Swen Lorenz Analyse zu Conister (WKN: 912832) - 500 Beiträge pro Seite

[J.Nebler]

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J.Nebler

[nekro]

Antwort auf Beitrag Nr.: 26.931.367 von J.Nebler am 15.01.07 11:10:28

Buy Conister Trust at 75p Says Tom Winnifrith of www.t1ps.com


Conister Trust (CTU) has been running a sleepy car finance business on the Isle of man for years. It is a solid enterprise but - for obvious reasons - it has minimal growth potential. But in May of 2006 financier Jim Mellon invested £5.4 million buying new shares in Conister and taking a 29% stake. Mellon has brought in a dynamic new CEO, Jerry Linehan who is heavily experienced in financial services and Linehan is about to set this company on fire.

The Business Now

There are four parts to this business of which the first is a cash pile of £10 million. That limits the downside risk.

The second is the legacy car finance business. It is boring but, operating only on the Isle of man, it is safe enough. last year it achieved sales of c£4 million and made an operating profit of £200,000. This year it will do the same again. Next year it will do the same again. Do you get the picture? This is not an exciting business but at least it covers 40% of the entire central corporate overhead of around £500,000 per annum.

The third leg is actually dormant. Conister has an Isle of Man
banking license. With so many affluent tax avoiders on the Island
this could be a useful avenue for Future growth but for the time being it can be ignored.

What is so sexy is Mellon\'s new business - prepaid cards. These are credit cards which allow those without bank accounts to insert cash on and which can then be used like any normal debit card.
Critically you can also have two cards on an account so my Polish
cleaner Barbara can now top up her card here allowing her ageing
mother in Poland to take out cash there with no transactional
charges just a very competitive Devisen und Währungen"> Forex rate. In the US pre-paid
cards are enormous and in Europe they are catching on.

Conister reckons that each card issued will net it around W£10.Of
this a third goes to the company that handles all card transactions and a third will go to the distribution partners who Conister is signing up to mass market these products. Additional income is earned (and split in similar ways) on each transaction (either putting cash on the card or taking it off) and the cost per transaction is about £1.20 There is also a tiny margin made on each forex transaction and Conister picks up all of the interest on cash balances on the card. I am lead to believe that customers typically make around 5 transactions a month.

This part of the business will be launched in March so what take-up will be is anyone\'s guess. But Conister is already signing up
distribution partners, notably a large mobile phone company and its big push will be in the UK migrant worker market -n a part of the population which is largely outside the reach of normal banking services.

Meeting up with Linehan the other day he seemed relaxed with the
idea that he could build up to 100,000 customers within a year of
launch and perhaps 300,000 within two years. The man has done his
market research, he knows this industry and so he may well be right but there is an obvious risk.

Forecasts & Valuation

If Linehan is correct my spreadsheets suggest that this operation
could clear for Conister a gross profit of £1.8 million in the
first year soaring to £6.6 million in year two, assuming that
customer numbers reach 100,000 after 12 months and 300,000 after 24 months and that card usage rates are as stated. Since Conister will have an effective nil tax rate that means that even after absorbing half of the central corporate overhead it would be making a post tax profit of £1.5 million in year one and £6.3 million in year two. For a business which (ex-cash) is being valued at £21 million that is pretty good going.

What, you may say, happens if sales targets are missed. Just to
check out I ran a model where sales of cards are only 1/6 of what
the company hopes for. Even so this business would still record a
year one pre-tax profit of £300,000 rising to £1.1 million in year two and to more than £2 million in year three.

Conister runs a calendar year so last year\'s numbers will not
reflect any of this excitement and I\'d expect a calendar 2006 loss of around £500,000. Frankly I do not care. This year will enjoy
nine months of the Prepaid cards business and if my assumptions are correct that should see the group making an operating profit from cards plus cars minus central costs of £700,000. I shall ignore interest income which should be at least another £500,000 on top.

For calendar 2008 we could expect to see operating profits on the
same basis clearing £3 million.

In terms of valuation, if one strips out cash the underlying
businesses are, with the shares at 75p, being valued at just £21
million which on my numbers is a 2008 earnings multiple of 7,
falling to - perhaps - 3.5. If Conister delivers the sort of growth
Mellon hopes for then this business will be valued on, perhaps, 20 times earnings which would imply a one year out valuation of £70 million for the entire group (or 167p per share) and that would
just be for starters. Operational gearing means that if this
business works, its profits will race ahead in years three, for and five.

If take-up is much slower than anticipated I have still demonstrated that this will be a business recording a small profit and sitting on a cash hoard. With Mellon on board that has to limit the downside. On a risk reward basis Conister is very attractive indeed and at 75p my stance is "speculative buy" with a 90p limit buying price and a one year target of 167p.

Tom Winnifrith edits www.t1ps.com where the average gain in Tom\'s hypothetical Portfolio over the past six years has been an amazing 53%. (Past performance is no indication of future success and investing in equities can lose you all your capital). To sign up and catch his next hot tip,