r21442
30 Jan 2018
Shore comment Investors in parcel delivery business Connect Group (CNCTC) have been hit by a profit warning after a long list of failures but Shore Capital still believes the share price is justified.Analyst Martin Brown reiterated his ‘buy’ recommendation on the shares, which were trading at 74.5p yesterday, down 29% after last week’s warning.He said the recent profit warning and ‘stumbling block’ in the sale of Connect Books were ‘yet another blow to investors’. Connect had been due to sell its books division to Aurelius, but announced last week the German investors had pulled out of the deal.‘We recently commented that while we agreed with the new strategy of focusing on early distribution and mixed freight, the long list of strategic failures over the years meant we believed investors should wait to see some delivery first,’ he said.‘A cut to profit before tax guidance was not the delivery we or investors were looking for. Connect’s diversification strategy has now failed to deliver on all fronts.’However, he added that ‘in terms of the share price, the reality is that the current price can be justified by the core news and media business alone’.
casabanker
25 Jan 2018
Re: Chairman buys 30k shares, Numis upgr... I'm sure we've all seen directors buying shares at times of bad news and profit warnings previously. Buying at these levels is a red flag imo as, to really inspire confidence, they need to be buying over £250k's worth. I am not impressed and neither is th market.Casa.
Hydrogen Economy
25 Jan 2018
Another director buy 20k shares Another modest vote of confidence. H2David Bauernfeind, Executive Director, bought 20,000 shares in the company on the 23rd January 2018 at a price of 74.93p. The Director now holds 60,000 shares.
TX2
24 Jan 2018
Re: Chairman buys 30k shares, Numis upgrade I think perhaps a more sensible upper valuation by Numis.I have made a modest 4000 share purchase @ almost 74p & see what happens until the next reporting period before further action.It is all a question as to whether it can build Tuffnells up to augment the decline in the Smiths News business and continue to make a profit & build a business with a long term future..I am not sure that it can continue to pay out all the cash flow in dividend.I feel it needs to pay down debt perhaps half in div' half in reinvestment.
Hydrogen Economy
24 Jan 2018
Chairman buys 30k shares, Numis upgrade A couple of positive news items, Chairman's buy, not massive but is hopefully first of several by board members to show confidence that they have a grip on the issues recently reported and that SP is undervalued.Numis upgrade also slightly double edged with the SP target dropped, but given the drop that is to be expected. H2-Gary Kennedy, Chairman, bought 30,000 shares in the company on the 23rd January 2018 at a price of 75.99p. The Director now holds 50,000 shares.-Numis today upgrades its investment rating on Connect Group PLC (LON:CNCT) to buy (from add) and cut its price target to 100p (from 135p).
forwardloop
23 Jan 2018
info [link] profits for the year are now forecast to be between £42mln and £45mln.That’s still more than the £34.2mln it generated last year, but analysts had been looking for a figure nearer to £50mln.Connect struck a deal – worth up to £11.6mln – to sell off its books division to European investment group Aurelius Equity Opportunities.The deal – which will see £10.6mln paid upon completion plus up to £1.05mln in milestone payments further down the line – became unconditional last week when it was approved by German regulators.
Canny Mannie
22 Jan 2018
I got lucky... .. this time as I had a stop order on at 105 triggered last week.Was slightly miffed at the time as Barclays new platform failed to inform me that it had been sold but now very glad it did at least make the trade.GLTA who continue to hold but I'm afraid it looks like long-term decline to me.
marktime1231
22 Jan 2018
Re: Eeeek! - aaaaagh! Further attempt failed ... trying to buy a chunk in my ISA at 75 now 76 now 77p with hundreds of pounds of cash to spare and trading credit, with a view to then sell the equivalent chunk in my trading account ... but ii still refusing to accept the instruction.Tried the number again ... nnn 6001 ... would I like to wait another 10 minutes before shouting at someone?No. You fools ii, had your last chance!Confirmation of my ISA transfer instruction into the post box.
marktime1231
22 Jan 2018
Re: Eeeek! - oh dear oh dear Third attempt to post, previous going missing, no doubt will end up repreating myself, things seem to have frozen up in the last hour. Has ii had a complete meltdown?
Hydrogen Economy
22 Jan 2018
Re: Down £70m - really? GS"So CNCT is now predicting earnings (pre or post tax?) of £42-45m for the year. Taking the lower figure is still EPS of 16.9p. And most of that is free cash flow. "The forecast was pre-tax, I estimate EPS of 13.5p-14.5p for the 42-45m pre-tax range. Still covers the 10p dividend, but cover (adjusted EPS) over last 5 years was 2.3,2.2,2.1,1.7,1.6 so forecast 1.4 fits into a worrying trend. Adjusted PT Profit may exclude some significant "one-offs" relating to the books sale, failure of which seems an outrageous failure on the part of Aurelius Omega Ltd, their parent company (German?) should be able to fund this so one questions why not and why it was allowed to progress so far if funding was not in place. It is unclear that anything materially changed, except perhaps on looking under the bonnet they realized it was a bigger challenge than they expected, but presumably due diligence was carried out. Hopefully CNCT will be able to either force it through or obtain compensation but it is uncertainty no-one needs.H2
kryptes
22 Jan 2018
another brilliant IC buy recommendation When IC tipped this (at about 160p from memory) I took a look and quickly decided it was way too risky for me to invest. Down from 250p in 2014 to just 75p now. Yuk!
Guitarsolo
22 Jan 2018
Down £70m - really? Wow! Talk about hammering a share because of a bit of bad news. I'm no expert on this company (or anything related to this company or investing come to think of it) but really? Wiping nearly 30% off the company - that's over £70m - because of some contractual delays for people signing up to Pass My Parcel and poorer margins than hoped for?PMP was making about a £6m pa loss if I recall from the August 2017 year end accounts. I for one was just thinking about it breaking even in 2019 so didn't really have great expectations for it just yet - just to stop being such a drain. But it is small fry compared to the rest of the company and in no way (in my eyes) was supposed to be the white knight coming to the rescue of the remaining declining business. It was an iron in the fire, that's all! So CNCT is now predicting earnings (pre or post tax?) of £42-45m for the year. Taking the lower figure is still EPS of 16.9p. And most of that is free cash flow. Debt is still high-ish at c. £80m and I note that Stokopedia claims a pension deficit of c.£149m but I don't know the make up of those liabilities to understand whether it is short term enough to present a problem. I note the trading update states that FCF underpins the dividend (at 9.8pps = 13%! and covered by earnings and FCF!). As for the book sale - obviously disappointing that Aurelius is pulling out because it says it can't raise the financing - surely they would have to show they have that before making an offer?! But I see that the directors have reminded Aurelius that it is contractually obliged to complete by this time next year, and has reserved rights to seek redress if they don't. Did the deal have a penalty clause I wonder? It was about £11m I recall which would have been useful to pay down debt. No one wants a legal dispute (except lawyers) but if that is what it takes. Shame though, because the book division was losing money so not being able to off load it now will be a drag. The directors either need to make the deal proceed or get compensation from Aurelius if it doesn't. No one likes to see a share they own drop - especially on "news". I can only hope this is an overreaction - but I've read this completely wrong so far so what do I know?!Guitarsolo
marktime1231
22 Jan 2018
Eeeek! 2018 keeps getting more interesting. Kicking myself for not trimming ahead of the ex-div though not too hard when this dive was without warning. A candidate resolution for 2019 already, to invest less in companies beginning with C.The 30% sp tumble on a profit warning of 16% below forecasters consensus albeit predicting a gross margin of 20% increase on the last 2 years. Difficulties with cost savings are disappointing but they are said to be still in the pipeline. The decline in newspaper delivery business was not unexpected. So is it struggles in other areas which are the body blow?What is the real news - failure of a deal to dispose a small non-core business, but if you have exchanged contracts and met the conditions the buyer is on the hook surely?Most of the coverage has ignored the assurance that the dividend is covered from continuing cash flow. No sympathetic comment anywhere, no bold director or stakeholder share buys ... comments like "this is the first warning" implying more to come are chilling plays on sentimental fear.Resisting adding a chunk on the prospect of 13% dividends, in case there are arguments supporting this gloom and unsure of the chance of an even deeper slump in the sp.
Callun
22 Jan 2018
Re: Trading Update schwee,The statement reads "the Directors of Aurelius Omega Ltd can see no way of financing this transaction". Are you suggesting this is false? What do you read that's not included in the statement?Callun
schwee
22 Jan 2018
Re: Trading Update More interesting is why the buyer for the book business has backed out. One theory is that it is willing to pay the £10m or so acquisition price as a legal remedy, as this will be cheaper than taking on any long term liabilities of the business. Any other thoughts?
