Stanley Gibbons (LSE:SGI), a world leader in stamps and other collectables has seen its share price plummet over the past four years. The company’s stock traded as high as £2.88 in 2014 and hit an all-time low of just 2.75p in December last year. While some traditional markets shrank, demand was propped up by Chinese investors, with China surpassing the US as the largest market for stamps this decade. However, a slowdown in China’s economy from 2015 has resulted in a drastic reduction in revenue and forced significant write-downs in the valuation of its assets.
With debt ballooning, Stanley Gibbons has found itself in an ever-precarious position but there may be light at the end of the tunnel. Phoenix UK Fund has stepped in as part of a proposed refinancing package, offering an investment of £19.45m. Phoenix is no strangers to buying household names, and recently took over the controls of Hornby PLC (LSE:HRN) in an attempt to keep the company on track. It’s too early to know whether Phoenix will successfully turn around Hornby, but it gives the company a better chance of survival. Likewise, with Stanley Gibbons, the debt restructuring and additional cash injection of £6.2m gives the company more time to resolve its issues.
I wonder if Phoenix believes a possible revival of stamp collecting is on the cards. With the world economy potentially a ticking time bomb, investors will be looking for more tangible safe havens for their money. Rare collectables as well as art, join precious metals as obvious candidates.
Time was surely starting to run out for Stanley Gibbons on its existing trajectory. The market’s reaction to the news today has been positive, with the share price up 15% at 5.6p as I write. That’s seen a breakout of a downward trend channel formed on the daily chart over the past 8 months. It’s also a move above its 100 DMA, which if held, could herald some level of recovery for shareholders. We’ll have to wait and see how Stanley Gibbons performs longer-term with Phoenix under its wing.
Author: Stuart Langelaan
The author does not own shares in the company mentioned in this article