Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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Superb update and I expect the SP to resond accordingly. I can only see greedy investors scrambling to get some HEAD and I also foresee a happy ending after they get HEAD.
Decent update this morning:
- Sales recovery to 2019 levels
- Driven by growth in residential sector (other shares to look at - Topps Tiles & SCS?)
- Unsurprisingly commercial is down
- Europe performing well, esp Switzerland and Netherlands
- Return of dividend payable in May & Nov 2021
- Expecting on target profit - £14 to 16m
- £50m net cash position
SP has been consolidating since mid November 2020 at 350 - 390 (2013 levels!). Expect this to return to pre-covid levels in due course given return of business scale. Medium term target 520 - 550. No reason longer term it can't get back to ATH of 655 in longer term.
this morning but dare not tell the wife. The prospects look good here and the TU in 10 days will hopefully be better than previously expected.
Cleared now (369 to buy)
Buy price down, still no volume to sell
Bought some of these but at the moment can only get a quote to sell 1k at 370 so be warned. Will post again when this changes. Currently buy price of 385 is higher than when I bought , seems a bit rich
Thanks Steve305, that fits in with my expectations. Particularly, the caution of the older buyer, which is understandable and sensible. Yes, commercial is down like for like but as you say it is a lower margin business. I'd expect some guidance from Headlam in their next update. Also, I think it's safe to say that retail like for like through Jan and Feb will be up on last year but that will not be confirmed till the finals in Mar.
hi londoner spoke to my man again today and he confirms that retail orders are plentiful
and still has backlog of orders well into new year.
commercial carpet sales are down but are also lower profit compared to public sales.
he says that the over 70s are not the ones buying it is the working age groups .
also i forgot to mention this company also sells furniture and that side is also very busy hope this helps.
steve.
steve305, I agree in part.
I too was convinced until today that it would be no deal. But there was something from today - I watched Andrew Marr this morning - that reversed my view to the point I do see a deal.
Where I differ is that I don't read it as Bojo caving in. I think both sides are equally keen on a deal, but it could go to the 31st. Heaven forbid it gets dragged into the New Year. That would require support in law through the UK parliament but I don't rule out anything these days.
Thanks for your insight in your local shop. I see another angle here. With fitters so busy, the role will attract more youngsters into the trade. Particularly with other job opportunities limited. Further up the chain I'd expect those with experience to look to break free and set up for themselves. That's typically how markets and competition develops.
Next time you chat to your man, I'd be interested if he sees the workload pushing out into the New Year.
just to add until todays announcement i was convinced that it was a no deal brexit .
but after today i now think bojo is caving in to eu as cannot see any other reason to keep talks open. interested to get your opinion on this.
hi londoner according to a local carpet shop owner that i have frequent conversations with he is stacked out with orders but struggling to fit them fast enough.
his fitters are working long hours trying to keep up.
his is a long established family business with a good reputation .
Due to the nature of Headlam's supply chain I thought there might have been greater volatility in the share price reflecting the will they, won't they, Brexit mood. I have a limit order in place in anticipation of a drop but it hasn't been triggered. I'll leave it in place until after 31st Dec.
I think the lack of volatility is down to a view, which I share, that the impact of a 'hard' exit would be modest on Headlam. Headlam stated in their recent update that they were building up stock ahead of the deadline. Their earlier comments on Gold, Silver and Bronze products in relation to stock levels points suggests they will always have the beige carpet in stock, demanded by most 'buy-to-let' purchases, but if you want red you may have to wait a few more days. But there's always a trade off. As a resident I may be happy to wait a week for my red carpet, but the trade perhaps wanting to get the job done today, or being poor at there own scheduling, might go somewhere else where red is in stock even if it means paying more, which is probably picked up by the customer anyway.
I'd guess a consequence of a no deal will be port or import delays. But this isn't fresh fruit, carpets can sit around a couple of weeks if the worst happens. Working capital goes up but this should normalise over time.
We know that residential trade peaks ahead of Christmas - you want your house looking its best when the in-laws are visiting for Christmas dinner, so the 10% like for like increase probably isn't a surprise after the lockdown, but Headlam are pointing to a possible lack of fitters impacting December. Again, not a surprise. A few weeks back I was sounding out a BT Outreach engineer , who was fixing my BB, on the Covid impact. He told me that many of his older colleagues were not happy doing home visits. I guess the carpet fitting trade will see similar.
Also, if Dec is always the peak then an additional 10% call is huge pressure on the trade. Bit like the NHS over the winter. I'd guess that if a householder wants a carpet for Christmas but isn't getting it, most will leave the order in place for fitting in the New Year.
These are the ramblings of someone not in the trade. I know some posters here are in the trade so I'd be interested in your comments. Particularly, in relation to any overflow of business into the New Year.
Incidentally. I live in Scotland, and a little reported fact is that during the three week period of 'Phase 4' on most of the Central Belt, say 35% of population, tradesmen were NOT allowed to visit homes unless it was an emergency. I'd guess that doesn't cover a new carpet. That could have had a 2-3% impact on Headlam's Nov revenue, and it means the Scottish carpet trade will be seeing an exceptional Dec. Surely that has to run into the New Year!
londoner i take your point that head delved into a section of the market that was not their forte and have paid the price as i stated this must have been an embarrassment to the bod and hopefully they have learnt their lesson.
in fact jhd was more suitable for that section of the market than head was.
on your comment of jhd being too expensive i agree i have waited for some time for the opportunity to buy in to that stock and on monday of this week after the drop after the ex divi date i managed to buy at 4.48 which i think was a good entry price.
this company never seems to disappoint and looking at the world economies and the need for massive projects that will be needed in all economies to grow ourselves out of this mess i can only see this company going from strength to strength .
so as you say its not cheap but it is good and i am happy to hold both stocks .
good luck. steve
Steve305, I take your point about nobody getting it right all of the time, but the Domus acquisition was about more than that. It was a significant change in direction. Headlam had built its business on a high volume of low-priced transactions and is the market leader in floor covering’s distribution. The transaction size is c£100. Domus is completely different, with a typical project size of c£8,000.
The cash payment was £30m and £23m was classed as goodwill, so only c£7m of tangible assets. That £23m would have paid for the recently completed Ipswich distribution facility. In 2019 Domus made a profit of £1m. It was the only business unit within Headlam to have an impairment to goodwill in 2019, and the Domus goodwill still accounts for c60% of total goodwill within Headlam.
Domus is still operated as a separate business unit by Jon Newey, Domus's Chief Executive. Its business is completely outside the scope of Headlam’s management experience. I would not be surprised if Jon Newey approached Headlam with a management buy-out offer, which would be for considerably less that £30m.
But I expanded on yesterday’s RNS as a focus on Steve Wilson as CEO of Headlam to stick to what he knows best. Signing a cheque for £700K should help remind him of the need to do that!
As an investor I want my investments to generate a high and growing free cash flow yield. It is my primary investment metric. The FCF is returned to me in the form of dividends or reinvested in the business by management. I have no control over the decisions management make in assigning that investment but I watch closely, as it is those decisions which will have the greatest impact on the performance of my investment outside of the market cycle.
Headlam management should be fully focused on investing capital to improve on their position as market leader thereby raising ‘barriers to entry’ to new entrants. If there’s spare cash, return it to shareholders, not pursuing investment themes outside the business model. That’s my job.
That all said, Domus is now priced into the Headlam share price. I closed yesterday’s post with a comment from the recent trading update. I like the reference to capital allocation and the comments on operational improvements that are expected to result in an additional £4m of profit. Alongside a market recovery from Covid 2022 looks very-good, although I expect 2021 to be decent too. That’s why I’m invested here.
On JHD. A great company. I've taken a look several times over the years but I've always considered the stock to be expensive. Today, I prefer Headlam's valuation.
hi londoner yes this was an expensive mistake and a huge embarrassment to the bod but hey nobody gets everything right all of the time.
but with the new warehouse and distribution system head will be a leaner and more efficient company going forward.
i expect the next 2-3 yrs to be very good for head as there will be a lot of changes and investments in both the public sectors and private corporate sectors.
the private sector has been very busy during the pandemic period to date with lots of people spending money on there homes etc and see this continuing through 2021.
looking forward to jan update on divi and financial position of company.
this is looking like a very good investment at the moment and i am pleased i bought in when i did just my opinion but am very bullish here. good luck steve.
ps. i also bought into another specialist flooring stock this week jhd you might want to take a look.
This should draw a line under the 2017 Domus acquisition. I’d guess the £3.7m performance related contingent payment to Dec31st 2020 will stay in Headlam’s pocket. I sold out of Headlam early 2018, a couple of months after this acquisition. I commented at the time that Domus wasn’t a good fit with the existing business.
Headlam CEO Steve Wilson comment 7th Dec 2017
"Domus is a significant addition to Headlam and broadens our overall position in the industry. Domus provides us with meaningful product, supplier and customer diversification and expansion into a market segment that offers higher levels of profitability and additional growth opportunities.”
Two years on - Headlam accounts 5th Mar 2020
“Additionally, based on the Board's assessment of the carrying value of the investment in the Domus business, a goodwill impairment of £2.1 million has been recognised within non-underlying items in the year. Due to its predominant focus on larger scale projects within the London area, the Domus business in particular has been adversely affected by the weak market backdrop and political and economic uncertainty that has prevailed over the last two years, and which has particularly impacted investment in the London market. Although the market is anticipated to recover, the Board felt it prudent to take a more cautious view on the revenue recovery in Domus and hence to take a write-down reflecting an impairment in the carrying value as at the 31 December 2019. “
What isn’t mentioned in today’s RNS is that as part of the settlement Steve Wilson will also be signing a cheque for c£700K. I’m sure Steve will be reflecting on his decision 3 years ago. Hopefully, he’s now thinking, “stick to what we do best!”.
I was encouraged by the recent comment, “Company expects to provide an update on the reinstatement of an ordinary dividend as well as its wider capital allocation priorities.”. Which I interpret as the return of spare capital to shareholders in the form of special dividends, rather than splashing it on another Domus.
Lots of people getting head today and I promised myself to get some in the morning.
Agreed Steve305, the January update is sure to be equally as positive as this one.
I expect this one to be towards the 5s within a few months.
well i expected it to be good but this is better than i ever dreamed.
going to be a very nice stock over the next couple of years and looking forward to the january update and the reintroduction of the divi.
one very happy investor here. jmho.
Expect an RNS tomorrow with a 6 month trading update.
Since the end of lockdown 1, trading for this company has been significantly above expectation. I expect to see a very positive update and then see that reflected in the share price.
Carpets/flooring retailers and contractors are seeing a boom in sales, mainly due to people spending more time at home so more money on home decor stuff. This isn't unique to the UK but to all of europe.
https://www.lse.co.uk/rns/VCP/preliminary-results-q1-fy2021-update-otrem3y9w1zxo89.html
https://www.lse.co.uk/rns/UCG/trading-statement-iwtnpdk01vr5le4.html
Like for like sales is up massively in the above carpet/flooring stocks. The distributors and suppliers will also see the same effect as more sales for retailers = more buying from distributors/suppliers.
The market has completely missed this for headlam.
Yes, some interesting block buying going on at Headlam - https://thecollective.finance/2020/10/headlam-head-l-significant-block-trades/
very strong buying yesterday.
decent buy @283p
on other exchange
nice report confirms all the reports i am hearing from local residential retailers .
who say they have been very busy in recent months.
looking forward to next update.
very low priced stock imho with great upside. dyor