Hits: 15

27 May 2020

Ramsden Holdings – Second interims

Share Price 141p

Mkt Cap £44m

Conflict Disclosure: No Holding

  • Results PBT in 12 months to March was up 18% to £8m. Of the £59.5m revenue, 22% was forex, Retail was 21%, pawnbroking 23% and precious metal purchasing 29.5%. Net assets £35m and net cash £11.1m with an undrawn £10m RCF. No dividend. With all stores currently closed the outlook anticipates 3 phases of re-opening but is unable to predict the timing or the effect of social distancing on trade. Inventories are £13m and the pledge book £10.1m 
  • Estimates currently assume a recovery to the £59.5m revenue by 2022.
  • Valuation The shares trade at 6.6X the 21.4p EPS delivered which is a 26% premium to NAV.
  • Conclusion The company was well placed coming into lockdown and will prosper while its gold stocks appreciate during the pandemic. Shares are 44% down from their highs and it may be reasonable to expect that to recover on perhaps a 12 month view.

8 January 2020

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Ramsdens – Trading Update 

Share Price 235p

Mkt Cap £73m

Conflict Disclosure: No Holding

  • Update Strong trading over Christmas leads the board to believe results will be “comfortably” ahead of expectations. |The strong gold price has helped while pawnbroking and foreign currency continues to do well. Jewellery retail saw double digit revenue growth.
  • Estimates March 2020 estimates look for 15% revenue growth to £53.6m and 24% PBT growth tp £8m which represents a 15% operating margin. The statement implies perhaps a 10% upgrade today.
  • Valuation PE 11.5X Yield 3.1%. The ROE is 17.5% from a balance sheet with net cash of £12.3m.
  • Conclusion With net cash of £12.3m and a dividend of 7.5p against 19p EPS last year it may be that the dividend policy needs to be revisited as acquisitions opportunities are few. The shares are up 40% over 12 months and perhaps have further to go.

3 December 2019

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Ramsdens Holdings – H1 Results

Share Price 200p

Mkt Cap £62m

Conflict Disclosure: No Holding

  • Results Statement opens with “on track to meet full year expectations”. Underlying PBT was up 12% to £5.7m. Forex revenue up 15%, Retail up 22% and Pawnbroking up 17%. 3 stores were opened in the period and 4 acquired which add to the 123 established stores. EPS was up 22% to `15.5p and H1 dividend is increased 13%. Net cash is £12.3m. Three further stores expected to open in H2 and the seasonally important H2 has made a solid start. Board is confident.
  • Estimates FY PBT is expected to be £8m from £53.6m revenue. EBITDA expected to be £9.8m. Given we have underlying PBT of £5.7m in H1 that looks somewhat better than “on track”.
  • Valuation 2X Book value for an ROE of 17.5%. PER 9.8X Yield 3.6%. H&T trades on 8.6X.
  • Conclusion The shares have sold off on the back of H&T’s FCA review announced in November. This is a time in the cycle when the stars are aligned for Ramsdens and it looks like an opportunity on a two year view.

7 October 2019

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Ramsdens Holdings – H1 Pre Close

Share Price 193p

Mkt Cap £60m

Conflict Disclosure: No Holding

  • Update. H1 is reported to be “in line” with expectations. The company has also liquidated some stock to take advantage of the high gold price generating a one off £600k profit. The Money Shop stores acquired are reported to be trading well and the company says it continues to appraise acquisitions in this fragmented market. Outlook is confident.
  • Estimates £7.6m PBT is expected for the year to March 2020 which is EPS of 19p. Including the one off stock profit would add 8% to this. 12% earnings growth is expected in the following year to 21.3p EPS, £8.6m PBT
  • Valuation PER 10.2X March 2020, falling to 9.1X March 2021. Yield 3.1%. ROE is now 17.5% and the shares trade at 1.9X book value
  • Conclusion  All the stars are aligned for the pawnbrokers. Consumer demand, high gold prices, competitors disappearing etc. The shares have gone sideways since early 2018. The last bit of this cycle is the market mistaking this for a growth business and rating it accordingly.  There is more to come.  If it got to 12X the share price would be 250p.

4 March 2019

Ramsden – Acquisition 

Share Price 163p

Mkt Cap £50m

  • Acquisition 18 sites are being acquired from the Money Shop together with 70 employees and a £1.1m loan book for a price of £1.5m.  The stores will be refurbished to Ramsden’s format and relaunched as Ramsden stores.  Integration and refurbishment costs may therefore be significant but are not quantified. This adds 13% to their store numbers.
  • Estimates The acquisition is expected to contribute in the year to March 2020 and is expected to add £0.6m (c.10% of profit) in the year to March 2021. On the face of it that is 2.5X Mar 2021 profits for the acquisition price but that will be a much higher multiple if we include the integration and refurbishment costs in the price.
  • Valuation The shares trade at a P/B of 1.7X for 17% ROE which is cheap for a 6% growth forecast pre acquisition. The PER is 9.1X and the yield is 4.8%. H&T trades on a small premium at 10.1X with a yield of 4.3% while achieving a lower ROE of c 10%.
  • Conclusion Over the last 12 months Ramsden shares have drifted down 12% while EPS to March 19 are forecast to grow 3.5% while the company has been investing.  This looks like an attractive time to be looking at this – perhaps post results when they report the expected 3.5% earnings growth which now looks set to accelerate again

3 October 2018

Ramsdens – Pre Close Update 

Share Price 164p

Mkt Cap £50m

·         Update  Profits for 6 months to September are expected to be in line. Jewellery retail and pawn has done well while Forex has reduced due to staycations over the hot summer.

·         Estimates Consensus looks for £6.5m PBT for the year to March 19 up from £6.3m last year

·         Valuation PER is 9.6X, yield 4.4%. ROE is c 19% and the shares trade at 2X book value. H&T trades at a PER of 9.6X and yield 3.2%. It makes a lower ROE of 11% and trades at 1.1X book value

·         Conclusion Ramsden’s FX driver is over and now the upside from retain and personal loans is set to drive the upside in H&T. Time to switch horses.

7 June 2018

Ramsdens – FY Results 

Share Price 186p

Mkt Cap £57m

·         Results  Revenue up 16% to £39.9m. PBT up 60% to £6.5m. EPS up 61% to 16.5p. DPS increased from 1.3p to 6.6p. FX and Reatil Jewellery were the drivers with revenue increasing 26% and 35% respectively. The outlook statement is confident.

·         Estimates Results are 5% ahead of expectations.  The 7.5% reveue growth assumption going forward looks conservative.  Room for upgrades

·         Valuation PER is 11.3 and yield 3.9%. The ROE is just under 20%

·         Conclusion  Cheap shares but with the share price having almost doubled since IPO in Feb 17 the next 12 months may be less exciting.