2024 results summary for S & U (SUS):

  • A very disappointing FY, with H2 profit slumping 41% and the final dividend cut by 17% as enhanced FCA “forbearance” regulations prompted the “temporary” modification of motor-finance collections and led to impairments surging 74%.
  • Various motor-finance ratios unsurprisingly deteriorated, including the first-payment proportion plunging to an alarming 94%, collections of due falling to a below-budget 90%, anticipated repayments hitting a fresh 127% low and up-to-date accounts sliding to 74%. 
  • At least the property-loan subsidiary continues to perform well, as minimal bad loans led to a new £5m profit high, an impressive 58% divisional return on equity and a company-blog ambition to double cumulative lending to £1 billion “in the next couple of years“.
  • Debt advancing to £224m and borrowing rates climbing to 8% caused net finance costs to absorb a significant 13% of revenue; extra post-FY debt could meanwhile take net finance costs from £15m to £19m and exacerbate the profit “headwinds“.
  • Post-FY references to “vigorous” FCA discussions, political intervention and up-to-date accounts running at a pandemic-like 69% now leave the £18 shares firmly below NAV, a valuation witnessed only very occasionally during the last 30 years. I continue to hold.

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FW THORPE: 25% Dutch Profit Growth Supports Subdued H1 2024 As New Combined CEO/FD Role Plus Slimmed-Down Board Raise Concerns About Executive Power, Technical Expertise And Aggressive M&A

30 August 2024
By Maynard Paton

H1 2024 results summary for FW Thorpe (TFW):

  • A 5% dividend advance was the highlight of this rather subdued H1, as revenue gained 1% and profit fell 2% after customers apparently finished (very) early for Christmas.
  • Divisional performances were extremely mixed, with Dutch profit up a super 25%, Thorlux’s profit sinking a disappointing 8%, Zemper’s profit still to show its full potential and Ratio’s losses becoming even larger.
  • The accounts remain in good shape, showing an acceptable 15% group margin, healthy net cash of £29m and a very welcome stock reduction, although Ratio has (probably) required extra funding and the pension scheme may one day follow suit.
  • The roles of chief executive and finance director have been combined, which alongside a slimmed-down board raises concerns about executive technical expertise, a concentration of leadership power and future M&A that may not be adequately challenged.
  • A possible 20x P/E seemingly reflects TFW’s distinguished operating history, future “synergy initiatives” and continual demand for energy-saving lighting rather than the group’s modest near-term prospects, doubts about the re-jigged board and the risk of an aggressive acquisition strategy. I continue to hold.

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ANDREWS SYKES: ‘Robust’ FY 2023 Delivers Record £23m Profit After 13% Workforce Reduction Helps Lift Group Margin To 29% High

07 August 2024
By Maynard Paton

FY 2023 results summary for Andrews Sykes (ASY):

  • A “robust” FY performance, which delivered a record £23m profit through “careful cost management” and positive sales momentum within a number of European countries.
  • UK air-conditioning revenue declined 14% to £8m following lower summer temperatures, leaving the domestic market’s progress to again be dictated by pump hire — up 2% to register a sixth consecutive FY improvement.
  • Closing the French subsidiary, curtailing Middle Eastern losses and reducing the wider workforce by 13% were among the decisive actions that helped the group margin achieve a new 29% high.
  • The very respectable accounts showcased net cash at £20m, capex requirements of just £3m, a 34% return on equity and a “fully de-risked” pension scheme.
  • A possible 13-14x P/E does not appear outrageous, with the restricted free float, weather-sensitive operations and absence of obvious economies of scale counterbalanced perhaps by bid-target potential. I continue to hold.

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M WINKWORTH: Non-Exec Appointments Invite Bid-Target Speculation After Suppressed Property Market Reduces FY 2023 Profit By 25% And ‘Top 3 Contender’ Ambition Prompts 9 Branch Closures 

29 July 2024
By Maynard Paton

FY 2023 results summary for M Winkworth (WINK):

  • Only the dividend advanced higher (+6%) as a suppressed property market alongside greater costs left franchise-network income 8% lower, revenue unchanged and profit down 25%.
  • Requiring every franchisee to be a “top three contender” prompted nine branch closures but underpinned industry-leading sales, lettings and conversion statistics versus (now anonymous) rival agents.
  • Company-owned offices now include Pimlico and collectively reported a £0.48m profit, although divisional progress remains dominated by Tooting — the exit strategy for which is unclear.
  • After reporting a lower margin, adverse cash conversion and weaker employee productivity, a post-FY update heralded a stronger FY 2024 that supports a possible 12-14x P/E and near-6% yield.
  • Celebrations marking the chairman’s 50-year tenure invite bid speculation, especially following the appointment of two non-execs with M&A backgrounds and sector merger activity involving Property Franchise and Belvoir. I continue to hold.

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CITY OF LONDON INVESTMENT: Subdued H1 2024 Shows Rising Staff Costs Cutting Profit By 5% Although Welcome ‘Engagement’ With George Karpus And Bumper $224m Q3 FuM Inflow Now Lend Greater Support To 9% Yield

10 July 2024
By Maynard Paton

H1 2024 results summary for City of London Investment (CLIG):

  • A subdued performance due to ongoing market “headwinds”, with funds under management (FuM) and revenue up 2%, profit down 5% and the dividend kept at 11p per share for the fourth consecutive H1. 
  • CLIG blamed further FuM withdrawals of $294m on higher deposit rates and appealing index trackers, although the follow-up Q3 statement reported a bumper $224m inflow as clients reappraised the group’s “compelling” portfolio valuations. 
  • A “strategy of engagement” with unhappy major shareholder George Karpus has led to welcome cost cuts, yet the staff profit-share continues to edge higher and doubts persist about whether CLIG is run for the benefit of employees instead of shareholders.
  • Other questions from this H1 concern the effectiveness of the salesforce, the reduced disclosure on fee rates, the necessity of a main-market listing, the revised testing for goodwill impairment and the failure to meet the group’s sole KPI.
  • While CLIG’s own projections point to earnings that just about support the 33p dividend and 9% yield, publishing USD accounts but declaring GBP dividends may confuse the 1.2x payout-cover policy. I recently bought more and continue to hold.

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SYSTEM1: Positive H1 2024 Reveals Platform Revenue Up 44% And Leads To Encouraging Dividend Reappearance While £17.5m Illustrative CMD Ebitda Projection Supports Possible £15 Share Price And Reinforces Bid-Target Speculation

23 June 2024
By Maynard Paton

H1 2024 results and Capital Markets Day (CMD) summary for System1 (SYS1):

  • A positive H1, with platform revenue up 44%, greater workforce productivity and improved cash generation leading to better-than-expected Q3/Q4 statements and the upcoming reappearance of the dividend.
  • H1 progress was not perfect, and drawbacks included questionable adjustments, revenue per client seemingly stagnating and services beyond ad-testing — which offer much larger addressable markets — still losing sales and still requiring product revamps.
  • Despite the higher H1 revenue, direct costs declined a remarkable 17% to deliver a record 88% gross margin. But significant bonuses limited the Ebitda margin to 13% — somewhat below the “at scale” target of 30%.
  • The subsequent CMD disclosed founder/executive John Kearon is now evaluating “long-term strategic opportunities“, which raises questions about his “relentless execution” of his own platform plan.
  • The CMD also provided a £17.5m illustrative Ebitda projection, which supports a possible £15 share price and reinforces my speculation that SYS1 could/should become a bid target.

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MOUNTVIEW ESTATES: Reassuring 59% Gross Margin And Hefty £29m Property Acquisitions Support Satisfactory H1 2024 Although £100 Shares Still Trade At NAV Despite Possible £189 Value

17 May 2024
By Maynard Paton

H1 2024 results summary for Mountview Estates (MTVW):

  • A satisfactory H1 performance, showing revenue up 5% and profit up 16% buoyed by the gross margin on property sales rebounding to a reassuring 59%.
  • Despite a hefty £29m spent acquiring new properties, greater debt, higher interest costs, extra tax and the chunky dividend kept net asset value (NAV) at approximately £101 per share. 
  • Properties purchased after a 2014 valuation and then sold look to have realised limited gains, and could explain why NAV growth has slowed and the share price has stagnated during recent years.
  • The protracted search for a replacement non-exec could spark further tensions between the board and unhappy shareholders, with the chief executive still entrenched through family support albeit with no obvious successor.
  • The £100 shares currently offer a 5% income, the highest for decades aside from the banking crash, and could be worth £189 if all the group’s properties were sold today at their vacant possession value. I continue to hold.

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ANDREWS SYKES: Preparing For A Bidder? Bumper £25m Special Dividend, ‘De-Risked’ Pension Scheme And Intriguing Executive Appointment Prompt My Speculation After Eclipsing Record H1 

26 April 2024
By Maynard Paton

H1 2023 results summary for Andrews Sykes (ASY):

  • A bumper £25m special dividend was the clear highlight of this record H1, which reported net cash reaching £39m after revenue increased 2% and profit gained 14%.
  • Progress was underpinned mostly by ASY’s European depots, where revenue climbed 17% and earlier restructuring led to “significantly reduced” losses in France. 
  • The “de-risking” of the pension scheme was a welcome surprise and, alongside a very intriguing executive appointment, could be interpreted as preparing the company for a potential bidder.
  • The accounts remain very respectable, with the H1 margin at a super 25%, cash generation helped by tight stock management and bank debt kept at zero.
  • A possible 13-14x P/E does not appear outrageously expensive, although the limited free float, weather-sensitive operations and mixed H2 outlook might restrict any re-rating. I continue to hold.

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ANDREWS SYKES: Water Pumps Rather Than Heatwave Scramble For Air Conditioners Drive Record FY 2022, Lift Net Cash To £37m And Support 20%-Or-More Margin For 20th Consecutive Year

19 April 2024
By Maynard Paton

FY 2022 results summary for Andrews Sykes (ASY):

  • A record FY performance, with revenue up 10% and profit up 8% buoyed mainly by greater demand for water pumps rather than the scramble for air conditioners during the 40-degree summer.
  • Bolstered by strong Italian, Dutch and Belgian progress and defying problems in France, European revenue climbed 24% and represented a record 31% of the group’s top line during H2.
  • A £2m write-down of unpaid customer invoices appeared to draw a line under the group’s problematic Middle Eastern division.
  • Revenue per employee reached a new £151k high although hire revenue at 1.07x the cost of hire equipment indicated no real improvement to fleet productivity.
  • The accounts remain very favourable, showcasing net cash of £37m, a 26% return on equity and a 20%-or-more operating margin for 20 consecutive years. I continue to hold.

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M WINKWORTH: ‘New Blood’ Sought To 3-4x Revenue At Certain London Branches After ‘Challenging’ Market Reduces H1 2023 Profit By 26% And Leaves ‘Progressive’ Dividend Yielding 6.9%

31 March 2024
By Maynard Paton

H1 2023 results summary for M Winkworth (WINK):

  • Only the dividend advanced higher (+7%) after a “more challenging” property market alongside greater costs caused franchisee network income to decline 5%, revenue to remain flat and profit to drop 26%. 
  • WINK’s franchisees continue to report greater SSTCs and exchanges versus other agents, with sales commissions improving to an estimated £5.4k per transaction and “new blood” being sought to 3-4x franchise revenue at certain London branches. 
  • A third company-owned office seems on the horizon, although the departure of WINK’s successful Tooting manager plus unclear financial progress at Crystal Palace do raise questions about the in-house approach.  
  • A lower margin and adverse cash generation reflected this H1’s reduced sales activity, but a post-H1 update indicated a stronger H2 2023 that ought to include greater returns from franchisee loans. 
  • Projected earnings of c12p per share may limit increases to the 11.7p per share dividend, although net cash of £4m alongside owner-directors committed to a “progressive” payout should sustain the 6.9% yield. I continue to hold.

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S & U: Record H1 2024 Overshadowed By Subsequent 8% Dividend Cut As Economic ‘Headwinds’, Greater Regulation And Higher Debt Costs Leave £18 Shares Valued Below 1x NAV

24 March 2024
By Maynard Paton

H1 2024 results summary for S & U (SUS):

  • A record H1, during which larger loan sizes and lower-than-normal bad debts offset higher interest costs and pushed net asset value (NAV) to a fresh £18.86 per share high.
  • This H1 was then overshadowed by February’s trading update, which revealed H2 motor-loan collections alarmingly reduced from 94% to 90%, extra Q4 write-offs of approximately £5m and the second-interim dividend cut by 8%.
  • Greater FCA regulation, including the new Consumer Duty regime, is prompting SUS to revise its motor-finance lending and seems likely to lead to inherently lower margins, reduced transactions and higher regulatory-admin expenses.
  • Net finance costs absorbed a significant 12% of H1 revenue, with post-H1 debt increasing to £224m — equivalent possibly to 100% gearing — and borrowing rates perhaps now at 8%.
  • Tighter regulation, greater debt expense plus various economic “headwinds” leave the £18 shares at 2014 levels and below 1x NAV, a valuation that has occurred only occasionally during the last 30 years. I continue to hold.

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BIOVENTIX: End Of 7-Year Special-Dividend Run After Record FY 2023 Spotlights Encouraging Alzheimer’s P-tau217 R&D And Leaves £50 Shares Trading At 31x P/E

27 February 2024
By Maynard Paton

FY 2023 results summary for Bioventix (BVXP):

  • A record FY, with revenue up 9% and profit up 8% albeit split between a post-pandemic H1 rebound followed by a standstill H2.
  • Sales efforts were supported by best-seller vitamin D (+7%) and second-best-seller troponin (+30%), although the latter may not be too far away from reaching ‘peak’ revenue. 
  • Significant long-term progress continues to rest upon R&D success with the University of Gothenburg, which has published encouraging lab results using BVXP’s antibodies to identify early-stage Alzheimer’s through p-tau217.
  • While revenue per employee at a super £801k and minuscule £11k capex continue to underpin amazing cash generation, the total dividend was unchanged at 152p per share, dividend cover has reduced to almost 1x and the seven-year run of special payouts has now ended.
  • The £50 shares trade at a premium 31x P/E and reflect understandable Alzheimer’s optimism alongside the general revenue longevity and terrific economics of successful antibodies. I continue to hold.

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