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Dowgate Capital - Capitalising on the booming AIM market (DGT)
overgrowth
- 09 Feb 2005 20:52
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Dowgate Capital (DGT) are sitting in the middle of a goldmine! This company through their sole trading arm City Financial Associates are looking to take full advantage of the "booming" AIM market this year. Dowgate provide NOMAD (NOMinated ADvisor) services to AIM companies and also have full Corporate Broker status which means that they can fund placements on behalf of the companies they represent. |
 Website: www.cityfin.co.uk |
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On first sight, the fact that Dowgate exist in the often veiled financial services sector makes you think twice about investing in company such as this because it would be impossible to understand what they were doing - however, think again! DGT bring new companies to the AIM (Alternative Investment Market). For each new company "floated" on AIM, they take arrangement fees when acting as NOMAD. After the company is launched then for a nice steady earner DGT get another healthy chunk of cash every year for looking after them (note that all AIM companies must have a nominated adviser - thereby securing a ready source of recurring income). Because DGT also act as a Corporate broker they can get a very healthy percentage for arranging placement of shares with insititutions before a new company floats. In addition, because placements come outside the sphere of yearly NOMAD work, they can also gain healthy percentages of placements which companies may need to make throughout the year when they need a quick injection of cash to speed growth. Current NOMADships: 28 companies represented (gives recurring income of approx 480,000 per year) Current on-going Brokerage agreements: 19 companies (income depends on placements) For flotations, depending on the size of a company, fees charged will be anything from 50,000 to 100,000+ For placements (the real earner), DGT get anything from 3% to around 12% of the TOTAL AMOUNT RAISED - For example a new company raising 3M though a placement will earn DGT anything from 90,000 to 360,000 ! These figures are indicative as actual deals all differ due to circumstances and DGT sometimes take payment in shares - they still have a tasty chunk of Setstone shares and when this Russian exploration company comes back to AIM, predictions are that the share price will rocket. Note that the amount that this little company can earn in fees is huge and every new deal that comes through we know will contribute another healthy chunk into the bottom line. The good news with every new floatation means that it's another chunk of recurring revenue which could go on for years, with DGT having to do very little. New clients gained in 2005 are: Mediazest (NOMAD & broker) Elite Strategies (NOMAD) Process Handling (NOMAD) Poland Investment Fund (NOMAD) Nanotech Energy (NOMAD & broker) Archimedia Ventures (NOMAD & broker) Red Leopard Holdings (NOMAD) Alba Mineral Resources (NOMAD & broker) Intandem Films (NOMAD & broker) Motive Television (NOMAD) IncaGold (NOMAD) Sportswinbet (NOMAD & Broker) Infoscreen Networks (NOMAD & Broker) Mark Kingsley (NOMAD & Broker) Croatia Ventures (NOMAD & Broker) Pantheon Leisure (NOMAD) Firenze Ventures (Ofex Advisor) FlightStore Group (NOMAD & Broker) Euro Capital Projects (NOMAD) Pearl Street Holdings (NOMAD) Worldwide Natural Resources (Ofex Advisor) Dovedale Ventures (Ofex Advisor) Other 2005 work completed:Neptune-Calculus VCT offer for subs of up to 12 million Advisory work for TGM on London Bus disposal for 20.4M Advisory work for Creightons on property disposal Advisory work for Hampton Trust on company restructuring Advisory work for Interbulk Investments on acquisition of Inbulk Advisory work for Fundamental-e Investments on two disposals Advisory work for Designer Vision re: Design Rights against Centurion Electronics Click Here for fundamentals and profit projections. |
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ptholden
- 23 Jul 2005 11:06
- 1182 of 2787
Good point, I think somewhere between 3-5% of the placing would be about right. So perhaps a little less than your 50k and settle on another 40k?
Won't be far of I don't think.
pth
PS Just to reinforce sd's comments, this is a cracking thread, especially when compared to the lunacy of others on the board. Well done to all posters for excellent research, informed comment and thought provoking rationale. Collective pat on the back.
ptholden
- 23 Jul 2005 11:24
- 1183 of 2787
Edit. Ah, all becomes clear, ENTH were Mosaique, have changed their name!
pth
stockdog
- 23 Jul 2005 11:42
- 1184 of 2787
MoneyWeek lists Tellings Golden Miller as their gamble of the week - SP at about 1.00 with 60p per share pay out to come from the proceeds of their recent 20m disposal of their London bus division. Evidently do not need to raise fresh funds in the near future, but nice to see a client being promoted.
sd
stockdog
- 23 Jul 2005 12:04
- 1185 of 2787
I will take pth's suggested 30k NOAMD fee and a conservative 25k Broker commission for the FIE placing and allow 1/2 a year of 22,500 for each of the two new NOMAD/Broker appointments - totals 77,500 to kick off H2 new earnings.
We already have estimated 126,250 H2 earnings from pre-2005 client retainers and 141,500 from H1 2005 client retainers, so a total for H2 so far of 345,250.
My model suggests a further 669,375 from
Retainers - 4 NOMAD only new clients half for 1/2 and half for 1/4 of a year (26,250), 4 more NOMAD/Broker clients placing funds one for 1/2 and three for 1/4 of a year (28,125) retainers.
Sundry advice and Broker transaction fees/commissions for placings for new and existing clients - 615,000. I suspect at least one of the two new clients may raise funds before the end of the year, since they are both looking for a reverse takeover which may require more than they have on their balance sheet, but they are not IPO's raising money now.
Given the prospects for "scores" of AIM IPO's over the next few months (Scott Longley on Bloomberg Money) we may well get even more new clients - however, the level of new fund placings is difficult to predict, so I remain conservative, as ever with my numbers.
Chart looks good - the multiple formation of the last month can be seen as a "pennant rampant", heralding (geddit?) further moves north after a wellcome hint of consolidation at the current 76p level (which has its own short blunt "pennant couchant" form).
In the words of Snakey White's old song, "One day your pence will come . . . "
sd
EWRobson
- 23 Jul 2005 22:06
- 1186 of 2787
moneyplus, that shrewd, profit oriented young lady (how's the new grandchild getting on - matthe Eric is doing great) asks the intersting question whether she should be ahppy with 2p from this share. I think that could well be reasonable on the basis of the presnt business as it implies a cap. of 12m. 1.2m pbt is in our sites so that underwrites 2p on a pe of 10. But the stated policy is to diversify around the core business, either by generic growth or acquisition. As the sp rises, it becomes more tempting to go the latter route. It seems particularly significant that DGT are picking up business from other nomads/brokers. My own view is that we should wait and see how the company develops. Expansion by acquisition is fine but it can mean dilution as, for instance, with Yoomedia. Byb the end of the year we should have a better idea of generic growth rates and projections. og is [probably right as usual in his suggestion of taking half profits. I have already done this, probably prematurely, but really beacuse I needed the funds. I still have that sign of virility - a million shares.
Eric
stockdog
- 24 Jul 2005 10:39
- 1187 of 2787
In passing, Eric, I would also like this thread to be considered for the "in doggerel" award (when it is inaugurated, woof course).
Stephen Thomson was appointed non-exec chair in October following Simon Eagle's resignation in July last year. Thomson also happens to be deputy chairman of Oak Holdings and a non-exec of Tellings Golden Miller, both DGT clients. Seems like he was recommended/placed by DGT - an interesting part of a NOMAD's brief (now there's a concept to slake your thirst in the dessert!).
A closer examination of the new placing on Friday reveals the following thoughts:-
The chairman, CEO and FD subscribed for 128,000,000 shares between them, obviously pour encourager les autres. Let's assume there was no commission payable to DGT on these.
Two new major holders, Dr Oussama Al-Dimashki and Mubeen Corporation, subscribed for a total of 501,526,304 shares, roughly half each, but quite possibly connected parties. These two now own 59% of the issued capital including attached warrants. Can someone tell me, is this carefully pitched below the 60% mark which would trigger a full bid? I imagine that DGT worked hard to introduce this fresh capital, earning maybe 5% commission.
I guess the remainder of the placing, 74,400,000 shares, being such a round number also went to a new(?), single placee, presumably introduced by DGT, also for a 5% commission. I also doubt whether any existing shareholders had the stomach for putting good money after bad.
The total commission was therefore nearer 35,995. There may have been other Broker fees associated with this deal, making as much as 50,000 total Broker fees in addition to the 30,000 NOMAD fees estimated by og. A total of 9% of costs raised does not seem unduly high, given the parlous state of FEI which DGT had to sell to the market. TR rescuing FEI from the seeds his forebears sowed with Simon Eagle who seems to be of that ilk!
After full exercise of the warrants (which expire a year hence) I assume at the same price, there will be 229,000,531 (14%) old shares in existance to 1,407,852,608(86%) new shares (incl. warrants exercised) in FEI - all of which really belongs to the new thread started by shaikh2 on Friday, to which I am transferring my further FEI thoughts (Thought Transference by Dogs - now there's a captivating idea to raise fast city money on, Tony).
sd
EWRobson
- 24 Jul 2005 14:31
- 1188 of 2787
moneyplus Coming back to your 'do you sell at 2p' question, have you clicked on the 'for fundamentals and profit projections' box at the head of this thread. Supposedly by Saddam Bin laden, I suspect it is og or could be even sd or pth. Whoever, it is an excellent analysis. It includes a table of projected sp depending on pbt and pe. There is good confidence in pbt of 500K+ for first half so I would take a downside of 750K for the full year and an upside of 1.25m. If you take a pe of 12 for the former and 20 for the latter you get a projected sp of 1.45p for the former and 4.05p for the latter. This would appear to give a reasonable range of outcomes for the full year. Personally, I will revisit these projections following the interims and trading statment in the latter part of August. But the ineviatable conclusion is that the position is ADD at the moment with the expectation that the sp should move to something like 3p this year. That is still only a cap. of 18.5m. We have already had a good run but it is quite amazing to have the level of confidence about the projections of a company that so far exceed the current valuation.
Eric
ptholden
- 24 Jul 2005 14:46
- 1189 of 2787
Can assure you that I am not SBL. SBL generally posts on ADVFN. It is reassuring to note that his, sd's and my own projections are pretty much 'd'accord'. Personally, I still wonder if the fees earnt from the TGM disposal may yet offer a real surprise. I think most of us have assumed roughly 100k (conservative) or perhaps as much as 250k (possibly still conservative). Considering that DGT generally work on 3% (ish) for placings etc, it may be more. No doubt we will have a fairly good idea when the Interims are published next month. It would be a fantatic shot in the arm if it transpires that it was close to the 3%. Would certainly explain TRs excitement expressed in buying more shares.
pth
stockdog
- 24 Jul 2005 15:27
- 1190 of 2787
I can also confirm I am not Saddog Bone Laden - odd sense of humour for these troubled days, I always think (so is his!).
pth - If the fees for TGM disposal are indeed 600k, then my 12 month SP mid price projection is 2.73p. This is an importatnt number in three ways: it is the frequency of the principal line for the Nuclear Magnetic Resonance chart for Hydrogen; 273Kelvin is equivalent to 0Centigrade to the nearest whole number; it was my telephone number (after the local exchange STD bit) for the first 20 years of my life. So there we have it - a racing certainty (never sure if that expression isn't meant to be used ironically!).
sd
moneyplus
- 24 Jul 2005 16:06
- 1191 of 2787
moneyplus
- 24 Jul 2005 16:23
- 1192 of 2787
overgrowth
- 24 Jul 2005 23:26
- 1193 of 2787
He's had the same handle for yonks on advfn - though it does seem a little strange in these times.
Nevertheless, I agree that SBL's analysis is top notch and it's very reassuring to hear that sd's and pth's models come up with near enough the same sort of figures.
Looking good for another bullish phase next week !
stockdog
- 25 Jul 2005 08:01
- 1194 of 2787
Walktall - 25 Jul 2005 09:47 - 1195 of 2787
WT.
ptholden
- 25 Jul 2005 09:52
- 1196 of 2787
I can't comment on the prospects of RTD, but following DGT interims, most of will be very disappointed not to see a SP in the region of 1.25p-1.50p next month. If RTD's SP is not expected to increase by 50%-100% in the next four weeks or so, you have probably made a wise decision. The longer term looks even more inviting, details are in the thread, but in a nutshell, increasing client base and possible acquisition of a brokering arm will propell DGT into a new arena.
pth
Walktall - 25 Jul 2005 09:57 - 1197 of 2787
WT.
ptholden
- 25 Jul 2005 10:05
- 1198 of 2787
Still learning myself, so wouldn't class myself as an 'experienced investor', but the transparency of DGT's earnings have provided an unique insight into their growth potential and that of the SP. Always DYOR, remember BBs can be a very misleading place. However, this is an excellent thread, frequented by well informed investors.
pth
Walktall - 25 Jul 2005 10:06 - 1199 of 2787
WT.
overgrowth
- 25 Jul 2005 11:19
- 1200 of 2787
RTD is not likely to suddenly surge until the 4th quarter of this year where it appears that high oil prices and favourable exchange rates should lead to an "above expectations" trading statement again based on fuel card income. CNP business needs to grow more I agree and investors will be looking for some evidence of this growth in the interims which will be out in around 6 weeks time. Goldman Sachs and Barclays still have substantial holdings which will keep the share price stablised for the time being.
For short term gains DGT is virtually certain to pass 1p in the run up to interims (in around 4 weeks time) and could reach 1.5p briefly. Based on our fundamental calculations it appears that a year end target of 2p is not unreasonable. DGT have every opportunity to grow by acquisition which is likely to be the next stage upwards after solid results have been posted for half and full year in 2005. DGT's client list continues to grow and at this rate they will soon be in a great position where recurring income pays for all operating costs.
sd - apologies for my error - must be one of the "classics" ! I must admit that the joke wasn't original, but lifted from Chucklevision !
Walktall - 25 Jul 2005 11:23 - 1201 of 2787
WT.
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