Bronc, I'm right with you on the buy and hold strategy and that's where the core of my holdings lie, but I'm uncomfortable with these aspects of the business :-
1. It's very low operating margins - between 2-6% over the years
2. It businesses are all linked to the health of the general business climate -- if the businesses are not being bought or sold or needing valuations or finance, there is virtually no business for Christie - no matter how good a service they provide.
3. They have a high fixed cost in terms of the number of employees and such gearing means that only a relatively small dip in revenues of say 10% will wipe out their small profits and the stock price will tank.
On the positive side, there is only a small % of the company is in free float and the management are financially committed.
I just don't want to be looking at this ins 12-18 months time at 60p or with another year of static dividends or even a cut.
The last set of figures at the interim were quite good with a 10% revenue growth, but the 2016 period was pretty dire.
Also despite showing growth in EPS for the last years, it's not retained any earnings during that period.
It also appears to have it's debt, whilst not large on a comparative basis, all lumped into current liabilities and not structered more cheaply on long term deals -- that leaves it's current and quick ratios below 1 -- may never be an issue of course, but you never say never.
Games -- On the fence -- perhaps a stop loss might be appropriate as the share price has had +ve momentum of late.
I have to admit I bought in on a similar basis, the Lord Lee angle and that it looked relatively cheap. I did a bit of research into it, but I found it a tricky company to evaluate. I think that's mostly because its difficult to get a handle on the main markets - stock taking, and SME M&A / valuations work.
I'm up about 60% so far, so perhaps I should look at cashing in, but it does go against my buy and hold mentality, especially as the spread is pretty wide on this stock due to the low volumes traded.
I'm wondering is it's getting closer to a cyclical top.
I bought this on the back of Lord Lee's article in the FT, without much research into it at the time.From it being heavily oversold and adding to it at lower points. it's now sitting on a reasonable capital gain.
Looking at the business, and whilst it has old and strong brands, it's really a very hand to mouth existence with a profitability per head and revenue per head at wafer thin levels. In 2016 this was about £1,200 and £23,000 respectively.
It's so heavily people intensive and dependent of the general health of the business community wanting to do deals or mergers or valuations (usually associated with transactional business) it's not hard to see it getting clobbered in a downturn once again.
There are some interesting areas like the ticketing on the cloud they operate, although this looks like a relatively small aspect to the business.
Mortgages look vulnerable going forward in a slowing property market, as does insurance perhaps?
The valuations business has got to be predicated on the number of businesses being acquired, so is vulnerable to a drying up of deal flow at any point -- as is the cost base with a big employee base of over 3000 people.
Back in 2007 this was over 230p per share, only to sink to 42p in 2008-9.
Back in 1997 this company paid a dividend of 2.5p.
In 20 years it's gone from that level to zero for long periods, back to 2.5p -- so little real progress in that time.
Not a disaster, but a realistically poor investment over that period - especially had you entered up at the 230 level in 2007.
Nothing exciting I guess, just reassuring that they managed to return to normal profitability in the second half.
If that H1 2016 truly proves to be a blip and 2017 full year returns to the profit levels of 2014-2015, then the current price is cheap.
I have added to my initial purchase made in January, bringing this up to 2.7% of my portfolio.
Dipped my toe in the water with a first buy at 84p. Fingers crossed for a recover in 2017!
My main worry is that continued uncertainty over the terms of Brexit could cause deals to be further delayed. However unlike the referendum, there is no fixed date when this uncertainty will be resolved, so I think and hope that deal makers will just have to get on with business.
That trading update on December 22nd was fairly reassuring, the company should at least record a profit this year and is well positioned to bounce back in 2017, it looks cheap looking forward if it can return to previous profit levels of c. 9p EPS.
I note Lord John Lee remains a holder as well.
My finger is hovering over the button to buy, but I need to wait for some funds to free up.
The one thing I wasn't happy to see is that the DB pension scheme is still allowing existing members to accrue future benefits. I don't like it when companies allow this kind of two tier treatment of staff, as considering the scheme has a hefty deficit, it is not very welcome that members are still adding to this deficit!
Looks pretty reasonable all round, but as usual, unless you shoot the lights out these days your stock gets a beating -- down 5.44%
Oh well at least one can buy some more cheaper!
· Revenue growth of 4.5% to £63.7m (2014: £61.0m)
· Operating profit remained stable at £3.8m (2014: £3.7m)
· Earnings per share increased to 9.73p per share (2014: 9.34p per share)
· Proposed final dividend at 1.5p per share (2014: 1.5p per share) increasing the total dividend for the year to 2.50p per share (2014: 2.25p per share)
· PBS division improves on 2014 result with 9% revenue growth and corporate activity across a broad selection of trade sectors
· PBS operating profits up by 42% to £4.6m (2014: £3.3m)
· Difficult year for UK retail stocktaking which adversely affected SISS division results
· Christie + Co awarded 'UK's most active agent' in the Leisure and Hotels category by the Estates Gazette for the sixth year in succession
· Christie Finance wins 'Commercial Mortgage Introducer of the Year' at the Business MoneyFacts Awards
Commenting on the results, David Rugg, Chief Executive of Christie Group said:
"During 2015 we expanded our team, our network & our range of services and grew our client base.
We have developed our systems for implementation in 2016 and are soundly based for the future."
Read Panmures full note on Christie Group (CTG), out this morning, by visiting www.research-tree.com
"Prelims to Dec 2015 ahead of forecasts, but 2016 had a quiet start 9% sales growth in CTGs PBS division on broadly stable margins. 2016 softness leads us to reduce our PBT forecast by c.7%. Target price goes from ..."
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