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Your point is well-made.
I wouldn’t want to get into the can of worms that can be opened by direct comparison, but on current metrics Wickes shareholders should be very well placed.
I did previously have a look at Kingfisher on the lease malarkey. It seems to be carrying about £2.3bn. in lease ‘debt.’
Well, I'd take from that they don't know what they're talking about... look at the debt on Kingfisher's next accounts. They'll have tenfold the leases that Wickes do at least and they're running at EPS of 28.7p and trading at c.£7bn.
Come the next results, Wickes will be trading at c.25p and be trading at c.0.6-7bn. It's an incredible disparity in valuation.
But, as I said in the past and earlier today, true value will always reveal itself.
Just to finish off on that debt or lack thereof, the poster to whom I think you were responding on the other side did not post the full comment. I have since had a look at the full Wealth Oracle article. Wickes is a monitoring job for them, but restricting myself to debt they seemingly endorse, to some extent at least, what I posted earlier.
“…….Meanwhile, valuation looks pretty attractive. WIX is trading on a forward PE ratio of around 9, while PS ratio is around 0.4%. Both look decent for the Speciality Retailers sector and suggest scope for upward rerating. On the negative side of the ledger, the company does have a significant amount of debt, net debt was £784m at end FY20, although it is mainly leases….”
The only sham is the share price. But it finally appears to be bleeping on the radar and I sincerely hope it strikes through three quid fifty before any potential bid situation.
Amazing it hasn't been snapped up already.
Thanks. I don’t think anybody could make a persuasive case that there is not even more value on offer as a result of being sold down. Certainly the directors ( this is not some sham company ) thought value would out in time when they first bought at £2.50.
Good post Culpo, and what a pleasant and unexpected Friday that was for Wickes holders.
Long way to go yet, but we keep faith that true value is always realised eventually.
have no appetite personally to argue the matter of debt again. Early posters here have discussed it, and I think it fair to say have concluded that Wickes has none or very little in the layman’s everyday use of the word. But there will be new shareholders and I see it has been mentioned elsewhere. Other views may be taken.
On my limited understanding, IFRS 16 requires all future contracted lease liabilities over 12 months to be shown as debt, even though they are pay as you go and not in arrears. The new accounting rules require an interest component to be added. Wickes has many leasehold properties, and started life on it’s own with about £790m non current but future lease obligations, The figure is large, but not ‘overdue’ and not ‘owed’, in an everyday sense. A form of balancing takes place, by an entry as a right of use asset.
I can’t make the figures equate, and probably you would not expect me to do so.
On my reading, no commentator has made mention of onerous debt. Indeed, support for the ‘little or no debt proposition’ can be found here, from them that are paid to work these things out.
Shares. https://www.sharesmagazine.co.uk/news/shares/wickes-rallies-as-impressive-margin-performance-drives-upgrades
“The broker also raised its forecast for 2023 by 10.5% to £89.4 million and upped its price target from 420p to 450p, arguing the current share price and equity rating are ‘far too cheap given the high-quality nature of the business, the strong trading momentum and net cash on the balance sheet of circa £170 million.”
Investor Chronicle. https://www.investorschronicle.co.uk/news/2021/09/17/wickes-thrives-as-an-independent/
“A capital restructuring that took place ahead of the merger saw Travis Perkins repay inter-company balances of £123.5m, which helped Wickes to effectively bring net debt down by more than £100m to £564.8m. All of this is essentially lease liabilities, with £769m of future lease payments offset by net cash of £240.2m.”
Yahoo Finance. https://uk.finance.yahoo.com/news/why-wickes-group-plc-lon-101412800.html
“Wickes has not one iota of net debt.”