Hydrogen Economy
14 Jan 2015
Re: Trading Update OxtraderAgree overall slightly downbeat but no serious concerns. Tuffnell's contribution should help keep earnings at least flat. With PE of 8.8, well covered yield of 6% I am comfortable holding for now.H2
Oxtrader
14 Jan 2015
Trading Update They indeed did sway into the negative area, albeit only very slightly. The acquisition & benefit of the freight company won't be realised now until April; so there's quite sometime before that gets worked into the figures.Shame there's not much more to read into Connect's Pass-my-parcel commitment, unfortunately it sounds like they weren't able to fully utilise this for the busy Christmas trading period.With little significant change in the business, this will probably happily sit around the 150p-160p for sometime to come.
Oxtrader
13 Jan 2015
Re: Sold out--- Always wise to sell Having said that, the director sells running up to tomorrow's results makes me feel a little uneasy..The last results in November posted only a small increase (1%?) This could easy sway into the negative region, but I feel that the busy Christmas that 2014 had logistically, should bolster business for Connect Group.Having said that, I'm not sure what the margins actually are with partnering with Amazon's Click and Collect service. Knowing Amazon though, I'm sure they aren't too handsome.
kbf
31 Dec 2014
Sold out--- I spent 30 years running transport, and I assure you there are very few profitable parcel deliveries that I know of.Generally- If there are profits made at all, you will find it's at the owner drivers expense.Usually it is made by buying and selling the vans and such at much lower prices than the price charged to the O/D.Some operators also sell the DIESEL to these same O/Ds, at a much higher price.This is done because most can't afford an account with a garage group. Therefore they they are a captive group.And so, I thought the risk of staying in was too great.I hope it works out for all you guys. Best of luck to all staying in.
Hydrogen Economy
30 Dec 2014
Re: City Link I agree the City Link failure looks double edged for CNCT, showing the tough state of the market but opportunity to take market share and possibly assets. Looking at the history of City Link it looks like it really should have gone into liquidation in April 13 when BC bought it. . Moulton's previous claim to fame was Alchemy's attempt to rescue Rover - seems to have a thing about lost causes. At least CNCT have a track record of managing distribution on low margins, even if as pointed out below in a different market sector. I will be interested to see how the SP reacts to going XD next Thurs. high yielders sometimes see ongoing falls after the XD date, I will probably add if it does..H2
Merlindale
30 Dec 2014
Re: Cream rises to the top Bought into these for the first time at 151.8p and agree Eb's analysis and the failure of City Link will help - seems a very fair PE , a well backed prospective yield and a well managed business
Eagerbeaver66
27 Dec 2014
Cream rises to the top They will probably get pulled down with the rest of the sector on Monday, but I think this news is actually a positive for Connect.It helps to highlight what a strong company Connect is, highly profitable, solid, and growing in a competitive sector littered with loss-makers and marginal services like Yodel, or Ocado. Citylink's failure just looks like one more milestone on the way, where a handful of winners survive to dominate the sector. -The cream will rise while the also-rans will fall by the wayside.I wouldn't be surprised to see Connect picking up some assets on the cheap now, as they did when Dawson went to the wall a few years ago, (after Connect, called Smiths News then), won all their customers business from them). Its also good that Connect are now in at Amazon where they may encroach on Yodel's space, since Yodel must be one of the most next vulnerable companies - They have the poorest customer ratings and still are not profitable, so could easily become the next domino in the pack.
Oxtrader
27 Dec 2014
Re: City Link Well not surprising* considering - bah!I too happily bought into the rights issue Hydrogen Economy - but how much will it bring connect group into the already tough mass-market delivery sector? As after all connect group, are a more specialist B2B delivery company.
Oxtrader
27 Dec 2014
City Link Well not surpassing considering the pressures on logistics companies presently - but the market consolidation of City Link might bode well for Connect Group and other companies alike. Also indeed, the oil prices will be great relief for these companies in the short term!
Hydrogen Economy
20 Dec 2014
Oil Price RI and acquisition completed so I expect SP to start rising in the new year when the additional stock finds a home.One thought is that for a tight margin distribution business which must spend a high proportion of costs on fuel the oil price drop should helping profits.Bought my RI allocation and happily holding for now. H2
Hydrogen Economy
03 Dec 2014
SP - RI In case anyone was wondering what the current SP reflected - as I was, noting that my broker was showing a reduction in pool cost I had to check the Prospectus to determine that the current SP is equal to the price assuming rights are taken up,ie If you held 10000 pounds worth COB 1st Dec when price was approx 1.85 ie 5405 sharesIf you take up the 2 for 7 rights you will have 6950 total shares and pay 1575 pounds for the additional 1544 shares at 1.02p per share. So effective SP is 11575/6950 = 1.66 which was where the SP opened on 2nd. (although drifted lower since in weak market)You can correct for your pool price by substituting you old pool price for 1.85 in the above calculation.But you canny CNCT investors knew all about that anyway.Don't forget to elect for your preferred option before 10thI'll be happily taking up my new shares, CNCT feels like a steady though unspectacular bet with good yield.H2
JohnOfYork
21 Nov 2014
Re: Tipped in IC this morning Oh no! An IC recommend is normally the kiss of death!
r21442
21 Nov 2014
Tipped in IC this morning Bull points•Diversifying into new growth areas•New acquisition brings national coverage•Cost-cutting measures working well•Fat sustainable dividend yieldBear points•News market in long-term decline•Books business struggling Connect Group's (CNCT) lowly valuation reflects concerns about the long-term decline of its traditional business, Smiths News, which serves the dwindling newspaper and magazine market. However, we believe a share rating of less than nine times forecast earnings overlooks the work that has been done to diversify the business into potentially exciting growth areas. What's more, Connect boasts solid cashflows that look very capable of supporting the shares' attractive yield.Since changing the name of the company from Smiths News to Connect Group in April - reflecting the company's aim to deliver half of profits outside its flagship Smiths News and magazine distribution service - management has been successfully plugging holes in its existing operation while scouring the market for the next big thing.The process began in October with news of two new ventures in parcels and coffee, which will utilise Connect’s existing route network, which means little start-up capital should be required to expand into these growth markets. The first venture announced was Pass My Parcel, a click-and-collect delivery service enabling Amazon shoppers to pick up orders from their local newsagent within hours of making an order. tapping into Smiths News' distribution network and half-empty vans, entrance into this market, which analysts at JPMorgan Cazenove predict will more than double in size between 2014 and 2017, should be relatively straightforward.The same is true of Connect’s other recent initiative, Jack Bean, which involves supplying coffee, and the machines that make it, to the same convenience stores across the country that it has been distributing newspapers and mags to for years. Given the nation’s love of coffee, this too could turn into a very profitable operation. The icing on the cake has come with the acquisitions of Tuffnells Parcels Express this month. The business, a next day B2B deliverer of parcels of irregular dimension and weight, is being acquired for £113m, using a £55m rights issue at 102p and extended debt facilities. The acquisitions is expected to be earnings enhancing in year one and substantially earnings enhancing in year three. In effect, Tuffnells supplements the Pass My Parcel and Jack Beans ventures by providing Connect with a market-leading business with national coverage.These new initiatives should eventually help offset the challenges faced by its other division. The books division has been hit by margin erosion as business moves online. But management plans to give books the same cost-cutting treatment that helped Smiths News reinvigorate itself. Action taken to improve the performance of the division saw profits rise 7 per cent last year and long-term distribution contracts means 84 per cent of its revenue is secure to 2019. Meanwhile, Connect's Education and Care division traded well last year with underlying profits rising 5 per cent.The steady revenue stream from newspaper and magazine distribution should help support Connect’s reputation as a strong generator of cash, which should not only fund the expansion of new initiatives but also underpin a rising dividend - the board recently proposed a dividend per share of 9.7p, representing a yield of nearly 6 per cent.Connect's growth initiatives have already seen the shares move off recent lows and we think there could be much more to come. And while investors wait to see how these exciting developments progress, there's an attractive and growing yield on offer. Buy
Eagerbeaver66
19 Nov 2014
zero sum game? If Royal Mail are reducing their growth estimates by 4%, because of Amazon's plans to use their own click and collect suppliers, then I guess that gives scope for Connect to grow by upto 20% just from that part of the service alone!
