Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Blimey well done guys, not one i would have ever considered as a buy but that's life
Bought a small amount of these late 2021 at £3.81 and pretty much forgot about them when they dropped through the floor … it still feels like a win today
More again today
I'm sensing great things from the company. They appear to have weathered the storm of the past 18 months and have laid out their vision of the future to improve business health and return shareholder value.
Engaging television adverts, new store openings and product ranges are all positive signs heading into the busy Christmas period.
There was no borrowings at the year end in July '23 but drawdown on RCF by the Autumn (as per Financial Review): "As at 10 October 2023 the Group remains well capitalised with £30m headroom comprising of £8m cash on hand and £22m of unutilised facilities within its £50m RCF, immediately prior to the peak cash-generating trading period."
Premium valuation: does one need a premium valuation for HOTC? Right now at £200m market cap it trades at 10x normalised after tax earning (assuming £220m revenue next year, 12% pre-ifrs ebit margin). One just need it to trade in line with the market at 16x to justify a re-rating gain, let alone revenue/earning expansion
Asset intensity: last 6 yrs store counts went up by 25% with revenue doubling - not fair I think to take a growth period to judge the asset intensity of the business. At the end of the day, if you cap store count they can Jack up pricing and all of that flow to the bottom line. That’s See Candies (Buffett) level of low (!) asset intensity.
Borrowings: are you referring to trade payables? Because clearly q1 24 updates cited a net cash of 8m£ with an undrawn(!) rcf of £20m odd.
Number of large buys coming in over the past few weeks build confidence for the future.
Any potential investors will have assessed the company's history and potential in the current market. Whilst the economic environment is still uncertain; positive signs are visible and the turnaround has started
Looks like someone loading up again. Some big buys.
There’s a lot to be said for the power of positive sentiment and loyalty and it’s been driving the mcap of HOTC up closer to £200m recently. Who doesn’t like chocolate right?
The quality of their product is top notch and imagery is pure velvet but all this comes at a cost that leaves me wondering whether it can really provide a return for shareholders that justifies a premium valuation.
In total, cash inflow from operations over the last 6 years was £94.1m but the business is asset intensive and this figure excludes capex of £84.2m and lease payments of £37.7m. The net result is an average outflow of about £5m per year, funded by equity raises of £40m in FY22 and £26m in FY20.
The group’s latest cash figures also look to be worsening: The most recent reported figures (mid Oct 2023) show borrowings of £28m whereas at the end of last November (2022), the draw down was £10m lower at £18m – a full 6 weeks later into the pre-Xmas cycle.
Regardless of the above, I wouldn’t be surprised to see the SP continue to rise over the coming weeks. But longer term, it may be that this will taste slightly bitter.
Looks to have been some big buys today
Interesting - I am keen on anything that adds value to the business. Not only am I shareholder but I am a loyal customer.
Yes - if anything it may be a collaboration. And if such a thing is currently being pursued then it will most likely be when HOTC shoot trough £250m sales (the current maximum revenue that the group can achieve based on 300m chocolate production capacity - assuming pricing stays broadly the same). If Angus T wanted a repeat of the past, i.e. a double in production capacity to say 600m chocs capacity, then he would need outside money. Both debt and equity financing have been done in the past (choc bonds and 2021 equity raise), it's not totally inconceivable that Ale Costa may end up being an equity partner
How would that work the the founders still own a majority stake? Couldn't aquire it with them bring on board and given Angus' passion for the company seems unlikely.
Could be a collaboration though?!
Hi Tom/Andrew, what do you think about Alexandre Tadeau de Costa (Ale Costa) of Brazil Cacau Show who just bought 3% a month or so ago. I notice that in a paper Ale Costa also mentioned he’s looking for m&a target outside Brazil. Cacau Show has 30x the number of store count as HOTC though lots of it is under franchise rather owned store model like HOTC. But there are a lot of similarities in terms of product positioning, leader in premium chocolate gifting etc.
The share price has dropped over 70%. The company has no debt, cash reserves and increased its production capacity. It has a multichannel income, growing business streams (velvetiser + cafe) and its founders still own over 50% of the business.
I was also reading an article that luxury chocolate spending goes up during a recession.
Personally I believe there is reason to be optimistic about the business, especially with share price at this level. Of course no one knows the future but i can see this being over £2 by Christmas. My target is over £3 a share.
I know you were after less than £1 Likeitornot but i just can see that happening especially being October. It's hot chocolate season..
The reason there was a negative TU is because trading is poor and the expectation is that this will continue to be the case. So don’t be surprised if next TU is poor too, Christmas or No Christmas. Sorry.
Completely agree Andrew and oddly enough went to same shop a month or so ago and was very pleasantly surprised how busy it was.
Just a shame the share price is a bit of a yawnfest at the moment. Hopefully it will start to make sine meaningful moves upward soon.
The run up to Christmas is always an exciting time for chocolate retailers. I suspect the company will have reviewed their offering in an attempt to broaden their Christmas range.
Visited their Glasgow store last week and customers were certainly enjoying the velvetiser café concept on a cold afternoon. Hopefully some good times ahead for the company
I kept buying all the way down. As you say this is a seasonal dip compounded by their factory upgrade.
IMO wider market will realise the value here at some point soon an pile in
(not that i bought in, then!). But we're starting the run up to Chrismtas, already. So there' going to be some interest in the sp again.
Chocolate purchases only go out of fashion out of season. It'll soon be the 'fudge it! if we're all going to die may as well do it with quality chocs!' season.
In the last set of results, it was stated that revenues through the tills (so I guess incl. VAT) was £1m per store per annum ON AVERAGE. This is one hell of a combined performance if it is true. It is approaching £3k per day for every store, and must be at least 20% of the stock they hold at any one time. Is this plausible or have I got my decimal point in the wrong place.
Slightly unfair comment on the Japanese expansion. It was covid restrictions that buggered them there. Japan is only just re opening properly now!
Went to the glasow shop Monday, it seemed the Cafe model is proving popular. We'll see if that turns into a profitable exercise.
I'm Still a LTH here, as a family we've been buying HOTC chocolates since the original phone ordering days..... and bought a fair few of shares over the years for my wife... so I'm a fan of the company...
I dont really follow the logic of each store being a % of the mcap. The company has a reach far bigger than its own retail stores, ie concessions and online. That said, I think being a niche operator, which HOTC is, makes expanding the brand tricky. They failed at cosmetics and the rabot restaurant sadly died. Ive stayed at the St Lucia Hotel and its superb but not much room for growth on that side of the business as its only got a handful of rooms.
I'm not sure what the target of vodka is all about?
So, they start hot chocolate for home use via the velvetiser sachets and Hot chocolate and ice cream in stores- all ok.
But what will drive this company back upto £5? Enter the snack bar mass market?? I doubt they could compete on price with Mondalez etc and I very much doubt they have the advertising budget of the bigger rivals.
Maybe its time for Angus to enter the magical world of Wonka and start a chocolate factory tour via the golden ticket... otherwise I see a buyout at some point by the Americans.
One final point- shareholders are not rewarded in any way for our loyalty- about time we got a voucher to use in store!
Chocs Away!
Hopefully we will both be right. The stat which values them at £1.1m per store (and associated share of online sales) just doesn't quite compute for me currently. They just need a convincing growth story to justify it I guess. The Japanese saga dented people's perception of how easy they could deliver on their international growth potential. I really hope that they can find a way to reach new markets as this will help to get to £3 and above again.