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Krisp

310 Posts.

10/04/16

20:54

Post #: 17467638
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Originally posted by Melrosian ↑

Denbo

These things dont turn around overnight. Nevertheless I am confident. The reason I am confident about SGS is that it is needed and wanted by the insurance companies and should ( says it on tin) achieve material competitive advantage from
its economies of scale and processing modus operandum. One advantage it should have when it is running right is less capital tied up in WIP per case than is likely from the competition. From the insurance industry point of view it is going to be easier and quicker to go to the 2 big UK motor and medco specialists ( SGS and Redde) than smaller competitors. SGS already has the biggest segment of this market in the UK by a big margin. It is unlikley to cede ground despite the travails of 2015/early 16.

I was on the other side of the QPP PSD takeout by SGH and then thought it a giveaway. Still do although clearly SGH could not have financed more. Now that I am a SGH shareholder I view it differently. I think SGH as lawyers will add to professional standards to QPP PSD ( now SGS) and in the short and long run that will be a material advantage.

So QPP slowed it down pre deal and post deal a period of hows in operational terms and continued slow running.
When they get their strategic plan and tactics all in place I am quite clear that there is a lot more in the SGS tank. In ROCE terms it is likely to prove to be the best performing element in the group .

There isnt a good reason, other than uncertainties, why SGH ( with SGS as its biggest bit) should be valued at 0.45 forward PE , while Redde plc ( doing the same where all stakeholders are clear ) has a current PE of 19.5.
It seems likely that it wont be long before the commentariat and the company can clearify the ongoing underlying base
earnings capability of the various parts of SGH. If that coincides with a period from Jan 16 to June 17 ( Debt lowering) followed by financial engineering ( bank warrant/ debt swap .....Short dated convertible retail ? issue followed by Convertible placing , then it is possible that June - Dec debt 17 could be lowered to $400M while PAT heads north of $250m .

I do think one element has to be handled well. SGH cannot afford to give the impression that it is running a branch office in the UK and some big hitter / gravitas at board level really has to be brought on board.

If SGH can shape up well over the next couple of years there is no reason why notions of re-entry to the AUX 100 and perhaps a FTSE dual listing entry could not be a clear agenda plan this time next year. That is the main prize and the point will not be lost on the bank syndicate.

( Zero to Hero?)

Mel

PS apropos nothing a tiny town in the scottish Borders (Jedburgh- pop 1800) is rejoicing after defeating a country ( Belgium) and nearly defeating a professional side in the final of the Melrose sevens. Amazing.

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"There isnt a good reason, other than uncertainties, why SGH ( with SGS as its biggest bit) should be valued at 0.45 forward PE , while Redde plc ( doing the same where all stakeholders are clear ) has a current PE of 19.5.
It seems likely that it wont be long before the commentariat and the company can clearify the ongoing underlying base
earnings capability of the various parts of SGH"
It is not without reason when i write that 10 dollars B4 2017 can't B ruled out is not JUST A DREAM.

SGH Price at posting: 24.5¢ Sentiment: Buy Disclosure: Held
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