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DX Group – from trading despair to planning, er, despair…

By Steve Moore | Monday 6 March 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Having noted previously justified caution on parcels, mail and logistics group DX (DX.), the shares had edged up to 9.5p before a “Re: Proposed West Midlands Hub” announcement last week.

This updated that;
“The company's proposed plans for the development of a new central hub at a site in Essington, in the West Midlands, have been declined at the local authority planning hearing held last night. The company is now considering its options, including the development of an alternative site, in consultation with its stakeholders.”

Hmmm. Having IPO’d (at 100p per share) in 2014, the company’s results for its year ended 30th June 2015 included that;

“The hub is intended to replace DX's current sites at Willenhall and will create substantial additional capacity and significant operational benefits, including increased efficiencies and enhanced customer service levels. Subject to planning consent, our intention is to have the new hub operational by the summer of 2017.”

Given the subsequent trading performance, the likes of increased efficiencies and enhanced customer service levels would currently be particularly welcome - but are clearly not to be from a new central hub for at least a good while.

The 2015 results statement also included that “planning permission on a site has been applied for, with a response anticipated by November 2015”. By early 2016 this had evolved to “we have recently submitted a revised planning application” - and then in May it was announced that permission had been declined. Not to worry though as it was then decided to appeal the decision, with the board “hopeful that the appeal or revised planning application will be successful”. Another good call!

Broker to the company, Zeus Capital, reckons there “a contingency plan in place relating to other suitable and available sites near to the original” and that “we would hope to hear shortly on an alternative strategy regarding potential sites”.

How again did ‘hope’ work out last time here? And this is still led by management who on IPO were “to focus on market leading Customer service and growing the DX brand”. Again, how’s that worked out for shareholders?

With also the most recent profit warning announcement suggesting uncertainty as to what to do to get out of the mess here, for me it remains uninvestable. Bargepole ahoy!


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