JSG surfing the crest of takeover waves?
Johnson services group are one of the Blogs favoured companys and for good reasons too. The company have undergone dramatic change over the last few years since they came close to being cleaned out themselves during the credit crunch. The share price dropped to an all time low of just 5p. We’ve been banging on about this company since they were about 9/10p. Enter John Talbot as the new chief executive. Talbot is a turnaround genius who previously co-founded Talbot Hughes, a turnaround specialist group, which was eventually bought out by Kroll. He set about plying his stock in trade improving margins whilst steadily improving the company’s debt. ( Talbot owns 1.23% of JSG.) which has now been fantastically reduced. The company have recently reinstated the dividend whilst Evolution reiterated its ‘buy’ recommendation and raised the target price to 50p, noting that the downside risks were reducing dramatically. It also hinted that bolt-on acquisitions would now be a distinct possibility. Analysts have been crawling all over the company this year noting the strong cashflow and reiterating that the dividend underpinned the stock’s new found attraction. Cash flow yield is very healthy at 12.5%. while dividend yield of 3% is attracting renewed interest in the shares. The above though most welcome is excellent news for holders of the stock but it isn’t the emphasis of this article. The ever-increasing symbiotic relationship JSG have with Timpsons is! I’ve been saving our opinion for the launch of the new site but web designing being web-designing means that time lines for launches are always fluid! Early indications or signs of this relationship merging into one are beginning to gain ground particularly with Schroders who have been ebullient about the company of late not least of the magnificent turnaround story which is continuing to generate steady positive cash flow and growth. There’s another company also keenly interested in the JSG empire and that’s Timpsons. Some in the city think that a natural progression here is developing whereby JSG become so inextricably linked to Timpsons that AN OFFER could be made for the company. It’s mooted and known that John Talbot isn’t averse to the odd takeover or two! The stock is certainly still trading down and is worth at least 50/60p in its own right however if Timpsons or any other interested party (rumours that others have been nosing around here) decide to make an offer for the company then a doubling of the present share-price could secure the company. Get them on your watch-list now!
Viva!
Daniel
PS. Remember you heard it here first!
Dan,
Cambay has now been spudded – time for another Oilex update. The sp continues to slide!
BMD
Could you put the ticker in for these companies you comment on please?
Cheers
Hi Dan I work for John Timpsons.. Have done for about 3 years. We know that he’s interested in Johnsons a couple of weeks ago our area managerwas speaking to their sarea manager about itheir jsg staff contracts of employment. We hear stuff just bits an pieces theres definatly something going on between them.
All the staff at jsg think it’ll happen before the end of this year. It means more retraining for us which is abummer.
Keyman
That’s JSG.L, right? Currently 34.5 ask?
Hi Dan. Do you still have San Leon in the challenge? Havent heard much about them recently from you … any chance of an update
Yes still going strong.
Dan
For followers of Dan this seems another good diversifying move. Its not Dan’s responsibility to ensure everyone has a balanced portfolio but over-focus on commodities has obvious pitfalls. In essence its a bet on the ‘Asian growth story’. And while its a ‘good’ story, its not unproblematic.
I thought this might be interesting, for some. The article is by Roach – he is an out and out supporter of the Chinese growth story. If you scroll down and read the comment beneath the article his points are countered. Both arguments are simplified for presentation – but the latter contains a reference to ‘Red Capitalism’, a book whose data and argument I found useful.
http://www.project-syndicate.org/commentary/roach5/English
I think some non-commodity are useful additions to Dan’s bread and butter commodity plays (although not lloy, which I doubt will beat inflation this year, don’t see where the profits will come from (especially if BoE raises interest rates) happy to listen to any counter anyone might have though).
As an aside: MTA v MXP….could be an interesting comparative post. Another idea might be to include some reference to trackers/recommendations to watchlist physical assets. Natural gas seems popular amongst certain economists at the moment as a long-term hold.