Member Info for Billybob15

I agree with the overall sentiment Roxbury but not with your figures. CF is a very seasonal business and so even if they have traded well since opening up, they will not yet have accumulated the large cash reserves you suggest - these will come over November/December. This will create uncertainty now (ahead of Xmas and with Covid still rife) and so I still expect a capital raise to be announced in the next few weeks and suspect that may be why the share price is held back. Once the raise is done, and assuming a strong November and December I would expect to share price to move strongly upwards.

People - does Berenberg even mention the potential US Import ban that the Financial Times raised two weeks ago? The US makes up 25% of BooHoos revenues and is its fastest growing market. I would be keen to see what they say about it - please do share.

Peoplepower1 - I think I will take a look at BooHoo now - given how great you think that is ;)

People - you are right that ebitda has fallen from £100m to £80m over the past few years. Perhaps your amazing insight can explain why this has happened? If not, a detailed review of the annual reports will highlight: 1. GBP/USD has declined from 1.50 to 1.20 increasing the cost of non card purchases by £16m 2. Previous CEO allowed other overheads to grow by 2-3% of sales and 3. National minimum wage increases have been significantly ahead of inflation. Each of these effects is now reducing/reversing. GBP/USD is back to 1.40, new CEO will doubtless look at the cost base and above inflation NMW increases will alleviate once £10 is reached. I see at the weekend IKea is refusing to pay the latest full increase.
CF is my favourite recovery play. I can see ebitda return to at least the latest £80m ebitda within 18 months - at 8x ebitda that is a firm value of £640m, with debt paid off by then that will also be market cap suggesting a share price of close to £2 - so I agree with Liberum that the share price could triple from here. Though I still see it could fall temporarily if they raise money through a rights issue.

MD - whilst I understand and agreed with the CF policy of maintaining a small (sub2x ebitda) level of debt to be tax efficient, the pandemic has highlighted the issue if shops are forced to close (which has never previously happened). If I were CFO, I would now reduce the small amount of underlying debt (£90m at Dec 20) but maintain a revolver to fund the business seasonality. As the business is very cash generative this can be done with 18months of normal trading or accelerated with a smallish (£40-50m) rights issue. Peoplepower1 seems to want to talk down the share - presumably for his/her own nefarious reasons.

People - it is like talking to a brick wall. Do read the link you sent me. It sets out the make up of the debt and splits it between debt and leases. IFRS16 was not in force in 2017. The debt has been between 130-190 since IPO. They have kept it there because it is between 1.5-2x ebitda (read the annual report). As a result they have paid out over £340m in five/six years and ordinary and special dividends - equal to £1 per share. Not only do you not understand this business but you don’t understand IFRS16 and why retailers report adjusted figure to take out the misleading effect of it. Net debt at Dec 20 was £90m - granted at the best point in the working capital cycle - it was £140m at the half year. The debt facility is a revolver - to fund the seasonality of working capital.

People - people in glasshouses...I see you suggest that debt in this business is £500m. That tells me what you know of this business. By definition the current share price indicates what people think CF is worth. Some people will believe it is worth more and some less. But you seem to spout nonsense like debt is £500m - if you were right, don’t you think banks would have refused to give a covenant waiver? I understand you don’t think the business is worth the current share price but there is no need to attack others who have a different point of view especially when your rationale is flawed.

Guitarsolo - I agree with much of what you say other than how long it will take for Card to return to previous profit levels. Clearly the important spring seasons have been missed by the physical stores this year. However, I understand that some 40% of profits are made in November and December, so I can see £50m ebitda for the year to Jan 2022. For the following (full year) I would start with the £80m achieved last year, reduce it a little for national living wage increases but offset this with the new revenue streams (Australia, Aldi, Matalan), presumably improved rents, and the benefit of a stronger £ which will reduce the cost of non card purchases from the Far East (paid for is USD). In the very short term I still expect a rights issue albeit raising only about £50m given how close we are to shops re-opening. In my view, chances are high for something this week as (1) share price has been above 60p for two weeks justifying a rights issue at 40p+, (2) Darcy will have been there for a week and so should be up to speed on financing discussions and (3) if no rights issue is launched next week, I doubt there will be one given we are so close to shops opening.
For those scaremongering about debt levels, I would suggest they read up about IFRS 16 on lease accounting, which controversially capitalises future leases as debt, rendering the balance sheet incomprehensible. This is why most retailers talk about adjusted ebitda (adjusting out the IFRS16).

The ebitda pre Covid was £80m, at a multiple of 8x that would be an enterprise value of £640m, I see debt a bit higher than you, say £130m, so market cap should be £510m or a share price of £1.50.

Try2buylow - I don’t understand what lies behind the trades, I just see that both institutions have close to net zero position. Perhaps these are the counter parties to ABC long position held through CFDs?

If you read the 8.3 RNS fully you will see that both Soc Gen and Barclays have an equal an opposite long position to their shorts. That means they have a net zero position. Disclosed short positions are shown on short tracker and are a ragbag of three little known institutions. Doesn’t bother me in the least - they will get hosed if there is a bid.