Member Info for Billybob15

Hi Olpps. Don’t forget that the debt was significantly higher back in 2022 even with the recent acquisitions (yet to be fully integrated and in FP case yet to include a full year of trading). The dividend was always set conservatively (at the bottom end of their payout ratio range) and so I feel comfortable that this will at least be maintained. Also news from other retailers since mid December has suggested a late surge in footfall. I have added to my holdings and with a 7.6% dividend at the moment this looks a great place to put more money. GLA.

Nonsense - I am not going to get into an argument with you about whether Ebitda is profit or not, the clue is in the name, the first initial stands for Earnings. I feel I have made a decent career out of buying and selling companies based on ebitda, which I considered the best measure of profit without having to consider the capital structure of a company. It is also usually (but not always) a decent indicator of cash flow.

Some odd comments posted on this board today.

Ebitda is not profit? Really? FY27 starts 6 months from now, and there will likely be some redundancy costs from the integration of FP hence no comment on the impact of the current year - especially as the deal hasn’t completed and is subject to competition clearance ie 3/6months. Consideration of £24m for £10m ebitda (£5 existing plus £5 synergies) suggests it will add c£70m (7x£10m) to the market cap. Net of the purchase price this is £46m or about 13p a share. We are up 6p so far.

These options already existed it was just the exercise of them so they are already in the diluted eps

SimplyWallSt says the average of 7 brokers is 160p. That feels about right to me. Jonathan Pritchard is a big fan of Moonpig which I think is massively over valued. I believe the PE of CF should be about 13x fwd on an eps for Jan 2026 of 14-15p so get to 182-195p.

Latest broker views:

Kate Calvert at Investec 215p

Jonathan Pritchard at Peel Hunt 110p

I have met both over the years and rate Kate very highly.

If RDH were to bid at 200p that would represent a 48% premium. It would cost him only £203m to buy the shares he doesn’t already own. Continuing EPS is c28p so current price of 135p indicates a PE of 4.8x. Even at 200p it would be just over 7x PE. I would feel short changed but can understand why RDH may want to try it. Equally a PE House could bid and roll Roger in.

If BC Partners have told the FT that PUG has nothing to do with Pets at Home then it doesn’t. They would be in serious trouble with the FSA if they have lied about that and will know that. I don’t quite understand why the PAH share hasn’t fallen back to its opening level today. PE guys are not stupid - they don’t go around setting up companies called Bidco for Pets at Home…

I look at this as a retired private equity partner. Adolfo has done all the hard work, reduced costs and allowed low margin contracts to expire. The stock is misunderstood by the market and unloved so the share price drops. Now is the perfect time for a CVC, Advent, EQT, Blackstone, KKR or Bain to pounce. I am happy to sit here and watch it unfold, adding on dips.

Alnwick - some of your data is out of date. Invesco sold out about four years ago…indeed they sold out mainly to Teleios. Teleios started selling over a year ago and sold the largest chunk to Brett Blundy - the new largest shareholder at just over 8%.

Lorenzo - I largely agree with what you say from a value point of view. The reason the interest charge of £6.5m looks high relative to the year end debt is that from Sept to December they build stock for Christmas, some of which is funded by supplier credit terms but some by a drawing on their revolving credit facility. At the year end they have collected cash at Christmas and paid down the rcf and suppliers. So the average debt during the year is higher than the year end figure. This is common to most seasonal retailers.

I haven’t seen the broker note itself but it appeared on my investing.com pro yesterday morning and as the note references the budget it is obviously recent. Saw someone on ADVFN said it was old but given it talks about the interims and the budget I think it is recent.

Polish - it is the runaway market leader, highly cash generative, product margins of 70%, strong management, vertically integrated, market NOT declining, plenty of adjacent gift/celebration markets to go after with addressable market 15x that of cards. You talk utter tosh and if you are short will likely get very badly burnt.

IMHO - a load of private investors bought in on the back of some bullish broker notes so the share price rose from 120p to 144p in short order. Many were surprised that the first half profits were lower than prior year and so all the private investors piled out again. Massively overdone retreat imho. Reminds me of the Grand Old Duke of York nursery rhyme.

I don’t see a bid at 120p being successful LWHL. Last year Card hit 122.2m gbp ebitda and this years guidance will be higher. I expect them to miss by a small amount say 120m ebitda. The net debt will be down from 135m last year to c120m this year. If you apply a lowly ebitda multiple of 4-5x that gives a share price of 103p-138p. So in my view the share price will be above 120p once the results are out.

I vaguely remember writing an essay in the first year of my economics degree some forty years ago titled “does a minimum wage increase improve fairness or simply create inflation”. Sadly I can’t remember the details so I turned to Google. The consensus seems to be it increases inflation. The supermarkets are all warning that prices will go up to offset the NIC threshold and rate increases as well as the NLW rises. I know it is a political hot potato but it is interesting to see an economic analysis of it. I wonder how successful this policy will be in raising real money for the govt. The spending increases will be real (such as train drivers pay increases). I predict the budget shortfall will get worse over the next few years.

What RR fails to consider is how people or companies will change their behaviour in relation to her tax/employer NIC increases. Let’s assume that CF employs 15,000 workers each earning £9,100. It would get clobbered by the threshold change in employer nic to £5,000. It could change its labour practices in one of two directions to mitigate this change. Firstly, it could put a maximum of 8 hrs per week on workers to avoid them earning more than £5000 (and so avoid 100% of the threshold change). However, they would need 27,000 workers to do that. Unlikely to go that route. The alternative is to say that workers must work a minimum of 21 hours per week - salary of £13,500 at new NLW of £12.21. In this case they will only need 10,111 employees and so almost 5,000 workers would lose their jobs. There has been no thinking about how people react to tax changes. I thought RR was supposed to be a chess champion - I reckon my dog could beat her. Her NIC threshold changes will lead to massive job losses in retail through either companies changing hours for employees or by retailers going bust. Well done Rachel.

alnwick - my *** packet calculations came to £17-£20m increases for cf from april 2025. the answer will lie in the average number of hours worked per employee each week (which drives how much of the employer nic threshold change hits them). in the ar2024 they had an average number of 10,331 employees earning (ex board costs) an average of £13.1k pa. in reality this may actually be 15,000 earning an average of £9,000. 15k employees suddenly attracting 15% employer nic on £4100 is £9.2m. the nlw changes adds another £10m but this could easily be offset by price increases.

Zed - please give me a call. RyB has my number.

Polishcap - Tescos and other supermarkets have had card aisles for decades - nothing new. They look tidy at 9am but by 10am look like a dogs breakfast.