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Thanks for this response MB10. Hope your seemingly well researched comments turn out to be correct. I also think we need to move away from number of events to revenues. Once a touring set is up and running, I've calculated that the margins should be very good - but I'd like to see more evidence that these profits will materialise. The company has said that merchandising revenues have been disappointing although they are just getting started in this area. I'm all for investing to build up the business, and can see substantial demand, but the model needs to be sustainably very profitable to justify previous share price peaks..
Good post fsjamescampbell. You're right about the lack of emphasis about the maiden profit and the focus on negatives. This is a business with good momentum. The issue is about valuation. In this regard, a few concerns need to be addressed in my view. First, why were the revenue targets for 2020 reset downwards if demand is looking so good heading into 2020? With such good momentum reported, I was disappointed that the original higher targets could not be be maintained. The narrative and numbers needs to reinforce the growth and gross profit trajectory. If growth and profit slows down, a higher rating becomes hard to justify. Secondly, why is DC taking the equivalent of around 75% of the profit in pay? I know he will feel he has earned it, but the profit (and share price) would probably have benefited markedly if he had foregone some of his income. Thirdly, as others have stated, the financing approach doesn't feel convincing - higher interest from a questionable firm. Disappointing that LVCG couldn't attract better terms. A bullish share price will only occur about if LVCG significantly outperform their targets in 2020.
Shares..........that is the message that came out of the Wembley event last Friday (17th) IMO this has been very oversold, an emerging profitable company with a maiden profit should have generated more positive interest in the market. Sadly, the RNS last Friday leaned towards this missed target of 700k from the broker note stating 1.1m. Which at the end of the day was the broker assessment, the company actually never gave a number, yes they have endorsed the 1.1m since it was reported in the broker note. The focus should have been geared towards the maiden profit, with a message about why it didn't reach the 1.1m and then the rest of the news should have been packaged up in a few other RNS on the same day. There is one trading week left before the tax deadline which means the BB directors who could and possibly have sold in the last 6 or 7 weeks will cease. Albeit, it does look like the director sells have dried up, the few pence drop this week has been a result of a couple of % on Monday, Tuesday and Thursday with flat days being Wednesday and Friday. 17m mcap for a company like LVCG with the BB acquisition, fully funded to virtually double the touring sets, build NKD sets and new Peppa pig models and so on, puts them in a very healthy position for the start of 2020. I suspect with DC being in Tokyo and Seoul this week we will likely hear of some more deals done for 2020 very soon. Operationally, financially and fundamentally LVCG is in a very strong position, a compelling case to buy far outweighs any reason to sell shares right now. This could double in no time from 21.5p and maybe we see a steady rise up to the summer months to give the sp a healthy outlook for 2020.
At the end of the day 61m shares are not in public hands, held by DC, directors and so on, that leaves 18m shares that can be traded on the open market (in theory). The twitter group that has many loyal and long term holders must hold 5 - 8m shares in total, probably more. There will come a point where the tightly coiled spring will just not coil any more and the rise will happen. It is not a lot of shares in issue for the reverse to be just as dominant as the decline. The bottom is very hard to call but with recent news, the end of January coming ever closer, £3m of revenue booked for 2020 already, new deals to announce, IP's to announce and current IP models and sets to build and rent out, it really wont be long until the sentiment returns and the sp will react very positively. This is one that will be easy to make money on given the drop from 70's and with all the fundamentals driving the growth in this unique company.
Thought id add my view on the current position now i've broken cover.
At 70p, with 70m shares in issue the company was valued at £50m mcap, the analyst note suggested the companies valuation was slightly discounted to their workings based on a 1.1m ebitda forecast for 2019. The valuation range of 73p-89p given, lets use 80p which would have given a £56 m mcap, suggesting £6m upside. The company has since issued another 10m approx shares, we have 80m shares in issue so that gives a 70p price target had they hit the £1.1m ebitda.
Clearly, the advisors felt the forecasts in the market given by the broker were reasonable and achievable hence the company appears to have been forced to issue the rns stating they would fall short. This tells me the broker note, unlike most, was based on real and respected valuation methods and in fact still stands.
From what I gather, the shortfall was actually due to a delayed contract rather than any major problems, a contract that is now due to happen in Q1, so its more a case of bad timing than missed targets, with LVCG year end being December. Taking into account it sound like this may still happen, and giving some goodwill and further discount just because its AIM. This still suggests to me that 20P is actually very cheap.
Have taken a decent look at the company recently, £11m in assets, models bricks etc. Which are now producing free cash flow. Add this to 2019 revenue, the booked revenue for 2020 and the value added by having such world renowned IP partners as Viacom and Hasbro, at £17m mcap this company is looking very cheap.
Pretty sure theres a hefty seller in the backround, and given Miton have been bailing out of lots of stocks across AIM post the woodford disaster id be tempted to guess its them. Ill be keeping a close eye on this and will be looking to add significantly once it looks like the seller is drying up.