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Tag Archives: CRH

2016 – The Great Irish Share Valuation Project (Part II)

30 Monday May 2016

Posted by Wexboy in Uncategorized

≈ 9 Comments

Tags

Circle Oil, CRH, Escher Group Holdings, First Derivatives, Galantas Gold Corp, IMC Exploration Group, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, iShares MSCI Ireland Capped ETF, Keywords Studios, TGISVP, The Great Irish Share Valuation Project, Total Produce, Tullow Oil

Continued from here:

Company:   First Derivatives   (FDP:LN)

Last TGISVP Post:   Here

Market Cap:   GBP 494 Million

Price:   GBP 2,038p

My last write-up was bang in the middle of a sickening price reversal. While FDP got nearly sliced in half at the time, my price target’s been massively adrift ever since. Clearly, I was wrong to speculate FDP’s consulting business* might eventually grind to a halt – as banks continue to retrench, we’re actually seeing an increasing reliance on IT outsourcing, while reduced head-count & market evolution demanded ever greater technology capacity & automation. [*Let’s not forget consulting (64% of revenue) remains FDP’s primary business, and its margins are far less scale-able than software]. And revenue’s continued to forge ahead, at an average 28% pa in the last three years, assisted by FDP’s serial acquisition strategy (three new acquisitions & a consolidation of Kx Systems in the last 18 months, or so). Earnings growth trailed though, as FDP essentially bought revenue/technology (rather than profits…with new Big Data & IoT opportunities also being touted) & the share count’s been diluted almost 25% in the last couple of years. [Even on a revenue basis, those acquisitions look damn expensive – averaging over 7 times sales, vs. a 4.2 P/S multiple for FDP]. But FY-2016 was clearly a real gang-busters year, boasting 41% revenue & 33% EPS growth.

However, we’re still seeing a huge disconnect between EBITDA & operating free cash flow margins (Op FCF: Operating cash flow, less net PPE/intangible expenditure). But presuming software is the ultimate driver of the business, EBITDA will become increasingly relevant: A decent compromise for now is to use an adjusted margin, averaging the latest 19.9% EBITDA margin & Op FCF margin of 7.2% (noting a prior year margin of just 2.6%) – a 13.6% adjusted margin deserves a 1.33 Price/Sales ratio. And noting FDP’s financial strength (with net debt of just £15 million), we can adjust for (surplus) cash & also add a debt adjustment. [Based on this adjusted margin, I calculate another £23 million in debt (at an assumed 5% rate, for acquisitions etc.) would still limit finance expense to 15% of adjusted margin – as usual, let’s apply a 50% haircut, just to be conservative]. Of course, we also need to value FDP as a growth stock: While earnings growth has accelerated to 33%, we should still recognise the huge/ongoing disconnect vs. cash flow (& reported earnings, which are now about 40% lower than adjusted diluted earnings) – limiting ourselves to a 20.0 Price/Earnings ratio, based on adjusted diluted EPS, seems only prudent (or maybe even generous):

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2014 – The Great Irish Share Valuation Project (Part VIII)

17 Thursday Apr 2014

Posted by Wexboy in Uncategorized

≈ 4 Comments

Tags

Ardmore Shipping, Chiquita Brands International, CRH, Fyffes, IMC Exploration Group, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Kenmare Resources, Keywords Studios, Mincon Group, Paddy Power, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

Continued from here:

[NB: Worth revisiting Part I if you’re a new reader, or you’d like a refresher on TGISVP & my approach to the whole project.]

Company:   Fyffes

Prior Post(s):   2012 & 2013

Ticker:  FFY:ID

Price:   EUR 1.27

Seems like I picked the wrong horse, choosing Total Produce (TOT:ID) instead of Fyffes…but I can live with that, you can’t pick ’em all & TOT’s been good to me. But maybe not good enough – because FFY popped 46% in early March, on the news of a definitive merger with Chiquita Brands International (CQB:US). [CQB also closed 11% higher on the day – since then, on average, each stock’s held onto its gains]. I think we can comfortably assume the deal will go ahead (unscathed):  Shareholders love it, the DoJ doesn’t give a damn what happens in Europe, and the Irish Competition Authority is presumably asleep at the wheel, as per usual. [A study confirmed the ICA has a rejection rate of just 0.7%!] Anyway, what deal dissenter would relish the possibility of mercenaries dropping in for tea & a little chat..?! 😉 At this point, let’s just rely on the merger terms for our valuation:

USD 12.25 CQB Share Price * 0.1567 CQB Share (per 1 FFY Share) / 1.3841 EUR/USD = EUR 1.39

Fyffes is marginally undervalued – it offers an attractive arbitrage for the big boys, or a cheap entry price if you’re interested in going long the new ChiquitaFyffes.

Price Target:   EUR 1.39

Upside/(Downside):   9%

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2013 – The Great Irish Share Valuation Project (Part XI)

24 Wednesday Apr 2013

Posted by Wexboy in Uncategorized

≈ 6 Comments

Tags

Barryroe, CRH, DGO, Dragon Oil, Fiordland, IFG Group, IFP, Irish shares, Irish value investing, Melrose Resources, PCI, Petroceltic International, Providence Resources, PVR, TGISVP, The Great Irish Share Valuation Project

Continued from here.

Company:   Petroceltic International

Prior Post:   Here

Ticker:   PCI:LN

Price:   GBP 6.3p

Last year, I correctly tagged Petroceltic as slightly over-valued. Despite that, I’ve been surprised to see the share price continue its decline in the past few months…because 2012 was a game-changing year! There were two key events:

First, Petroceltic closed on a GBP 170 mio merger with Melrose Resources in October. This was essentially a merger of equals (with PCI shareholders getting 54% of the enlarged company), and both companies possessed nicely overlapping portfolios in the MENA, Mediterranean & Black Sea regions. The key attraction of the deal, however, was the fact it was the merger of a producer & an explorer. This is an incredibly powerful combination in the hands of the right management team: Production can actually fund a company’s exploration plans on a self-sustaining basis. In this instance, pre-merger cashflows suggest operating cash generation (after interest & taxes) is now running around $155 mio pa post-merger, which nicely funds Petroceltic’s forecasted 2013 exploration & development programme.

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The Great Irish Share Valuation Project II

24 Tuesday Jan 2012

Posted by Wexboy in Uncategorized

≈ 11 Comments

Tags

Alkermes, CPL Resources, CRH, Datalex, DCC, Donegal Creameries, Elan, FBD Holdings, Grafton Group, Great Western Mining, IIU, Liberty Mutual, Monaghan Mushrooms, Produce Investments, Sherlock, TGISVP

OK, folks, let me throw another dozen stocks into the mix!

The Great Irish Share Valuation Project II     (xlsx file)

The Great Irish Share Valuation Project II     (xls file)

A couple of housekeeping items, if you’ll take a look at the first (Wexboy) sheet:  I’ve added a Blog Link column to the right – if I’ve written about a stock already, you’ll find the link there. I’ll bold any stock (see FBD, for example) where I’ve disclosed an ownership stake. I’ve also added some averages at the bottom of the sheet. I’ll discuss these in more detail when there are valuations for a majority/all of the shares listed, but they’re pretty self-explanatory and already look interesting.

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The Great Irish Share Valuation Project I

18 Wednesday Jan 2012

Posted by Wexboy in Uncategorized

≈ 10 Comments

Tags

Abbey plc, Aer Lingus, Allied Irish Banks, Aminex, Bank of Ireland, Conroy Gold, Continental Farmers Group, CPL Resources, CRH, Irish shares, Irish Stock Exchange, Irish value investing, stock screener

Time to take a little breather from Catalysts..! I’ve finally got ‘round to beginning a project that’s been top of my to-do list ever since starting this blog:

Yes, I wanted to identify all the listed Irish companies out there, (re)acquaint myself with their business fundamentals and financials, come up with a rough and ready valuation for each stock, and thereby come up with a list of the most potentially under- and over-valued Irish stocks.

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