gamesinvestor
30 Jan 2018
Re: Another Holdings RNS ""But does it really merit such a dramatic price drop from the time that highlighted competition. £25.00 to £8.50 since November is one enormous drop.Unfortunately computer algorithms are ruling the trading patterns on DTY at the moment."""This hardly is warranted given that Dignity on a P/E historically close to 22 in 2014-15 and 20 in 2016 was always vulnerable to a mistake with such a generous valuation. The growth is all pumped primed with debt, it's staring one in the face.At the same time the yield was less than 1%, and it's now a more normal 2.7% to 3% (closer to the index yield) and with a P/E down at a level comensurate with the business.There's nothing special about this, with a projected P/E close to 14 and an expected growth rate of negative 35% forecast for this year, it's still vulnerable to a future covenant breach if the customers don't like what they see with the sudden price drop - maybe they will look upon the outfit as one that has been overcharging and turn away from it with a level of distrust, I dunno. It's very hard to reestablish credibility once it's blown.With such a high debt, it's remarkable that it's still at the 800p level, especially at a time when everything that isn't oil or commodities (both experiencing a bit of a renaissance) is being treated harshly - Dignity is no exception.Games
onewayticket
30 Jan 2018
Re: Another Holdings RNS There would appear to still be someone in the background intent on bringing the price of Dignity down despite a balance in favour of buys over sells and recent revised broker target all above (£10-£14 range)I actually took the liberty of reading the 3rd Quarter trading update this afternoon and I thought I had to check the company name again as I thought I was looking at a completely different company. The update was for an in line with expectations performance. Deaths, Revenue and Profits all up. In fact £79.4M profit and a 1% increase in deaths had led to a 5% increase in profit.TY/news/item/2575890/third-quarter-trading-update?context=LSE
TYNow" target="blank" rel="nofollow">[link] I know that with new pricing will differ next year and it will all revolve around how much extra business they gain by becoming more competitive.But does it really merit such a dramatic price drop from the time that highlighted competition. £25.00 to £8.50 since November is one enormous drop.Its madness. Pure madness.Unfortunately computer algorithms are ruling the trading patterns on DTY at the moment.Own due diligence.
Hardboy
30 Jan 2018
Updating on the new Strategy I dropped an e mail to the company secretary last night asking why; when at the time of the Finals the new pricing strategy will have been in place for almost 2 months, and they usually give us a Q1 update, would we have to wait till the interims (in August) before we are told how the new strategy is working. No reply yet.
Hardboy
30 Jan 2018
Re: Another Holdings RNS Thank Goodness ii seem to have finally got their news feed back in order, so we can actually see the notifications of major holdings - OWT has pointed out 3 entities that have increased their holdings - Phoenix, UBS & Mr Jakes. It seems Harris & SLA have also increased their holdings, but it's not all been one way - Oppenheimer & Kempen have reduced their stakes.
old_punter
30 Jan 2018
Re: What shot up has come down FTSE is up 18% and eps about doubled 2012-2017, but there was still a substantial rerating so you have a point, and I think the query is more about what sort of rating should the stock have rather than concerns about the profit/eps fall in 2018. Fixed costs are two thirds according to the Fitch comment so that magnifies volume changes. However, the 2016 Annual Report says that 84% of total revenue comes from reputation, recommendation or previous experience plus pre paid plans and that this proportion aahs been "broadly consistent" over ten years, which is probably a factor behind the relatively upbeat broker forecasts for eps in 2018.But the question remains what sort of p/e should this stock have given growth may be slower as price increases will be less easy in a more price competitive market. Growth by acquisition may also be more difficult if the shares are less highly rated. Did I read the number of deaths is expected to rise by 2% pa so growth may be only that plus inflation. I don't think the company will or should attempt to reduce its debt given it is fixed at 4.2% and repayable gradually over a period out to 2047. If this high level of debt was not securitised then that would be a different matter. Bank and other borrowing is insignificant. Methinks I may have bought too early.GLA
itsfatboyjim
30 Jan 2018
Re: What shot up has come down .....and t/over has increased from 210m (2011) to 314m (2016).
Doggedly persevering
30 Jan 2018
What shot up has come down A bit of perspective for those hyping this as a bargain.Today’s price is merely back to where it was in 2012. Has the market got less competitive or less price sensitive since then? No.It is the 200% rise in the interim that is the aberration, not today’s price.
TX2
29 Jan 2018
Re: Choppy start to a great ride I have an investment with a fund managed by Phoenix asset management they specialize in running a portfolio of about 15 shares in companies they consider undervalued at the time of purchase.Currently or at least last month it consisted of Lloyds,Tesco,Bellway,Sports Direct,GSK,Randall & Quillter,Redrow,Vesuvius,Hornby,Morrisons,Weatherspoons,Easyjet in decending order by value.Dignity based on this purchase would be about 5% of the fund.Generally they have a very good record over the years;but of course everyone makes mistakes like Hornby perhaps where they must have put in at least £30m and own most of the company.So time will tell if they have got it right.Frankly I would n't pay more than a fiver or so,OK maybe 10 times earnings after tax max..........Peel Hunt forecast £47.8m pretax for 2018.It needs to pay down debt,dividend income is likely to be nominal,growth probably non existent,I would be delighted to be proved wrong as I now have an indirect investment here.Dignity's investment case that justified its high rating was that it had pricing power in a market that had a declining number of suppliers.This does not appear to be the case as new entrants,perhaps by the original owners of the many businesses bought by Dignity have opened.The number of deaths per annum is marginally increasing by about 2% in line with back dated population growth,Just one new entry in each area the company operates can cause pricing competition and/or take business.The business has high fixed overheads.
onewayticket
29 Jan 2018
Re: Choppy start to a great ride There is nothing for you here then Castleford. Great thought though.No chances of a reduction in debt unless they retain the FY dividend or use profit to pay off some debt. Zero chances of an RI that they could have got away at £20 plus and for that to happen the revised cheaper pricing strategy would have to be unsuccessful and the cost would be at least 2 directors who would be falling on their swords.It has to find a level at some point. Day 11 since tomorrow.It is a good game thoughOwn due dili
onewayticket
29 Jan 2018
Re: Choppy start to a great ride Could go down further, could go up.But tonight it finished back around the low point that it reached on the day 19th Jan announcement. That's surprising for a number of reasons:1. On the 1st Jan and as a precursor the Board actually announced this was coming with a fall in the share price of 26% on that day alone and then some more in between.2. Pheonix Asset Management, John Stewart Jakes and UBS account for about 14% in new holdings bought on or after the 19th. 2 of them I personally think bought over £103. Then furthermore the 4 Broker notes that I have seen issued since were £10.00, £10.50, £12.75 and £14.00. (Investec at £12.75 to me seems about the most considered) In fact all I have seen have said hold.I'm interested in top ups at strategic lower points for there is a solid business underneath that is now a lot more competitive.Good luck with any entry point.Own due diligence
CASTLEFORD TIGER
29 Jan 2018
Re: Choppy start to a great ride sorry I needed to addIts always difficult to do LFL figures as the company is growing.The signs were there with the last int accounts that even adding 14 new business the numbers were flat.The debt ratios you quote work if targets are met.The debt pile of 586 m which may well be 10 years profits at the newer level needs trimming.If I were running this I would be tapping shareholders via a rights issue to reduce debt by at least half.The business would be better for it.I can see that debt is long term but no harm in reducing it in my opinion. I am not a fan of big debt piles.tiger
CASTLEFORD TIGER
29 Jan 2018
Re: Choppy start to a great ride ok no position here but looking.Neither of you consider the possibility that business may slip even further?There are a number including co-op who have also cut prices and this means further cutting of prices may happen?I certainly do not rate this at 14x earnings especially now the business model is under pressure.I think there may well be further falls in the price as I expect further bad news to come from HQ.At the moment markets are hammering companies who underperform.I can understand you holding but as an entry point I feel its still weighted against the company.regardstiger
old_punter
29 Jan 2018
Re: Choppy start to a great ride Bigtex,Interested to see your 2018 estimate, I did a similar exercise, on different and harsher assumptions/guesses and ended up with £74m o/profit, maybe 2.1 times financing costs so well ahead of the 1.5 times of the debt covenant and eps of c70p. A p/e of 13 at 896p.Your estimate is close to Investec's who project EBITDA of £86m for 2018 and £89m for 2019, and I accept I may be too cautious and the outturn may well be better. However, I conclude much the same that 2018 is a poor year and there should be progress thereafter although a more competitive market means price increases will not be in excess of inflation as they were. The securitised notes which finance Dignity are rated by Fitch and S&P. I noticed that Fitch changed their rating outlook from stable to negative on 23rd January following the profit warning statement. What they say is available to view on their website, they expect a 13% decline in revenues for 2018. Their current ratings are A for the A notes and BBB for the B notes (lower because of their subordination and longer maturity), these could be lowered. I know a bit about how rating agencies work and they would have had a discussion with the company and would have cleared their release before putting it out. The S& P ratings are lower than Fitch and they may respond similarly. FWLIW, I have now completed my buying of the stock, but would consider adding if the price were to fall further (which I don't expect).
Bigtex
29 Jan 2018
Choppy start to a great ride Assuming 2018 Funeral Service mix of 44% Traditional, 18% Simple, 33% Arranged, and 5% Contract on total of 70,000 Dignity funerals (12.1% market share - slightly higher than 2017 as result of pricing moves) and reasonable operating cost projection, I get underlying operating profits for Funeral Service segment at £50Mill-£55Mill.Add in another £43Mill and £11Mill from Crematoria and Plan Sales respectively and deduct £22Mill for Central Costs (should be at least £2Mill lower!) and Group should achieve underlying Operating Profit of around £85Mill in 2018. This should translate into earnings of £45Mill - equiv to 90p/share. I view this as a minimum return for 2018 and one that should be a springboard for future market share and earnings growth.Using PE multiple of 16, this level of earnings should support a share price upwards of around £14. Hopefully March update will steady and spur the market and more detailed announcement of cost saving programme and level of target savings should assist.I'm in.
onewayticket
27 Jan 2018
Another Holdings RNS [link] d d
