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maybe higher
Greggs do not sell any fresh cream luxury celebration cakes or celebration cakes which is over 80% of cake box shops revenue, no Supermarket sell fresh cream celebration cakes only basic product with 4 weeks shelf life on them. Cake Box are the only large company selling and manufacturing fresh cream celebration cakes on site with 3 day shelf as it does not fit into Greggs or a Supermarkets business model. 80% of Greggs confectionery sales are on donuts, not fresh cream cake slices as they do not sell any. Plus 85% of Cake Box customers ( like myself) purchase for quality not eggless which opens the market up even more. The franchise model gives the people the opportunity to run their own business. Massive market ahead as it is only scratching the surface at present, with company having deposits already from people waiting for the opportunity to have their own franchise and make money. 24 new shops opening this year, various Kiosks, plus a waiting list for a franchise. 90% of Supermarkets and Greggs are discounters, which reflects on there selling price of product where cake box receive a premium on their products due to quality
@cakes56 more speculation based off very little evidence.
Cake Box has saturated the territories in which they can do well. Franchising means they can't open stores too close to eachother. As said even their website doesn't show that locations are outside Scotland and Wales.
Competition exists already in mainstream cakes, there has never been a shortage of Birthday cakes on the market. By the slice through bakeries like Greggs and by the cake through Supermarkets and local bakeries (increasingly at home sold through Facebook/Instagram).
I think finally the market has realised that it's not sufficient alone to just extrapolate previous growth. We'll start to see that over the next 2 years as without new stores, there'll be no more significant jumps in revenues. The business will have to try and grow like-for-like, which will be hard to exceed more than single digit %.
And the books will be scrutinised more than ever. Founders have significant cash through share sales at higher prices and dividends, so we should expect them to start re-investing if they're so sure of the business being severely undervalued.
Average price per customer isn’t as high as that
Ive topped up on this - price feels ridiculous considering no business performance news has come out at all and its less then half the value it was in Nov?
Price is at 2018 level - we have had 4 years of nothing but wins and growth, survived covid and exceled, no obvious competition, massive pipelines of franchisees and profit margin not eroded at all.
Shares should be trading at least around £4.50, great buying opportunity. Less that 15% of customers buy product because its egg free, 85% of customers purchase products due to quality, business sells luxury quality fresh cream celebration cakes for every occasion and fresh cream slices at a premium price with a 3 days shelf life, no other business is doing this. Average purchase price per customer £40-£50. All shops are franchised, every shop owner has there own business and your in business to make money. Many of the owners who have franchises, have multiple shops because they are doing so well and cake box makes money selling sponge and components to them. Over 200 Kiosks and shops in the UK with potential for at least another 400 as its a massive market, already a back log of people waiting for a franchise. This only means one thing, sales up, profits up, which has happened every year in trading, which should reflect in the share price soon as business has a simple, proven, tried and successful trading model that works
anyone have a clue as to why the sudden drop yesterday afternoon? I was expecting an RNS, but non so far...maybe on will drop on Monday. But that was some buy last thing yesterday, so possibly MMs dropping the price simply to get more shares to meet that order?
Equally good points - the simplicity is a real benefit, and re: the positioning of stores, they must be picking up freeholds at a discount.
I think the growth got a bit head of itself re: the 400p valuation. I do think a 90mil market cap with 174 stores is more on the nose, so anything under from here is good value for me - especially with the healthy pipeline of franchisees.
Question is - in this market - when the heck do you take a considerable position! (Especially when some management 'own goals' aren't helping)
These are all good points JC1220.
Some major catalysts for potential growth I think I can see coming:
-Almost no marketing/brand awarness in the marketplace for Cakebox in my opinion, its really only in the asian community they are somewhat known, all it takes is for a catchy advertising campaign, a few key influencers (massive market to boost sales).
- Cakebox stores in key visible areas for exposure rather then profitability i.e outside of key train stations i.e New Street Birmingham, concession stores as they have with shopping centres but more of this needed.
-More B2B - perhaps suppyling cakes to coffee chains, corporate sales etc.
-Items themselves are incredibly simple in the same way a cup of coffee is, i dont buy any negative argument that because they just sell cakes this shouldnt be worth anything, its a very unique/simple concept their stores and the simplicity of the product skews i.e same base of cake but multiple different toppings etc make this a very sharp and simple business and theres no independents that can achieve the effieciency of cakebox.
Also this was trading at 400p plus only few months ago and we are now at half that - with the only facts to business performance being confirmation of forecasts continuing to come through, strong performance across the board. There is either something we are all missing, or this is another classic case of being too small for the big investment firms to care about and retail investors driving the price down.
The amount of share price sales as a % of the market cap is crazy as its incredibly small yet £50-100k can knock 5-10% of the share price off - literally makes no sense.
There are a few things I think this company has going for it:
- Convenience - you can order a high quality personalised cake and have it delivered in half an hour without breaking the bank
- Franchise model is capital light
- The stores are owner operated so staff are more incentivised / motivated / care
- Economies of scale: margins on e.g. the sponge will improve the more stores they open
- Room for growth: approx 60 stories in the pipeline
- Twin engines for growth: underlying store sales growth (currently over 10% per year) and opening of new stores
Couple of bad things:
- The founder owns so many shares they'll keep paying fat dividends which is a complete and utter waste*
- They've grown too fast for their systems (data leak last year, accounting errors, stock management - see trust pilot reviews for evidence re: not tracking shelf life of a cake and it becoming stale)
I make it that they earn approx 34k per store, per year. On 174 stores and a 15 pe they're pretty fair value (90ish million)
I'd like them to bring out a vegan range (something to scream about), cut the dividend and invest the capital in better systems which will facilitate quicker, less volatile growth.
*I really can't stand that the owner holds 25% of shares and pays a chunky dividend. If they didn't do this they could reinvest the cash to improve the business.
Quality of the product? This can't be serious. Cakes of all qualitys have been available on the market for years across all price points. Greggs to Tesco to Patisserie Valerie. This company services an egg-free niche that is not vegan and suits only the Asian market. It's a good business model, don't get me wrong, but it's capped at the the current figures. New territories are exhausted. Competing outside of this USP will be tough.
with today's drop and PBT c£8m for current year it looks like your PE of 10 is here!
More of a plunge really. Must be a reason for this...
My point is many of these cakes are bought by repeat customers because they are delicious nothing to do with egg free beliefs. The people I know who buy them don't buy them for any other reason than the quality of product. I believe the initial egg free target market is now completely misleading, this product is simply a delicious cake. The quality of cake slices in the kiosks for example are way better than any Asda equivalent cake. Time will tell when results come out but i believe many areas of the UK can still be introduced to cake box for these reasons.
Unlikely. Their own website shows they only have new stores in Scotland, Wales and South East England. Not exactly lucrative Egg-Free markets.
Concessions in supermarkets are fighting against in store bakery products. Without a need for the cake to be egg-free, consumers will buy from instore options. Egg-free isn't vegan, most Cake Box product is covered in fresh cream.
Shop staff are franchise owners and have bias.
Don't get me wrong, I think it's a healthy business with a good business model, but growth will be extremely hard to achieve.
P/E of 10 is closer to realistic.
Large pipeline of new franchisees will ensure next 24 months has scope for greater results through more stores, more Asda kiosks with a great product anyone can enjoy. Regular visitor to their shops lets me see how popular products are, just talking to shop staff tells how they continue to increase customers month on month. I feel confident results will please any shareholder for years to come.
Even after the slide, can't see how even this is a justifiable P/E ratio.
Having saturated the market in low hanging fruit areas, new branches are only available in weaker parts of the countries where there are only small Asian communities. https://www.eggfreecake.co.uk/available-areas
I can't see how the significant growth can be sustained. The marketing/branding is already starting to get dated and I am not sure where the business moves from here.
As good value as SBTX before you lost 50% on it when it was definitely going to a quid?
Maybe invest your fiver elsewhere lol.
#AIR #HFD #ATG #VIC #SED #EQLS #CBOX #TSTL #IXI #POLX #AMYT #ERGO #EAH #SENS #VTY #GLE #VRCI #TRLS
In this fabulous interview with 'All-Star' fund manager Paul Jourdan of Amati Global Investors. Paul takes me through what’s in store for equities, along with which themes, sectors and importantly stocks he likes going forward – including:
Outlook for equities. Start
What’s the likelihood of a #russian invasion of #ukraine? 04:00
How long will the stock market turbulence last? 05:20
Likewise, will the M&A theme continue (eg Air Partner)? 07:40
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Halfords. 08:45
ATG (Auction Technology Group). 11:50
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Saietta Electric Drive. 16:45
Equals Money. 20:50
The Eggfree Cake Box. 22:20
Tristel Global. 24:25
IXICO.27:00
Polarean Imaging plc. Imaging. 30:20
Amryt Pharma. 33:55
ERGOMED 35:55
ECO ANIMAL HEALTH GROUP PLC. 36:35
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Verici Dx & Trellus Health. 44:00
What risks to future consider.45:15
https://lnkd.in/dNvBQX4E
Buying pressure getting better, as time goes on this will recover nicely, financials are all strong, just mistakes made on the way
Bargain of a stock currently
Buy them cheap while they are on offer, accounting errors are small and an oversight
This is significantly below the peak price we achieved in November at -46%. Since then we have had a chunky sale from the founders into the strength of the share price and also this issue around incorrectly reported numbers, all of which has been answered/resolved with no impact on performance.
Topped up as i simply dont agree with the market but could be horribly wrong.
significant growth year on year and no signs of slowing down, every week i am seeing news articles of a new cakebox store opening, i have gone to these personally and they are completely packed full of customers 24/7.
the concession stores in shopping centres look ok (not amazing) however the ones instore i.e asda look fantastic.
not really as if you look at amount he has brought in the past its similar if not a bit more