Character Share Price (CCT)

More value trap than value play ?

Hi senecadocet, please see the link below with full analysis:

https://www.reddit.com/r/UKInvesting/comments/1kikxkw/character_group_typical_small_cap_value_stock/

I would love to read the whole review!

Character Group is one of the rare gems that represent good value play. The company has good free cash flow generating capability with no debt and large net assets compared to the company's market capitalization. Considering that the Free cash flow for the past 10 years have averaged £6.75 million and £7million for the past 5 years and if the purchased warehouse is excluded that comes to £8million together with its net cash flow position of £13.2million, a layman DCF with discount rate of 8% and 2% growth can mean around £90million in intrinsic value. Also, in 2021 the group acquired warehouse premises for around £5.386million, however after delays in repurposing, the building is currently listed for sale or rent, considering the size and the region the warehouse can either be sold for around £25million or generate cash of around £1.5million per annum, indicating that even the assets of the company are undervalued. Also, as the company outsourced its production, it can easily avoid U.S tariffs by switching from China to either India or Vietnam, which are on course to avoid hefty tariffs.

I have written a more comprehensive review of the whole company, including the risks and how easily these can be managed. I will be happy to share it if people are interested in reading long reviews.

This may not be the highest quality business but the value relative to market cap is just getting silly now.

11.75% capital return if you combine buybacks and dividend

8x PBT earnings multiple

And half the £48m market cap in net current assets