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Alchemy having attempted to sheepsteal CWD with the support of the BODS have now offered shareholders another umbrella whilst the sun is shining.
They are not needed Getting their revised bid in before the good news of H2 emerges
Just in
Connells off ‘unanimously’ rejected by shareholders
Good news, 2.50p a share is laughable.
Revised offer from Alchemy now on the table and the other option as I mentioned was a small capital raise.
Just a few weeks til the end of H2.In the New Year CWD wil have a set of figures which should be sufficiently attractive with some fresh management,a small capital raise to secure a facility for the debt.
The worm has turned.
Steady as she goes .Hamptons are the crown jewels They have just incurred a large cost in rebranding them.Why sell when the Central London market is still languishing?
One of the huge mistakes that CWD made is they bought in revenue with borrowed cash rather than paper.
First and foremost this landed them into serious debt but also removed the incentive to remain for the big fee earners without equity.
Rather than sell give the staff an opportunity to buy a stake at a discount price
All CWD needs is a steady hand on the rudder.
LSH is a quandary. Unfortunately unlikely to get anyone in todays market to pay close to the £36m which was agreed over 12 months ago.
I would keep them and incentivise the staff to remain before they run off with the clients
Agree raise £20m,sort out the finance but keep the brands intact just carry on with the day job.
It’s a bold move but when you think that LSH was under offer at 36m this time last year now (although it fell through) this should give you an idea of the company total value
Mortgages and Surveying are huge profit drivers, if LSH was worth 36m both of these parts of the business alone must be worth 80-100m each.
If I was running Cwd my 3 year plan would be simple.
- Capital raise 20m pay down debt and secure medium term financing
- Sell off LSH & Hamptons raise around 70m.
- retain John D Wood as single premiere brand.
- scale down branch operations taking the 700 branches down to 500 with an aim of 40% ROS from EA and Lettings total. 40% ROS will create a good level of EBITDA even once central overheads are accounted for.
- scale back of non fee earning and support roles and invest funds from Hamptons and LSH sale into prop tech to support this.
- introduce a CMO (chief marketing officer) to the board.
Within 18 months you’d have a profitable business with debt paid down with a smaller but more efficient workforce with greater use of Proptech.
>I think you have the 50:1 consolidation the wrong way around.
Not the wrong way round but it looks like the SP I used was wrong. I used Google SP graph which I assumed was adjusted for the 50:1 stock consolidation. But this doesn't look right if the SP was around 600p when Alison Platt was appointed and I've just checked an old SP graph pre-consolidation and in January 2014 the SP was close to 700p and that's the max. it got to so 600p looks right.
So going back to what I was saying re. comparing with LSL, using the same graph I've just found I think the CWD SP back in Sept. 2013 was about 575p (very approx.). So about 28750p when taking the consolidation into account and comparing with today's 228p. Google has a SP of 10684p for Sept. 2013 for some reason but let's forget Google. Either way the point remains but is even more massive a difference if we use 28750p instead of 10684p for CWD when LSL's SP was at a peak.
I suppose CWD could have been massively overvalued back then but you'd expect LSL to have been too if that was the case. Or LSL could be massively overvalued now I suppose. It just seems too big a difference though and I can't make sense of it.
I think you have the 50:1 consolidation the wrong way around. Taking that into account they are worth 4.5 pence today compared to what they were pre -consolidation. The most I can ever remember them being was around 600p per share around when Alison Platt took over. So today they about 0.75% of what they were worth then A ratio of approx 130. Rough maths
I believe you are very right- CWD needs fixing and its fix-a-up-able . The FS Business, New Homes, Conveyancing Referral and surveying business at Connells made all the money(thats fact by the way)-Estate Agency(ie secondhand) probably broke even at best. For sure they had a few very good EA branches but so still do Countrywide.They need to offload LSH once and for all (Connells owned it once upon a time weirdly)and focus on what makes the money by managing the Estate Agent business to deliver the other stuff. Simples
LSL-great surveying business and took a brave decision to shut a lot of branches. Not sure about that but in light of Covid was a lucky move.
Connells run a discipline business focusing on the right things-thats all-no magic there
CWD at less that than at least double this is daylight robbery
(PS dont understand the debt issue as much as many will so i merely offer comparison between businesses)
I’m not prepared to put too much time into comparing LSL & CWD because understanding CWD is hard enough when you start looking at the accounts over a number of years.
Taking a very simplistic approach and look back at when LSL’s SP was at a peak – Sept 2013. At that time LSL were priced at just over twice what they’re priced at now. Compare that to CWD at the same time and they were priced at 10684p back then (so about 43 times higher back then than now) when you take account of the 50:1 consolidation of shares (the actual SP back then was really 213p but there were 50 times more shares than there are now approximately)
So unless there are things that can explain such a massive difference you’d have to assume there’s massive upside potential from CWD once they are 'fixed'. No reason why they can’t be run as well as Connells & LSL from my limited understanding of their business.
Thoughts anybody?
Don't really know much about CWD.
How would a fixed CWD compare with LSL in value?
LSL currently valued by the market at about £256m and CWD at about £116m.
Agree-100% giving it away at 2.50-just need to sell of a few bits/and then recruit some quality management to get the whole business focused on the future.Why not pay a few ex Connells people a few £ to assist-they have lost a number of ex op board members recently so its not all sunshine and rainbows. I am surprised Skipton want the risk to be honest unless as Adsharpe says its a fire sale and no risk
A reliable source informs me capital raise very much the favourite at the moment.
Mr Long departing I am sure was mainly due to the city and banks losing faith in him, the alchemy deal was a great deal for himself but dreadful for the shareholders. Integrity was lost when he backed it and the Connells turned up with a price which was still well below market value IMO.
Any asset stripper can see value in this company, their mortgage and surveying businesses are huge profit makers and Lettings a consistent performer in all market conditions
Sadly, over the years it’s been the estate agency side which has degraded and degraded. Currently in purple patch which is resulting in high net and exchanges. In many offices lettings side is holding the finances up and keeping the lights on.
My outlook - capital raise to secure medium term financing. Sale of LSH, Hamptons and John D Wood (in H1 2021) to free up large amount of capital (I hear movements internally are already happening to segregate the business from core business). Debt will be cleared down to circa 45m and new credit facility agreed.
Connells offer is fire sale price, would be criminal to sell out for that price.
Just looked at the sales incl recently completed for Jan 2020 which I guess is 60 days.so taking in Dec and Nov 2019. Most of the brands are currently showing 30%+ and some 100%.The BODS really shafting shareholders recommending the bottom feeding offer from Alchemy.Disgrace CWD clients can be relieved that the BODS haven't been engaged in negotiating the house sales
I think the dam is about to burst on income. The pipelines that have been swelling since lock down 1 are just beginning to deliver November and December will be great income months. Q1 will be good as everyone rushes to hit the Q1 SD deadline.
Well every chance that the BODS might look at a capital raise rather than recommend a sale.Both October and November have been excellent months so all the doom and gloom unfounded
They could easily raise £20m at 200p which should set them fair to sort out some medium term financing next year
anyone believe the raise will go beyond 2.50.If so-why is the price stick at this level.
Wearing I think the scaremongering is that obtaining finance next year will prove a problem rather than something which will need a dressing. H2 is going to be robust and a country mile ahead of last year.
Wrote caveat - meant covenant. It's been a tough Monday already, OK?
I'm not sure it is scaremongering - isn't the crux of the issue a bunch of lenders unwilling to amend terms with an unservicable caveat coming Sep21 - a leverage challenge that no amount of great performance is going to change? No matter how the CWD brand perform between now and then, there needs to be capital to clear, and refinance in a sustainable way - and CWD can't do that on their own.
Whether Alchemy, connells or anyone else - surely the finances need sorting out so the business isn't distracted by sorting its lenders out every 6 months?
The BODS &Alchemy have lost any credibility trying to pimp up the toxic deal.November proving to be yet another good month at the coalface .
Scaremongering unfounded.
The new chairman must be in a strange position now finding himself in a power struggle
Selling at £2.50 would be criminal.
Interesting piece In the Times yesterday about Alchemy trying to win Hoskings over
for a second bite of the cherry.
How much cash do LRG have? Would LSL come back for another bite? Would PB, bankrolled by Axel Springer, see a balancing out and ingredient brand opportunity? Would other investment vehicles or other major shareholders tool up and jump in?
You'd think so. If for no other reason than to prolong the process and cause CWD some pain by their competition...
Who else is realistically in the race here? Surely we can expect more than one other offer?