Dori Media continue to do incredibly well. I'm tempted to sell as the share price rises to nearly triple what I originally paid for it. Not all my shares have done so well - shares in TG21 (TGP) have more than halved since I bought them last year.
My most recent addition has been shares in S and U (Ticker symbol SUS), which I came across using Digital Looks stock screener.
Historical p/e of not much more than 10 – their competitor Cattles is on a p/e of 14.6, and provident financial is on 15.2. Cattles and provident have had growth, whereas S and U had a slight contraction in profits – but that took place in their first half, with growth experienced in the first half.
Dividend yield with a history of dividend rises. There is a commitment to continuing this “Excellent dividend payment every year since 1988 is our proud achievement and we hope to continue this trend.”
Large director ownership, meaning the two main directors main income will be from their dividends. D.M. Coombs owns about 2.8 million shares (value of almost 16 million or almost a quarter of the value of the company) and AMV Coombs owns 540,000 shares (value 3 million).
In addition to this, there are no dilutive shares.
Experienced directors have been managing the company since the 1970’s. They are cost aware – I like this statement “We maintain our frugal approach to unnecessary overheads, which have fallen around 8% since last year at Head Office level.”
Recent director buy – KR Smith bought 3,000 with a value of 16,000.
Good margins - I work them out at around 25%.
Expansion – with the number of representatives up over 20% hopefully there will be growth.The management certainly think so:
"The positive developments during the year further reinforce our strong home collected credit business and we look forward to continued controlled growth during 2007."
Liabilities, though well covered, stand at 35 million.
Interest rates – the group is obviously vulnerable to changes in interest rates, although the group took out a five year hedge on 20 million of the groups borrowings in 2005.
Growth – although the company now appears optimistic, the company has not experience steady growth in the last two years.
Increase in net cash doesn’t appear to be great (there was a net cash increase for the year of 715 thousand,) but this seems to be due to expansion – which will obviously require large initial outlays of money. In their interim results they stated that their outlays of cash should lay the ground for solid profits in the future.
Car finance dependent on car sales – but currently their car finance is doing well despite “difficult conditions”. Profits are up despite used car sales being down by 6%.
Sub-prime lending – I’m no expert on the risks here. At least SNU don’t seem to be in the mortgage arena. In their core business of home credit they have 30+ years of experience, although their car finance business was set up in only 1999.
Appears ready for take-overs – I prefer organic growth myself.
They are certified by Investors in people – when these guys came to a university I was working at, we renamed them investors in paper. It's not a very important point though.
Conclusion – Personally, I see this as a long term Buffet style hold. An easy to understand business run by owner managers at a fair price and with a good dividend to boot.
As ever, DYOR!
Disclosure – I own shares in SUS.