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Good to see an up-tick here for whatever reason.
10% bounce just now - someone knows something
Cash is largely spent on acquisitions which at the last update were trading as expected.
AB, what do you calculate the cash is here? Something like 35p per share with no debt?
The cash pot is huge.
ABftse, I am afraid I disagree with you... acquired companies have not delivered. So, prospects not looking good...
Strong balance sheet (assets worth more than market cap) and strong cash flow.
Good long term holding.
Another purchase by multiple directors to add to the one at the start of the month. Again, not huge - 3 directors bought around £30K worth each - but maybe it's adding up.
Definitely no rose-tinted glasses... rather, a strong stomach is what's required! Down 7% today, but that's generally poor sentiment in a thin market, I'd say.
this is a company that is in quick decline.
The current mcap is about the same as the new money raised and spent on acquisitions.
The old VL is deemed valueless…..can this really be true?
SP Seems to have overshot on the downside….but there needs to be a change in sentiment to trigger a change in the SP.
I bought yesterday and prepared to see it go down another 25%-40% as a possibility. They will have problems passing on input cost rises and there is no major reduction in the hit of covid. Med-long term I think this will offer a sensible CAGR and can add further on weakness. Much if not all of the bad outlook is known and priced in around here in my opinion. Always the chance it deteriorates further so no rose tinted glasses.
If I get the impression it has bottomed I might buy. Small businesses will have a hard time for a while. Those that manage to survive or even prosper will fly once through the coming period.
I really hope this prospers and you ultimately get a decent CAGR.
I've been there myself, more than once or twice.
Hey, thanks, you too! I'm happy if you've avoided some of the pain of this share.
Buy & Build is risky and runs down cash.
Meanwhile passing on higher input costs will be hard and supply chain issues. Variables that cannot easily be predicted and can (probably will) wreak havoc.
Its likely to get nasty for a while, 6 months minimum in my opinion and possibly a couple of years.
I hope you do well unhooked.
Great stuff, thank you. So if I've understood you correctly, you think net, net, they have little or no cash but have £32.5m net undrawn of a £50m facility. So, very moderately indebted then. In that case, not entirely dissimilar to what I thought, although I obtained my estimate in a less learned way!
Have you noticed how often they refer to this undrawn facility as providing them liquidity to fund further acquisitions? Are you a fan of their 'buy & build' acquisition strategy? Others here are not. They'd like to see the company focus on trading and pay down debt for a while. Do you have a view? The other thing is the mouthwash. I have my doubts. I think, now, it artificially raised or distorted the share price a year ago, which then suckered me in too early when the price fell. I feel safer appraising the business sans the mouthwash.
But thank you again. I've put a fair amount into this share and feel better after reading your optimistic thoughts, backed up, as they are, with good analysis.
Hi Unhooked, My analysis is that they had £42m cash (at 30/06/21) plus (assumed) Free Cash Flow of £1.5m for H2 21 (based on 2020 FCF allowing for growth) plus a facility for £50m less 30/06/21 creditors of £10m and non-current of £10m. They bought HICP for £5m and BBI for £36m. So that leaves around £32.5m head room (net undrawn). That's assuming the new borrowing completely replaces the old. (The Interim mentions needing to repay the Italian banks?).
Other thoughts about HICP/BBI/Dentyl:
1/ The relationship with Bayer and "another significant player" (GSK or similar) is substantial. They've already deepened, extended and built on that relationship in the Interims (eg extend from 12 to 51 countries).
2/ The margins are almost certainly higher on these specialist products compared to fighting it out with P&G etc on Mouth Wash and Tom/D*ck/Harry on the hand sanitiser!
3/ Go back and look at the EPS and EBITDA for every year 2017-2020. Those numbers more or less triple year on year. You can't achieve those sorts of numbers by luck!
4/ The Directors 2020 share sale. It was more like 60% of their holding and the buy back was less than 10% of their smaller holding. But the MD for example still has £300k of shares (at current prices) so does have skin in the game - and remember he has lost £700k on paper, so if that were me I'd be working damn hard to turn this ship around. (Otherwise I'd resign and enjoy my million quid from the 2020 sale haha)
5/ I bought Dentyl at the start of the pandemic (a daily further line of defence against covid). I found it in Boots (expensive) and then in Aldi (less). But recently I've seen it in many more Supermarkets.... it's a daft way to say a share is good but the fact they've got it into so many more places is encouraging too.
Great analysis and fair minded, thanks. I think it's the sheer speed and extent of the decline that has caught many of us out and (in my case) has added a bit of desperation to the pessimism. I agree with all the points, they are mostly in my head too but it's great to see them laid out like that.
Do you have an opinion on the debt? I believe they have some cash (about £5m?) on the balance sheet after they spent large on acquisitions earlier in the year, but that is exceeded by short & long term liabilities, such that the company is moderately indebted. That's my understanding.
I also worry that the market thinks the management hasn't allocated capital well (i.e. been profligate with the acquisitions). This will clarify in time.
There's a great deal of pessimism on the board. And the drop is very painful but I'm considering what we know.
1. We know that VLG have achieved cost synergies in the past. We know that potential for cost synergies exist in its 2 most recent acquisitions (manufacturing capacity, customer synergies and reduction of costs). The BOD have not given any indication that the synergies have failed to materialise (but have told us other bad news - which suggests there's not even more bad news?).
2. We know that 2021 revenue (very recently) has been guided as not less than £32m (a reduction of £6m). Cenkos earlier this month guided EBITDA to now be around £6m for 2021 rising to £9m for 2022.
3. If this is true (for all their faults the BOD haven't told any outright lies - I think we can agree on that?) then the EV/EBITDA is now standing at 6 for 2021 and at 4 for 2022.
The corresponding PE ratio is 9 dropping to 6. I can only say this valuation is incredibly cheap. But the crucial question is can it get any cheaper?
I've tried to think about all the reasons and then what would I do if I were the CEO:
1. The wonky Chinese distributor can be resolved/replaced. It was more a growth opportunity than a huge proportion of historic sales too. It's disappointing that it hasn't been resolved to be fair.
2. The destocking is a timing issue (and I'd argue an over supply issue - people aren't using less sanitiser, it's just most distilleries and other Tom, D*cks and Harry's decided to "help out" last year and switched to manufacturing Hand Sanitiser. I doubt any are doing that now - the pubs are all back open afaiaw and there's booze to make!).
3. It's not as though VLG is solely a hand sanitiser company either! The breadth and range of products - and VLG's ability to innovate its range of products (for example the way it combined traits from Dentyl and its other mouthwash product to produce new variants and the pink mermaid and blue unicorn versions with sparkly stuff in them.... to me I've been impressed by the innovation I've seen during the 2020 full year presentations).
4. As for the BOD selling down and rebuying a small slice recently - yeah fair one. But I believe they kept quite a lot of skin in the game despite selling a proportion (half?) last year.
5. As for the ii's selling down my thought on this is a £37m market capitalisation is chump change for Black Rock. Of the ii's Mark Slater is the one I rate most highly. And has he reduced his holding??
6. Cost inflation. This is across the board and not unique to VLG.
Look I'm sitting on a paper loss with VLG same as many (all?) of you. I'm not happy about that either. I just see the current drop as a loss of faith/sentiment, and think the fundamentals will cause this to bounce next year - like Vox Markets think.... to be fair to them Paul and the other chap only talked about putting this on a watch list rather than going all in
Bit more checking. BRSC kindly give a full list of their portfolio, albeit 2 months late. On 30/09/21 they held 2,902,553 shares in VLG. Value on that date (at 54p) was £1,567,379. It was their smallest holding. I assume that number is lower now. Either way, I don't think BRSC is Blackrock's only vehicle for their holding in VLG.
Btw, we know it was Blackrock, but do we know it was BRSC? They have other mandates, obvs.
We know BRSC went below 5%, but we don't know beyond that. I'm no expert on the rules, but presume the other major holders (>5%) would have to promptly RNS any change.
We know BRSC have but no idea of the others as the website is nearly 2 months delinquent and no guarantee others haven't and not notified market.
You_, I'm a holder but your cynicism is welcome as far as I'm concerned. Are you saying one or more of the aforementioned shareholders has sold down those percentages?