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

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Aryzta, Celtic Phoenix, Formation Group, Fyffes, Hibernia REIT, Independent News & Media, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Kerry Group, Kingspan Group, Mainstay Medical International, Origin Enterprises, TGISVP, The Great Irish Share Valuation Project, WisdomTree ETF

Um, apologies, the blog’s been quiet since early last month – though I’ve certainly been keeping up with readers via Twitter…Good Lord, I’m now up to 25K+ tweets!? Actually, I’ve been more than usually focused on stocks both old & new in my portfolio. Which seem to be increasingly bifurcated between special situation stocks where I continue to engage with/push management to enhance and realise shareholder value, and growth stocks (at the right price) where I can sit back & watch smart management compound shareholder value over time.

Hmmm, put it like that & growth stocks seem like the far more compelling choice..!? Though in reality, each presents their own unique risks/opportunities. And for me, somewhat perversely, one tends to inspire the other…dealing with recalcitrant management can inspire me to seek out smartly managed growth stocks, but actually seeing it done right, such companies also highlight the compelling value lurking out there just waiting to be tapped (sometimes, literally, overnight) if only management would come to their senses (or a third party steps in & does it for ’em).

Anyway, a little break’s a good thing – and we’re all feeling much better now, with most markets recovering their Jan/Feb losses this month. Hopefully, this new-found momentum will continue (at least ’til the usual ‘Sell in May & go away’ debate!), as markets generally remain flat/down over the past year – it’s been a tough period for nearly all concerned (spare a thought for those poor billionaire hedge fund managers!), clearly exacerbated by oil’s elevated volatility & influence.

And as promised, a good time to kick-off The Great Irish Share Valuation Project, with the ISEQ on a breather for the past year (down 0.6%) (but still over 40% off its all-time high, as set nearly a decade ago now), and the Celtic Phoenix offering more opportunity than ever… Long-time readers will be familiar with TGISVP (here’s my kick-off posts from 2012, 2013 & 2014), where I attempt to analyse & value every listed Irish stock out there (and usually piss off some tired & emotional shareholders in the process). The great thing about the Irish market is its size…one of the few globally (with about 70-80 stocks, in total) which actually presents investors with the opportunity to really get down & dirty with every single stock. And it’s a real stock pickers’ market, as I’ve previously highlighted:

‘And it’s worth noting brokers often segment the Irish market into very different sector/exposures. And so, accordingly, it tends to attract pretty dissimilar investor constituencies, who may only focus on: i) a handful of the largest caps, regardless of valuation & exposure, ii) stocks which (may) offer cheap/alternative access to overseas growth (a surprisingly large number of Irish companies are UK/Europe/globally focused), iii) stocks offering domestic exposure (notably, economic pure-plays are actually pretty rare), iv) a listed commercial & residential property sector that’s only emerged in the past couple of years, and finally (& perhaps most notoriously) v) a (junior) resource stock sector that’s been decimated in the last few years.‘

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

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Conroy Gold & Natural Resources, Dragon Oil, FBD Holdings, First Derivatives, Greencore Group, Hibernia REIT, Independent News & Media, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Norish, TGISVP, The Great Irish Share Valuation Project

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:   First Derivatives

Prior Post(s):   2012 & 2013

Ticker:  FDP:LN

Price:   GBP 1,070p

It’s been a wild ride for investors in the past year:  A year ago, FDP looked fairly valued to me – and for much of 2013, I wasn’t far wrong, with the shares clocking modest gains. But FDP took off abruptly in November…by January, the shares had almost doubled within 2 months & tripled within 6 months. With profits down in the interim results, I suspect this rally was more of a delayed response to FDP’s Aug-Nov news flow (with new contracts reported with Republic Wireless, the NYSE & ASIC). These all highlighted the capability & flexibility of the company’s Delta products/platform to deal with Big Data, both financial and non-financial. That’s a sexy pitch right now for investors & they responded accordingly… As usual, the mugs were the last to be sucked in – it’s no great surprise to see they’ve lost a third of their investment since January, with no particular reprieve in sight.

Even at these less elevated levels, I suspect the shares remain over-valued. While FDP continues to rack up attractive revenue growth, the rest of its accounts don’t paint such a pretty picture. Operating margins continue to compress (now between 11-12%), earnings growth is non-existent & the outstanding share count is mounting steadily. More troubling is the lack of operating free cash flow (cash generated from operations, less PPE & intangibles). However, this has been offset by residential property sales in the past couple of years – unfortunately, this source of cash should dry up fairly soon. Perhaps more troubling is the continued reliance on consulting (almost 75% of revenue), rather than software sales. This is in response to the industry’s need for further cost-cutting, consolidation & compliance, rather than renewed secular growth. But it’s 5 years now since the end of the financial crisis. Perhaps there’s more of the same work to come, but I worry it’ll dry up & the company will suddenly have a death valley to cross…before we see a genuine return to growth in the finance industry.

TGISVP – 2013 Portfolio Performance

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Alpha Portfolio, Beta Portfolio, Great Western Mining Corp, Independent News & Media, Irish shares, Irish value investing, ISEQ, Karelian Diamond Resources, Papua Mining, portfolio allocation, portfolio performance, Prime Active Capital, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

OK, a second year of The Great Irish Share Valuation Project is now complete – for reference, here’s my mid-year review, now it’s time for the real post-mortem!  Let’s take care of a little housekeeping first:

– Between Jan & May last year, I published individual reviews/valuations for 73 different Irish companies, and kept a file recording each share price (at time of evaluation) & price target to properly assess performance.

– Post mid-year, in Aug-Sep 2013, I published (& recorded) some additional reviews/valuations for 3 new Irish IPOs:  Green REIT (GRN:ID), Keywords Studios (KWS:LN), and Ardmore Shipping (ASC:US).

– Since mid-year, I’ve made no other changes to my TGISVP file, except: i) Donegal Creameries (DCP:ID) changed its name to Donegal Investment Group (DCP:ID), while United Drug (UDG:LN) became UDG Healthcare (UDG:LN), ii) Kedco (KED:LN) changed its name to REACT Energy (REAC:LN), and also consolidated its shares on a 1-for-50 basis, iii) Grafton Group (GFTU:LN) migrated to a London-only listing, iv) Elan Corp (ELN:US) was acquired by Perrigo Co (PRGO:US), and finally v) TVC Holdings (TVCH:ID) paid its shareholders a EUR 0.495 special dividend.

– Since the (major) review/valuation phase was spread over 4 1/2 mths, my benchmark (the ISEQ) needs to be adjusted accordingly. I’m going to reference the mid-point (in terms of companies valued) of this phase – i.e. Feb-25th – as the most appropriate start date for the index.

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

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Aminex, Aryzta, Connemara Mining, Continental Farmers Group, Independent News & Media, Irish shares, Irish value investing, iShares MSCI Ireland ETF, Kenmare Resources, Kerry Group, TGISVP, The Great Irish Share Valuation Project, Tullow Oil, UTV Media

I finished my last post with a question: ‘So, shall we continue with this TGISVP experiment in 2013..?!‘

Despite the relative comment silence, an emphatic ‘Yes!‘ appears to be in order. The success of the series was evidenced by the strong surge in Q1-2012 page views, and the significant level of out-performance enjoyed by each of the TGISVP Alpha & Beta Portfolios last year. I’d first recommend a quick review of my first TGISVP post last year as a primer, but we need to cover some important points here:

– I’m planning to (briefly) review & set a price target for all Irish companies.

– An Irish company is any company which conducts a major portion of its business in Ireland, is (genuinely) headquartered in Ireland, and/or whose management/directors/shareholders/history are predominantly Irish.

– Sure, it would be marvelous if I covered all companies simultaneously. But life (& investing) are never so convenient… I reckon there’s about 70 companies to cover, so I’ll give myself an end-March completion deadline.

– This is TGISVP-Yr II, so perhaps this will all move along much quicker this year – who knows?! To add some spice, I plan to cover companies in random order this time ’round.

The Great Irish Share Valuation Project IV

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Atlantic Resources, Austevoll, Continental Farmers Group, Hoarders, Independent News & Media, Limited Brands, Merrion Pharm, Origin Enterprises, Ormonde Mining, Ovoca Gold, Paddy Power, Petroceltic, Petroneft Resources, Polymetal, Prime Active Capital, Providence Resources, Readymix, Ryanair, TGISVP

Continued from here:

OK, time to tackle another batch of 10 Irish stocks. First, let me insert the Excel files. Again, all market prices (and FX rates) are updated, so this is a live snapshot of all stocks covered to date (with each stock’s upside/downside potential also recalculated vs. its valuation).

As I’ve mentioned before, please feel free to provide your own Price Targets on the Template sheet – it would be greatly appreciated by me, and many of my readers. If you disagree with some of my valuations, this is a great way to express yourself! I think we can all learn a lot more from divergent rather than convergent views on stocks..! Here are full notes/instructions if you wish to submit any Price Targets.

The Great Irish Share Valuation Project III

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Allied Irish Banks, Bank of Ireland, First Derivatives, ICON, IFG Group, Independent News & Media, Irish Life & Permanent, ISEQ 20 ETF, Karelian Diamond Resources, Kenmare Resources, Kerry Group, singing dancing duck, Wile E. Coyote

Continued from here:

Right, let’s work our way through another batch of 10 stock valuations. As usual, I’ve updated market prices (and any relevant FX rates) for all stocks covered to date, so remember that each new file published will be a dynamic snapshot of each stock’s upside/downside potential:

The Great Irish Share Valuation Project III     (xlsx file)

The Great Irish Share Valuation Project III     (xls file)

ICON (ICLR:US):   ICON’s at a very interesting point right now. In 2009, they pretty much hit the wall, probably a reflection of the mid-life crisis that most of the major pharma companies are suffering right now. This is a pattern I’ve seen before – and forget to check up on nearly every bloody time (and, of course, it’s far easier to spot with hindsight!):