Stamps, rare coins, autographs and antiques dealer Stanley Gibbons' (SGI:AIM) is in the doghouse on Tuesday, the shares slumping 42.5p, or the best part of 30%, to 101p on a savage full-year profit warning. This follows a poor first half for the £67.6 million cap, whose sales and margins were hit by weak trading in Asia and disappointing sales of high value stock.

SG Stamps high res 04

Click here to read today's bitterly disappointing update from the philatelic dealer and retailer, which guides towards flat first-half sales, even including revenues from last year's Mallett acquisition (20 Oct), a deal which followed 2013's takeover of rare coins and collectibles specialist Noble Investments.

Stanley Gibbons warns interim gross margins and profits will be substantially down on last year, when it delivered some high margin rare high quality collectibles sales. Though a better second half is expected, sluggish sales in Asia, where Chinese collectors are growing more cautious, combined with 'continued illiquidity in high value stock items', mean annual profits will disappoint.

Web chart - SGI - October 2015

Investors are clearly alarmed by the timing of today's warning, coming less than a fortnight after the small cap assured it would hit annual forecasts, albeit flagging the results would be more second half weighted due to the timing of auction sales.

Peel Hunt's Charles Hall, now expecting a first half loss, says profits disappointment also reflects 'considerable management distraction as the focus has been on internal issues', thought to include the launch of the Stanley Gibbons Online Marketplace as well as the integration of aforementioned acquisitions. However Hall seems to imply all is not well behind the scenes, adding that 'the departure of a number of senior executives should resolve these issues, which should enable management to refocus on delivering sales and profits.'

Today's share price collapse reflects the sheer size and scope of today's downgrades from Hall, who has changed his recommendation from 'buy' to 'hold' and more than halved his published price target from 330p to just 150p. The analyst has also halved his taxable profit forecast for the year to March to £5 million, reducing earnings per share from 17.3p to 8.7p.

Given pressure on profits and higher-than-expected half-time net debt of £17 million, Hall also now assumes a severe dividend cut from 5p to 2.5p. For March 2017, he now looks for £7.5 million of PBT, a chunky downgrade from his previous £11 million estimate pegging earnings back from 18.8p to 12.9p.

Issue Date: 06 Oct 2015