Tellings Golden Miller - floated at 70p at the start of August and motoring well. A possible takeover target for the likes of National Express (said The Times a fortnight ago). And nice to find a newly floated AIM stock with a worthwhile nms of 5000, allowing a decent size stake.



Company website http://www.tellingsgoldenmiller.co.uk


And here's that Times article:

October 25, 2003

By NICK HASELL

TELLINGS Golden Miller (TGM), the London bus and coach operator, settled at its best level since its August flotation amid speculation of possible bid interest from National Express.

TGM, which made its AIM debut at 70p, has made no secret of its own acquisitive intent, having already expanded its London route network since flotation through the purchase of a Dartford coach operator. It now runs 17 routes in London and 20 for Surrey County Council, and is expected to tender aggressively for the 140-odd which come up for grabs in the capital every year.

However, it was TGM’s role as a potential target rather than bidder that caught the imagination of investors yesterday, with National Express cited as a likely acquirer. They point out that the FTSE 250 bus operator is conspicuous among the “big five” for not having a presence in London.

However, National Express said last month that it would re-enter the capital after being encouraged by Transport for London to bid for routes to raise competition.

In that context, a move on TGM, up 9p at 139p, would give it instant critical mass against the rival Go-Ahead. But the fact that 72 per of TGM is held by directors means only an agreed bid would succeed..


Also this recently from Investors Chronicle:

105p - Aim - London and Home Counties bus operator Tellings Golden Miller runs 17 bus routes for Transport for London (TfL), and 20 routes in Surrey for Surrey County Council. And its most recent set of results for the six-months to June 2003 - before it floated on Aim in August - show the company trading well, with margins on the bus routes higher than analysts had expected, at 13 per cent.

There's scope for further margin improvement there, too. Research house Hardman & Co thinks that it is possible to run London buses at a margin of 20 per cent, and says that Tellings Golden Miller is by far the most efficient bus operator. With mayor Ken Livingstone pressing ahead with major improvements to London's bus services, there should be plenty of room for growth through the addition of new routes and contracts.

Tellings' contract to run route 235 in London was recently renewed for five years - and it now runs 19 buses on the route, as opposed to the previous 12. The increase equates to an additional 1.5m in sales. Further growth is likely with the integration of new acquisition Crystals, which will be renamed Tellings Golden Miller Dartford. New operations are also planned in north-west London through the company's Linkline subsidiary.

Even though profit forecasts for Tellings don't take into account the potential growth from new routes and contracts, analysts still predict that profits will increase to over 3m in 2004. Earnings growth will be less marked as Tellings starts to pay tax but, at a forecast 9.6p a share, the price-earnings (PE) ratio of 11 times remains undemanding.

Of course, the growth expected from the implementation of Mr Livingstone's plans may not materialise. In particular, if London's congestion charge fails to deliver the anticipated cash, then funding for improvements to London's bus services may come under threat. That is some time away though, and Tellings does not rely on London alone. It also operates buses in Surrey, where one new route - run with the help of a subsidy from Surrey County Council - runs across part of the county to Heathrow. So far, takings from the route have exceeded expectations by 2,500 a week.

Tellings also generates a profit margin of 8 per cent on a coach business that accounts for just over one-fifth of the 26.4m sales forecast for 2003. Hardman & Co reckons there is scope for these margins to improve to 9 per cent over the next year. That said, a drop in tourist numbers in the UK this year means that the business has struggled just to keep margins steady.

However, there has been strong growth on routes that don't depend on tourism, including one between Portsmouth and Perranporth in Cornwall.

Seasonally, the second half of the year is weaker than the first, so investors may have to look at next year's first-half results to get a real sense of where Tellings is going. But the momentum shown in sales is clear enough and, with 1.7m in the bank, further acquisitions are likely. Discussions with possible targets are already under way. Interest costs are covered more than six times by operating profits, so there is also room for more borrowing should the company set its sights on a larger deal. However, because the shares are so new to the market, the current net debt level is a company estimate, and an audited balance sheet, since listing, is not yet available.

A modest dividend is also planned at the end of the current year, but Tellings shares are far from becoming a yield stock. Their attraction is the undemanding PE ratio of 11, which doesn't reflect the potential for picking up new routes and contracts under the mayor of London's bus-friendly regime. Buy.

BULL POINTS
- Profitable and cash-generative
- Growing market in London
- Improving profit margins
- New routes performing well

BEAR POINTS
- Plans for London's transport system may not materialise
- Sluggish demand in coach division
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Any mention in Shares Mag?

Just announced ex divi 14th April,on record 16th April,payment date 19th May.