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Perhaps you may have misunderstood. This was a call involving IR and management, not a public call. You know, companies and IR do host private calls with investors. Just as I am sure Geoff and his team do with investors like Capital Research, Camelot, Spruce House, and others.
Is that the same Camelot who was torched on Boohoo, whose fund was down 40% last year? and the same Spruce house was down 80% last year. World class seems to be a stretch here. If Elliott, Soros, Brevan Howard, etc were involved I think it would raise eyebrows but all the longs in Victoria are momentum players.
Don't be so defensive. It seems you are unable to accept any criticism of the company itself or even of cyclical / macro trends. Relax. I was only trying to share some useful information about one of Victoria's subsidiaries that a competitor shared.
Perhaps Victoria should have been more transparent about their plans to close down Saloni after paying EUR 100m on this not long ago. It seems to be a rather material decision and was not highlighted on the recent call. Again, it raises more questions over the company's compliance with disclosure obligations and whether Geoffrey truly acts in good faith.
Dear BlackBoulder,
FYI: I have no short or long position - and never have had.
I do have a healthy scepticism for companies that:
Produce heavily "adjusted" opaque accounts
Revenue increases by acquisitions but never profitability
Cash generation from operations is very poor - everything is funded by increasing levels of debt and preferred shares
Consistently has a negative return on capital emplyed
The Balance Sheet is a confection of Goodwill and other Intangible assets supporting a growing pile of debt
The BoD is beholding to one dominant character with a dubious history - who despite his large shareholding has already taken his fortune out of Victoria in the form of cash.
The Koch family and Spruce House are indeed sophisticated investors; who prey on the weak and needy. While not officially a concert party I would not be surprised if conversations have already taken place.
The end game will be the sophisticated investors picking up the business cheaply and the poor old PI's losing out.
I might be hopelessly misjudging the situation but the numbers don't lie. Unless you are a speculator there are many better places to risk your money - in my opinion - other opinions are available.
I wish you luck with your long position.
AceofClubs
Dear Ace of Clubs,
You keep your short position, and I will keep my long position, along with some of the most sophisticated investors in the world; Koch Capital Research, Spruce House and Camelot.
Let’s see how things pan out.
Dear Lobo87,
Your opinions would have more credibility if your post of 23 January had not been untrue.
There was no investor call that day. The last Headlam investor call was on 19 January. I have listened to the recording of the entire call and the subsequent Q&A session and not once was Victoria or Saloni mentioned
From the interim statement issued 29 November: "The Board believes cash flow, after exceptional costs relating to the integration projects, will be in excess of £100 million in H2."
This company never makes a profit and I am on record as valuing the common equity at zero.
However, Wilding has nailed his colours to the mast with the above statement. This will only be achieved by liquidating a lot of inventory at any cost; so goodbye gross margin.
Please bear in mind the "trick" of turning inventory into cash can only be done once.
AceofClubs
With all due respect Mr Boulder, looking at the recent HY report profit margins have actually declined from H1 2021 (£75.1m EBITDA on £489m of sales) to H1 2022 (£88.9m to £776.1m). So, EBITDA margins are down nearly 30%... That is some serious margin compression and is not made up like some of the rubbish short sellers are throwing at this. It seems rather dangerous for a highly geared company. This is of course what is drove the Moody's downgrade / negative outlook.
One can only assume another downgrade is coming if the Spanish CEO is talking about a 'collapse in demand with no recovery in sight'. Moody's plans to downgrade is there is a 0.1x move higher in leverage, which seems a certainty. You seem to be pinning your hopes on the prospect of continued integration of acquisitions and hopes of cost optimisation, but that seems like a pipe dream in the face of collapsing demand, which the company's subsidiary managers are confirming. I am a rather conservative investor, but it seems to be rather dangerous to be carrying out this integration / restructuring plan at a time when the entire household goods space is suffering.
Headlam feels like the better play here as an asset light business and I also prefer Tarkett SA in France as the Wendel family own the majority of the business and may just take the whole thing out.
Flooring is going to be an interesting space this year!
Victoria’s whole business model is based on using acquisitions to grow, and then consolidating production facilities to improve efficiency and operating margins. If you buy many companies in the same industry you want to rationalise production, obviously. It would be worrisome if Victoria was not doing that. They have previously closed the Victoria carpet factory in Kidderminster and moved production to their factory in Wales, they closed the Westex factory and moved production to their Dewsbury factory, they closed and consolidated two factories in Australia, and in addition to this consolidation in Spain, they are also reorganising the Balta factories in Belgium. It is this consolidation and integration that is precisely why Victoria’s operating margins have increased to the level they are. There is nothing unusual about this move and the Spanish CEO has said there will be no impact on the continued development and growth of Saloni as a brand.
The CEO of Cerámicas Saloni and Keraben warns of "a sharp drop in demand with no recovery date"
José Luis Lanuza sees a "strong contraction in demand" together with "high costs" and warns that the competition will send "wrong messages" about the restructuring of his company
https://www.economiadigital.es/valencia/empresas/ceramicas-saloni-keraben-caida-demanda.html
Not a surprise to me, been saying it for a while.
Dear old Saloni, o0ne of the older brands, it's a pity for their employees, but they're not alone.
First time poster here - I am an investor in Headlam and am watching this entire sector closely as the slowdown in housing sales and home improvement spending could throw up some opportunities.
This morning, the Headlam management team held an investor call and were saying how Victoria has closed down Saloni in Spain and has fired nearly all their workers. They spent EUR 100m on this acquisition in 2018. It also seems to be in the press.
They also pointed to a Swedish supplier/manufacturer called Kährs who are reducing significant capacity for Lower demand.
The Victoria management team paint everything as rosy, but Headlam were far more sombre and see this as a market where they need to survive. They advised me to go on Carpetright and scrape the data with Python, as they do, and said it is clear there are many price reductions taking place.
You guys know this business better, but curious what you have heard. Headlam are more asset light then Victoria and I am wondering if going long Headlam and short Victoria after the recent run up makes sense?
"Dutch TTF natural gas futures fell more than 12% to €56/MWh, the lowest since September 2021. Full stockpiles in China are forcing importers to divert February and March shipments to Europe."
https://tradingeconomics.com/commodity/eu-natural-gas
This week is the week when you want to be in! Do not miss out. Gotta be in it to win it!
The patience of the longs will pay off this week - Anyone who has sold will regret it. Me personally, I am loading up again tomorrow morning. FOMO (fear of missing out) is getting the better of me!
Come Friday we will all be sitting on a nice profit. The long wait and the faith in VCP will finally pay off.
Interesting articles @BlackBoulder
I think @alfista predictions about the energy price have been very wild. I can see the SP rising. I wouldn't bet against it.
DO NOT MISS OUT MONDAY! Expect big things to happen this week. The SP is rising rapidly and will continue to do so. Pile in now before it’s too late…
That’s exactly right FredHunt. According to Bloomberg today, European natural gas prices dropped to the lowest level since 2021, almost half the average for 2022, as storage levels in the region remain well above normal.
See Bloomberg today.
https://www.bloomberg.com/news/articles/2023-01-06/european-gas-gets-even-cheaper-amid-warm-start-to-the-year
And according to Trading Economics today, European natural gas prices have tumbled to €65/MWh, the lowest level since October 2021, falling 52% since mid December.
See Trading Economics today.
https://tradingeconomics.com/commodity/eu-natural-gas
All quiet on the western front?!?!?
Not much activity on the forum of late. SP hitting GBP6.00 today. Surely with the cost of holding these short positions must become too burdensome? After some research I found out that Spain and Italy are unlikely to be purchasing based on Dutch TTF and that they have their own gas markets which are notable cheaper. Especially now that Europe has had its most mild December in history.
@Alfista, you must have known this given your knowledge about the sector, or do you only share information that supports short positions?
@alfista
I suppose if we follow your thinking then it's apocalypse for the energy markets.
But on a more positive note, I've been told that Mr Wild Wolf is buying more shares next week and there will be an RNS confirming this.
Have you heard anything?
Maybe Wilding is using his kids' Christmas money to fund his spending spree.
Yes, there was last time around, but not before an awful lot of high energy users were put out of business, to the benefit of others who sere based in countries with more sensible policies on use of cost efficient production fuels. And that isn't in Europe. I'm told that there are many kilns standing idle at the moment.
One of the few things I have to agree with you on. Definitely the poorer countries suffer more.
Bangladesh economy is primed for an upturn. I've actually invested small amounts in a couple of companies.
There is life beyond the energy crisis.
Very much still around.
High gas pricing shows no sign of abating. Got to feel for poorer countries, Bangladesh unable to get gas deliveries as they can't afford current prices, it's being sold to EU instead. All the green policies punish those least able to pay.
@alfista
Looks like desperate time with recaster replying to himself.
Probably @blackboulder getting bored so churning out a different set of figures.
What's happened to your mate The Energy Crisi? Still around?
Two different threads. First posts as new to this website. I think the bias is in the published accounts rather than the recast accounts.
You don't think "recasting" is a bit of dodgy biased analysis then? Anyway, why are you replying to yourself, did you forget to log on as a different ID ??
I think you're on the right track here. Using figures instead of whispers in the wind.
Had a look at the accounts and recast them. There are some pretty concerning details in them. Posted the info at:
Interims:
https://recastinvestor.substack.com/p/update-victoria-plc-vcplse
Annuals:
https://recastinvestor.substack.com/p/basic-analysis-victoria-plc-vcplse
These links include attached recast accounts separating out lower quality earnings from higher quality ones. Some questions on comprehensive income and the company being stuck in an acquisition treadmill to generate negative goodwill which it takes under IFRS 3 to the revenue statement.