Markets Live chat transcript for the chat ending at 12:27 on 17 Mar 2011. Participants in this chat were: Neil Hume, FT bryce.elder Tracy Alloway
NH
Good morning
NH
From Cheltenham
NH
Live from the Betfair
NH
Stephen is here
NH
I am just trying to get him logged in
NH
please bear with us for a moment
NH
very swish tent
NH
and in green for St Patrick’s Day
BE
(@Ditto: I’m on lurking and zapping duty at the moment.)
BE
Bear with us for a moment.
BE
We’re having a few issues getting Stephen onto the site.
NH
hang on a moment
BE
Feel free to talk among yourselves.
BE
Oil, gold, the carry trade …
BE
Hobbyist atomic physics
BE
You know, the usual stuff.
BE
Ok – we’re making an emergency fix.
BE
(@anthrax: shush. Do we come round your work and tell you how to empty the bins? No we don’t.)
BE
BE
Still no progress.
NH
OK
NH
here’s what we will do
NH
Stephen is going to come in under my name
NH
and we will go from there
11:14AM
NH
morning all, sm here
NH
for once betfair arent to blame, honest!
BE
Ok – let’s just underline what’s happening now.
BE
NH is in fact Stephen from Betfair
BE
Not NH.
BE
So – Stephen – how’s your luck been this week?
NH
sm – pretty awful to be honest so far
NH
sm – but two days to go
NH
sm – i think wishful thinking has a very strong chance in the first race, and given the luck michael o leary has had so far this week you have to save on his two runners today as well
NH
sm – ravage d’or in 2.05 and beautiful sound in the 4.00
BE
So …
BE
On to the meat of the day.
BE
Do you have any views on what the Treasury’s plans are?
NH
we dont have any transparency into what they are going to do
NH
but hope tht it will be structured taking into account how the global egaming world has evolved
BE
There’s a move by the industry to go offshore at the moment.
NH
we ended up as pretty much last man standing
BE
Can you explain a bit more about the decision to go to Gibraltar?
NH
sm – and dont forget the government owned tote oprates under an alderney licence
NH
sm – we operate the core exchange under a gibraltar betting licence, with the key equipment based in dublin
BE
So the decision wasn’t just about cost savings?
BE
Or tax dodging?
NH
no, it was the right thing for us to do. We have been very transparent that we have been operating at a significant technical and commercial disadvantage
NH
sm – that wasnt sustainable
NH
sm – we still employ 12oo people here
BE
And can you give us some detail about what’s happening in the US
BE
And your attempts to get a licence there?
NH
sm – the US as a whole remins very exciting, but over the long term.
NH
sm – i am convinced that tvg was a great market entry strategy as an acquisition
NH
sm – exchange legislation has been passed in cal and new jersey. Cal aiming to be up and running by may 2012
NH
sm – we hope to apply for licenses in both states
BE
(@VP: we’ll be picking up on the usual knockabout markets nonsense in the second half of today’s show.)
BE
Ok – just to confuse matters further.
BE
Neil is now logging on as Tracy.
TA
hello – i have logged in as Tracy
BE
Fingers crossed that’ll work.
TA
I’m here
BE
TA
Ok, lets talk about the US futher
TA
there’s a rumour
TA
that you might buy a racecourse in New Jersey
TA
in order to help get a licence
TA
any truth in that?
NH
sm – i heard that rumour as well!!! the state own the racecourses there, and we will continue to look at ways of participating in getting a license
NH
sm – but that doesnt have to be by owning a racecourse!
TA
i see
TA
just wanted to clear that up
TA
so
TA
what’s are the next things to look out for in US
TA
is there any roadmap
TA
for what happens next
NH
sm – as I said long term the us is very exciting, its a huge potential,
NH
sm – sports betting is huge over there, but its all totally illegal, apart from horse racing and you have to hope one day prohibition will be proved not to work
TA
Ok a related question
TA
some people think your UK business is mature
TA
and that overseas expansion
TA
is absolutely crucical
TA
to the Betfair investment case
TA
is that right?
NH
I think that online gaming as a whole, and particularly in sports betting, continues to have huge potential, and that applies just as much to the UK
NH
sm – online is still only 10% of the total market
NH
increased broadband and now mobile penetration
NH
sm – more live sports, gambling seen more and more as part of the leisure experience
TA
and what about financial betting
TA
LMAX
TA
we have seen some comments in recent days
TA
from City analysts
TA
pointing to a slowdown
TA
in traffic during March
NH
we launced a producet called lmax about 5 months ago.
NH
sm – lmax is a start up. Ive been involved in betfair from the early stages, and I know how early stage businesses need to iterate and evolve
NH
whats really positive is the quality of the technology and that people are building automate trading systems against it already
NH
sm – but we do need to refine the customer proposition, add single stock equities and make it more international
TA
so you don’t think Betfair has overestimated client loyalty?
TA
in lauching this product
NH
sm – only then will we begin to see the full potential
TA
so what your saying is
TA
Lmax is a start up
NH
sm – its a different customer base to be honest, betfair technology but not the betfair customer base
TA
in its early stages
TA
and perhaps too much was made of it by the City
TA
during the float process
NH
sm – we are very excited about how our technology can be used in different areas
NH
sm – but it isnt ideal having a start up in the full glare of a public company
TA
fair enough
TA
A question on poker
TA
from one of the readers
TA
can you pinpoint
TA
when that turned negative?
NH
sm – poker has been difficult for most operators for a number of years
NH
sm – basically because te two largest sites out there still target US customers, which gives them a huge, and we believe illegal, competitive advantage
TA
right
NH
sm – we used yo run our own software, but moved onto a network in July to give customers more liquidity
NH
sm – we are actually seeing more custpomers play than before – we had over 70000 actives last quarter, but we have lost some of our larger customers. Our task is to get them back
TA
how do you do that
NH
sm – its tough to be honest
NH
sm – and we said it will take longer than we initially hoped
NH
sm – but poker is only about 7% of our total business
TA
ok some questions from the rabble on the right
TA
Stephen, can you tell us why on eartth the US government would licence a gibraltar company that pays no US tax and doesn’t employ US people ?
NH
sm – we bought a business called TVG, which operates in 18 states and has a tv station which broadcasts into 35m homes. They are licensed and pay taxes in the US now
NH
sm – we employ about 300 people in the US at the moment
TA
OK
TA
here’s another
TA
Can you confirm the more you use betfair the more is costs you, i have two friends who were trading on it day in day out who no longer use it as they tell me they starting having to gamble elsewhere due to the premium charge
NH
sm – we believe we offer a much better customer proposition in terms of value and choice. Our odds are consistently better than the competition,and I believe the vast majority of customers who use our site acknowledge that
NH
sm – and we dont close down winning customers
TA
and what about the technology
TA
you experienced quite a big outtage last weekend
TA
can you tell us what happened?
NH
sm – yes. Saturday was a very bad day for us. We let our customrs down badly
NH
sm – we have done a lot of work to make sure this doesnt happen again
NH
sm – we believe we have built up a lot of customer goodwill over the years, and we dont take it for granted – sports betting is hugely competitive and we need to make sure we continue to offer the best experience
NH
sm – ive been at cheltenham with a lot of customers over the last few days, and, although disappointed with saturday, they acknowledge that over the last few years the site has been more robust than ever
TA
are you investing enough in the platform?
TA
like us at Alphaville
NH
sm – this wasnt a financial issue – we spend about £100m a year on technology
NH
sm – its worth remembering how complex our technology actually is
NH
sm – we match up to 10million trades a day, and we settle real time
NH
arent just an exchange, we are a clearing house as well
TA
so to put things in perspective
NH
sm – we are 24-7 365 days a year, we have spikes in business that cant be managed or controlled
TA
you are a more complex business say
TA
than the LSE
TA
and that goes down all the time
London Stock Exchange Group Plc (LSE:LSE): Last: 822.00, up 0.5 (+0.06%), High: 831.00, Low: 818.00, Volume: 83.08k
NH
sm – by far. We have many more transactions, we settle within seconds, and we run it 24-7 for a million different customers rather than couple of hundred
TA
and across different juristictions
NH
sm and in 17 languages and in 10 currencies
TA
OK, so its complex
TA
right
TA
a post float question now
TA
lock ups come off soon
TA
over how much of the company
TA
and are you expecting any large sales?
NH
sm – we have lock ups in place for just over 60% of the total share base. most of those lock ups fall away after 6 months, with about 11% lasting a year
NH
sm – its worth remembering that those existing large shareholders only sold 13% in the IPO itself, these were people who believe in the business for the long term
TA
crikey
TA
this is proving popular
TA
loads and loads of questions coming in
TA
stephen has said
TA
he will answer them all!
TA
and we will run a separate post
TA
how’s that for service
TA
anyway
TA
we have about five minutes left
TA
before Paul Nicholls
TA
comes into the tent
TA
to give us his views on the day’s racing
NH
sm – i dont think his tips will be as good as mine!
TA
so time for a few more questions
Betfair Group PLC (BET:LSE): Last: 865.00, up 10.5 (+1.23%), High: 876.50, Low: 859.00, Volume: 233.69k
TA
any comment on the share price?
TA
disappointed?
NH
sm – better than a tin hat!
TA
was the float value wrong?
NH
sm – obviously we are disappointed
NH
sm – its worh remembering that we didnt raise any new money in the IPO, and we also werent seeing large sales by existing shareholders, indeed we only “managed to get 17% of shares avalable to be sold
NH
sm – i think the share performance is due to a combination of factors
NH
sm – the regulatory outlook in europe has been interpreted natively in the short term, though we believe moving in the right direction long term
NH
m – the sector as a whole is under a lot of pressure
TA
(@eib i didn’t mean all the time. just a artistic license)
NH
sm – we have acknowledged challenges with our poker and horseracing business which was taken badly by the market
NH
and the lack of liquidity in the stock probably compounds it all
NH
sm but we still believe that none of the fundamentals have changed, we have THE killer app for sports betting
BE
Well …..
BE
Just to make the counterpoint argument
BE
I’m going to turn to a note from Banco Espirito Santo
TA
ok
TA
saw that
BE
Who start coverage of BET this morning
NH
sm – thanks bryce!!
BE
With a sell and 701p fair value
TA
ouch
BE
Here’s the gist.
Betfair Group PLC (BET:LSE): Last: 868.00, up 13.5 (+1.58%), High: 876.50, Low: 859.00, Volume: 233.78k
BE
We do not believe that Betfair’s superior technology platform on its own is enough to justify its premium rating in the sector. In our view, Betfair is facing a number of regulatory issues as well as increasing competition in its core markets which is only partially offset by opportunities in the US horseracing sector. At 8.0x FY12 EV/EBITDA, increasing to 8.9x when including capitalized development costs, the stock does not offer good value. We initiate coverage with a Sell recommendation and fair value target of 701p.
BE
We are the first to admit that Betfair’s technology platform and operational concept are excellent. However, in order to justify its current rating of 8.0x FY12E EV/EBITDA rating (8.9x including capitalized development costs) the Group needs to demonstrate sustainable industry leading growth. In addition, we need justification that entry into the US market will provide the necessary growth to offset the slowdown they are facing in their core European market. Currently we do not believe either to be the case.
BE
US opportunity limited with horseracing: Betfair could be the first of listed operators to enter the US as California and New Jersey have both, in principle, approved of exchange operations. However, US sports betting regulation is unlikely to extend beyond horse race betting. Horserace betting itself represents less than 2% of the US gaming market and has been in decline since 2003 (total betting handle down 4% p.a). It remains to be seen if exchange betting can bring new customers to the sector. One of the issues that we would highlight is that the existing core customer base is mature with industry observers estimating it to be 80% male with average age of 53. Moreover, market size is relatively limited with the total handle estimated to around $11.4bn in 2010. If we assume that the entire amount shifted to an exchange (which is highly unlikely), a 15% revenue share on a 5% exchange commission would provide the software supplier with $86m. While this would represent around 16% of Betfair’s FY10 revenues, which is certainly not game changing for their business.
BE
Growth in UK/Continental Europe, under pressure from competition and regulation: Recent results show Betfair’s UK revenue growth rate slowing to 3-5% while William Hill and Paddy Power are demonstrating double digit growth (albeit from a lower base). In-play betting is becoming increasingly popular and conventional bookmakers’ margins here are between 3% and 5%, in line with the 2-5% exchange commission. In addition to competition, the online gambling regulatory environment in continental Europe is becoming more problematic as exchange regulation is not automatically covered under sports betting. This may well delay Betfair’s entry to regulating markets which has already been the case in Italy. There is also the risk to exchange player liquidity if regulators require a ring fenced platform to ensure money does not flow outside their territories.
BE
Betfair’s license shift to Gibraltar has brought savings of £20m p.a. This provides much needed margin support as our FY13E operating profit margin of 20.1% would have been 15.3% without it. However, beyond changing license jurisdictions and cost controls, the Group needs to demonstrate it can continue to gain market share in core territories.
While we estimate that it will generate 43.7% EBITDA and 69.6% EPS growth p.a over FY11-’13, which is in part driven by the cost controls, the estimated revenue growth over the period is a modest 8.9% p.a. As a result we initiate coverage with a Sell rating, a 701p FV target indicating 18% downside from the current price.
BE
Stephen – any thoughts?
NH
sm – we believe that we have a very defensible business that offers a truly better customer experience, and is very cash generative. We have many opportunities for growth in the core business across channels and geographies.
NH
sm – the US is a huge opportunity, but one that will take time. The thought of our product being able to be used by US sports bettors is hugely exciting
TA
ok
TA
thanks for that stephen
TA
and thanks for taking the time to answer the questions
TA
for those of you who didn’t get a response
TA
look out for a post in the coming days
NH
sm – thanks Tracy
TA
TA
and your big tip for the day?
TA
what should I put the Alphaville £15 on?
NH
Sm – wishful thinking in the first race, but im pretty confident about all of my selections!!
TA
Right
TA
you heard it here
NH
sm – the horse is called WIshful thinking by the way!!!
TA
Wishful Thinking
TA
and don’t blame us
TA
if it doesn’t win
NH
sm – and if you back it with betfair, you will almost certainly get better odds!
TA
the going is very good today, if that helps
TA
no overnight rain
TA
but a bit of mizzle in the air
11:59AM
TA
Right
TA
and now on to the usual markets drivel
TA
have we rallied?
TA
BE
We have
BE
FTSE up 0.8% or thereabouts at pixel time.
TA
hmmm
BE
Ahead 46 points at 5602.13
TA
it was looking all very grim late last night
TA
the Nikkei futures were off a 1,000 points
TA
what’s happened
TA
can we have some saloon bar
TA
nuclear physics?
BE
I was told off by the ROTR for mentioning that earlier.
TA
why
BE
Journalists “used to being fed lines” apparently.
TA
i yes
TA
I have heard that today
BE
Or, alternatively, journalists recognising they’re journalists rather than scientists so asking scientists.
TA
about Heritage Gas
TA
but that’s another story
BE
Yeah – we’ll get to that one in a second.
BE
Meanwhile, though, let’s have a look at what’s moving.
TA
right
TA
what’s up?
Weir Group Plc (WEIR:LSE): Last: 1,593, up 52 (+3.37%), High: 1,596, Low: 1,549, Volume: 383.78k
Wolseley Plc (WOS:LSE): Last: 2,064, up 67 (+3.36%), High: 2,071, Low: 2,011, Volume: 591.49k
Royal Dutch Shell Plc (RDSB:LSE): Last: 2,113, up 63.21 (+3.08%), High: 2,115, Low: 2,052, Volume: 2.00m
BE
Huge move in Shell, that.
TA
it is
TA
any reason?
TA
people realising it’s a gas play
BE
Plausible, I guess. But really, it’s bargain seeking.
TA
fair enough
BE
Mixed bag of gainers from what’s come down over the past fortnight.
BE
And, really, there’s only one proper story this morning.
BE
Which is yours.
Heritage Oil Plc (HOIL:LSE): Last: 310.30, up 20.6 (+7.11%), High: 321.30, Low: 307.00, Volume: 5.74m
BE
Any more colour to what went into the paper this morning?
TA
ok, some of the parasite hedge funds out there, have been on the phone.
TA
saying that we put the story in
TA
because it was dropped by Heritage
BE
(Sigh.)
TA
if only that were the way things worked
TA
here’s the back story
TA
the bidder
TA
I believe
TA
is part of the AIDA
TA
Mubudala
TA
they sent a letter to HGAS
TA
or rather their advisers BoAMerrill Lynch did
TA
all informal
TA
but they said we are prepared to pay 425p a share
TA
in cash
TA
subject to some conditions
TA
buckingham
TA
that’s the CEO
TA
knocked back
TA
he wants at least 450p
TA
not sure if ADIA come back
TA
and I guess the reason
TA
HGAS has not made a statement
TA
is that
TA
they knocked back the offer
TA
and it was informal
TA
if that makes sense
BE
Hm.
BE
Big move in the stock.
BE
On bid rumours.
BE
And we can confirm they received a bid.
TA
they did
BE
At a significant premium
BE
From a credible bidder.
BE
I’m looking at the Panel again here.
BE
What’s it for?
TA
well
TA
good question
TA
i think we all need to understand the rules
TA
because I am totally lost now
TA
when does someone have to say something
TA
help takeover panel
TA
pls help
BE
A plus-10% move on specific rumours, which are correct in essence, appears not to be enough to force a statement any more.
BE
That’s not really ideal, unless I’ve got something wrong here.
TA
smith & nephew anyone
TA
De La Rue
12:11PM
BE
Ok – let’s move back up to the blue chips.
TA
getting lots of racing tips from Nicholls
BE
Question on the right about L&G
TA
the course is running fast
TA
very firm
TA
fresh ground today
TA
any horse that’s been training on soft ground in the winter
TA
will lose
TA
yes
TA
what’s happening?
BE
Well, L&G’s not good to firm.
Legal and General Group PLC (LGEN:LSE): Last: 110.00, down 1.1 (-0.99%), High: 113.50, Low: 108.20, Volume: 18.26m
BE
And the results are a mixed bag
BE
Headline miss
TA
right
BE
Largely down to the Netherlands underperforming
BE
Core UK business looks fine
TA
(Nicholls wants rain for Denman. No rain is great for Kauto Star)
BE
Though unexciting
BE
And the numbers rather underline that point.
TA
(course is way too fast. that’s no good for anyone)
BE
Though it remains a decent nap if you want yield.
BE
(Sorry – I’m being infected by the lingo.)
TA
(very good)
BE
Here’s Citi
BE
Headline results. IFRS pre tax operating profits came in at £1,002mn, 10% lower
YoY and 5% below consensus expectations. One-offs contributed £178mn to these
profits. Dividend per share was clearly ahead of consensus expectations (of
4.54p) at 4.75p, 24% ahead YoY. The outlook for dividends looks robust with the
company suggesting that they could move to a longer term cover of 2x as
compared with a current cover on net cash generation of 2x over the medium term
YoY and 5% below consensus expectations. One-offs contributed £178mn to these
profits. Dividend per share was clearly ahead of consensus expectations (of
4.54p) at 4.75p, 24% ahead YoY. The outlook for dividends looks robust with the
company suggesting that they could move to a longer term cover of 2x as
compared with a current cover on net cash generation of 2x over the medium term
BE
Cash generation and VIF. Net operating cash was £728mn, 4% higher YoY and
6% ahead of consensus expectations. Overall, gross cash grew 11% while new
business strain grew by c3x. Within this, risk cash fell 54%, savings cash grew c2x
and investment management grew 34%. It is interesting to note that VIF in the UK
grew by £17mn on an operating profit level thus showing that the “bank” of future
cash flows from the life business is not growing. It is also worth noting that
deferred tax usage mostly means that net cash is mostly unaffected by taxes for
now. (Net deferred tax usage fell by £300mn in the year and £164mn was in the
operating profits)
6% ahead of consensus expectations. Overall, gross cash grew 11% while new
business strain grew by c3x. Within this, risk cash fell 54%, savings cash grew c2x
and investment management grew 34%. It is interesting to note that VIF in the UK
grew by £17mn on an operating profit level thus showing that the “bank” of future
cash flows from the life business is not growing. It is also worth noting that
deferred tax usage mostly means that net cash is mostly unaffected by taxes for
now. (Net deferred tax usage fell by £300mn in the year and £164mn was in the
operating profits)
BE
IFRS profits. IFRS pre-tax profits were £1,002m, 10% lower despite £178mn of
one-offs which were mainly tax related. Post tax profits were £1,092mn, helped by
positive investment variances driving IFRS NAV 15% higher YoY to 83p per share .
Within IFRS profits, risk business profits were 57% lower (due to £59mn of
mortality assumption charges) while savings business profits were 130% higher
YoY and investment management 20% higher. Investment management business
saw net margins of 5.2bps higher than the 4.6bps seen a year earlier and FUM of
£354bn, 12% ahead YoY.
one-offs which were mainly tax related. Post tax profits were £1,092mn, helped by
positive investment variances driving IFRS NAV 15% higher YoY to 83p per share .
Within IFRS profits, risk business profits were 57% lower (due to £59mn of
mortality assumption charges) while savings business profits were 130% higher
YoY and investment management 20% higher. Investment management business
saw net margins of 5.2bps higher than the 4.6bps seen a year earlier and FUM of
£354bn, 12% ahead YoY.
BE
EEV. EEV per share was 132p, 16% higher YoY and 5% ahead of consensus
expectations mainly driven by below the line investment variances/economic
assumption changes (reduction of risk discount rate). EEV pre tax operating profits
were 7% lower YoY and 9% ahead of consensus expectations. Operating
assumption changes and experience variances accounted for 9.5% of operating
profits.
expectations mainly driven by below the line investment variances/economic
assumption changes (reduction of risk discount rate). EEV pre tax operating profits
were 7% lower YoY and 9% ahead of consensus expectations. Operating
assumption changes and experience variances accounted for 9.5% of operating
profits.
BE
New business. New business APE was 28% higher YoY and 1% ahead of
consensus expectations with margins at 33%, 8 points ahead of consensus
expectations. NBP post tax were 4% of starting UK EEV.
Outlook. While the outlook is positive, the commentary cautions around Solvency
II capital requirement for annuities (“disproportionate amount of capital relative to
the risk”) and also cautions that the company could need to invest to drive the
savings business in the face of RDR
consensus expectations with margins at 33%, 8 points ahead of consensus
expectations. NBP post tax were 4% of starting UK EEV.
Outlook. While the outlook is positive, the commentary cautions around Solvency
II capital requirement for annuities (“disproportionate amount of capital relative to
the risk”) and also cautions that the company could need to invest to drive the
savings business in the face of RDR
BE
Conclusions. L&G is one of the stocks that has clearly outperformed the sector
YTD, but it is now against a wall of expectations in terms of both dividend growth
and driving earnings out of its savings business. It is not obviously cheap at a 4.2%
dividend yield, however growth in dividends relies on investment markets being
kind. While the business has transformed to a relatively lower strain business, our
main belief that a shift to savings could drive volume but not profits has been
challenged in these results. We maintain our Sell Rating on the stock.
YTD, but it is now against a wall of expectations in terms of both dividend growth
and driving earnings out of its savings business. It is not obviously cheap at a 4.2%
dividend yield, however growth in dividends relies on investment markets being
kind. While the business has transformed to a relatively lower strain business, our
main belief that a shift to savings could drive volume but not profits has been
challenged in these results. We maintain our Sell Rating on the stock.
12:15PM
TA
RIght
Encore Oil Plc (EO.:LSE): Last: 110.25, up 7 (+6.78%), High: 110.25, Low: 103.00, Volume: 1.32m
TA
I think there is a note out
TA
from Ambrian
TA
and Arbuthnot
BE
Can you give us a taster?
TA
which I will just get
TA
EnCore Oil saw considerable drilling success across its North Sea portfolio in 2010. Despite a recent lower-than-expected resource estimate at Catcher, the company has several important wells to drill in 2011 which could substantially boost its resource base further. EnCore has previously sold assets rather than raise equity to finance its operations and we understand it is considering a potential spin out of its exploration assets via an AIM IPO. This could expedite potential asset sales. We initiate with a Buy rating and target price of 211p.
TA
i can’t copy anymore of that
BE
That’s plenty – ta.
TA
i see
TA
nick bubb
TA
has accepted the
TA
challenge
Supergroup PLC (SGP:LSE): Last: 1,423, up 41 (+2.97%), High: 1,423, Low: 1,369, Volume: 28.63k
BE
Yes, he has.
TA
and he’s a buyer?
BE
We seem to have become the defacto counterpoint for Bubb
TA
let me guess
BE
A role we’re pleased to accept.
BE
He does, indeed, remain “buy”.
TA
why
TA
North of England expansion hopes?
BE
We noted yesterday that French Connection is often used by the bears of our beloved SuperGroup as an example of how a hot fashion brand can go wrong and that our friends on the FT Alphaville Markets Live webcast had asked us to update our views on SGP, given the recent fall in the share price and the fact that “middle aged fat banker blokes” have been seen wearing the brand…
BE
We are more than happy to oblige them, as we are, predictably, re-iterating our Buy recommendation, with the shares back down at 1382p from a recent peak of 1893p. A sharp fall of over 25% in a share price normally has chartists rushing for their Sell signals, and the share price is basically telling us that trading has gone badly off the boil in the last few weeks, after a fantastic Christmas and January. But, despite the tough background on the High Street, our spies in Cheltenham and Baker Street tell us that the company is still pleased with the way the business is trading in the UK, both in the standalone stores and in the House of Fraser concessions.
TA
spies in Cheltenham
BE
And that makes sense, because SGP said that their exit-rate from January was strengthening, just as other retailers were weakening, and the weather has been helpfully cool for selling through winter stock. And although discretionary spending ain’t what it used to be, consumers are clearly still interested in buying things that last and Superdry is still a brand with great pricing power: why buy a £15 shirt in Primark when you can invest in a much better quality shirt for £45 in Superdry?
TA
I was rather hoping to see Jamie Dunkerton here
BE
So, we are happy with our profit forecasts and on that basis, on just 20x the 2011/2012 year (versus 55x for ASOS…), the shares of this super-growth stock look outstanding value (just as they were after the post-interims sell-off in December). We still target 2075p.
TA
not sure if he’s a horse racing fan
TA
so
TA
it’s a bargain
TA
compared with ASOS
Asos PLC (ASC:LSE): Last: 1,730, down 2 (-0.12%), High: 1,756, Low: 1,714, Volume: 43.38k
BE
And Superdrug’s pitch is now that it’s better quality
BE
Thank Primark
TA
Superdrug
TA
BE
Obvious synergies between those businesses.
BE
Superdry shirts and Lynx aftershave.
BE
Go together rather well.
TA
yes
TA
anything else to look at?
BE
[/M25 snobbery]
TA
I am desperate for a Guinness
TA
and a flutter
TA
I have a whole £15 to spend
TA
I have something on
Kalahari Minerals Plc (KAH:LSE): Last: 206.75, down 27.25 (-11.65%), High: 207.86, Low: 192.00, Volume: 2.95m
BE
Go on.
TA
KALAHARI (KAH LN) – CGNPC is unlikely to make any immediate changes to
its proposed offer for KAH, notes Deal Reporter. CGNPC is likely to
reassess the situation once the environment has stabilised rather than
make a premature assessment based on daily market gyrations. Its current
priority is to push ahead with the regulatory process in China and
Australia, as it is still working on a 3 May timetable to fulfill the
conditions to the offer..
its proposed offer for KAH, notes Deal Reporter. CGNPC is likely to
reassess the situation once the environment has stabilised rather than
make a premature assessment based on daily market gyrations. Its current
priority is to push ahead with the regulatory process in China and
Australia, as it is still working on a 3 May timetable to fulfill the
conditions to the offer..
TA
way way
TA
below the offer price now
TA
and overnight in Canada
TA
a uranium play
TA
Mantra
TA
was suspened
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after its Russian bidder
TA
invoked a MAC
TA
citing Japan
TA
and slashed its offer
TA
I wonder if that happens here
TA
or they just walk
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290p on the table
TA
ubject to a million conditions
BE
Interesting. First bid to stall in the wake of Japan.
BE
Wonder what’s happening with Chaucer?
Chaucer Holdings PLC (CHU:LSE): Last: 53.00, up 0.75 (+1.44%), High: 53.22, Low: 51.50, Volume: 689.03k
TA
oh yes
BE
The chances of that one happening soon look to be receding.
TA
hands
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will he
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walk on japan
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at the very least DD
TA
is going to take months
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there’s no way
TA
Chaucer can know what it will lose in Japan
BE
Indeed.
BE
Ok ….
BE
I think we should leave Neil to spend the Alphaville biscuit fund on some three-legged nag.
TA
yes
BE
So, thanks for joining us today.
TA
I am off into the Guinness village
TA
thanks for joining us today
TA
and thanks to Stephen
TA
look out for answers to further questions
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from the Betfair man soon
BE
“Guinness Village” – sounds ace.
TA
thanks
TA
and goodbye
BE
Yes – thanks again to Stephen Morana