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Given all the profit warnings being made and disappointing updates, I think SCS continues to look strong. Their earnings over the long term should be relatively stable and predictable. They have a good fundamental business model (negative working capital). They will be offering a total 13.5p dividend this year (if interim 4.5pm and they are planning a 1:2 split), in addition to an ongoing £7m buyback (when announced this equivalent to a 10% yield, but now the market cap is lower and less than half the buyback has been completed, so this yield is further enhanced).
The drama continues.
I wonder is Chaker Hanna will start selling down his stake now
https://oilprice.com/Energy/Crude-Oil/Worlds-Top-Oilfield-Service-Provider-Raises-Earnings-Outlook.html
The Northern American rig count has continued and my overall thesis for Hunting has not changed despite the recent share price weakness (watched a <100% gain turn to around a 20-25% gain). I've retained my holding and if it drops below my original purchase price I will consider adding.
My only concern is whether inflation is eroding their margins on contracts (i.e. they agree a contract 1 year ago with a 10% margin and the 10% cost inflation over that time makes the contract unprofitable). That said, they must have some capacity to pass on costs or other form of direct/indirect inflation protection.
Interesting analysis of the online sofa industry re SCS:
SCS ranks 2nd in visibility (up 7% yoy but down 4% against wider market)
SCS ranks 2nd in authority
High visibility and authority is a good combination to have (obviously)
There has been a 26% increase in search volume for SCS. This compares to a 16% decrease for DFS.
SCS ranks 1st for reviews with an average of 4.7 across 340,807 reviews. This compares to DFS in 2nd (average of 4.7 across 202,705 online reviews) and Sofology in 3rd (average of 4.5 across 173,720 reviews).
SCS scores 3rd for brand reach (behind DFS and Sofology), but is not in the top 5 for social scores (related to social media). DFS has 673,000 branch searches per month compared to Sofology (246,000) and SCS (201,000)
I like this company a lot - small holder. The wider macro-influences on price of gold make me wary short term. I think the idea about changing the name and some publicity would be good. I wonder if Endeavour Mining would be interesting in acquiring the company.
I haven't received anything from HL related to voting. I didn't expect to vote. What makes you think they won't get re-elected? If Kitous holds 47.6% then that leaves over 50% who may vote against his motions, which was I thought stagnation was more likely? The RNS paints Kitous in quite a bad light and I personally think the management have been doing a good job. I wish there was more clarity on exactly what is being voted for, what percentage is needed and what is the roadmap thereafter - in the meantime I am still holding but thinking it may be wiser to sell ahead of the AGM.
For an RNS of this nature to reach the market then relationships, in my view, must have deteriorated beyond repair.
I opened a small position in Tasty. It offers a similar picture to Comptoir (big revenues relevant to small market cap with net cash higher than market cap).
Anyone have any idea of what happens next?
Assuming at least 75%(?) needed to pass resolutions, does this mean, assuming Kitous cannot gather at least 75% support, the company simply stagnates until an agreement is reached?
As Kitous has 47.6%, surely he can block any resolution?
If anyone has any insight in this it would be greatly appreciated!
Overall, a very good set of results. However, the company is right to emphasise the potential/likely negative implications of the tapering of government support as well as rising costs and the squeeze on discretionary budgets. The cash pile appears earmarked for expansion, which I hope they do wisely. Although I don't think it would be prudent to pay a dividend, I wish the report had more language suggestive of an intention to eventually pay one in the near future (as buybacks would make no sense given the small free float). Even if they are intending to sell the business to another restaurant group or private equity one day then it may still increase the perceived value of the business to include some dividend-positive language ("we intend to consider paying a dividend once we have reached point X in our expansion plans".
Stanstead airport opening was mentioned as being anticipated soon. They did say that they wanted to continue franchise openings (as a low capex way to expand, especially abroad), which seems a prudent way to grow the brand. It is difficult to understand why this remains so undervalued (relative to it's "fundamentals" as well as other restaurant peers), but the fact the shares are so tightly held must be a factor.
Very positive. Do you hold the LSE listed shares? If so, is there a still a withholding tax applied on dividends?
Been a long wait...
On a side note, I ate there today. Menu has been expanded with some good new options (I tried one which was very nice). Food was tasty as per usual and service was very good. Staff generally always seem to be pleased to be working there. On the business, I have no idea whether this was a wise or unwise investment decision, only time will tell. Worth 6m with over 9m cash at last count - do we think cash has been burnt down? They are generally cash flow positive (most of losses during previous years seem to have new restaurant openings and set ups as a big factor, which are then adjusted out in the aEBITDA).
www.retailgazette.co.uk/blog/2022/04/sofa-workshop-falls-into-administration-with-77-jobs-at-risk/
Did anyone attend the ShareSoc presentation yesterday? Any news from it?
Are we able to watch the presentation and questions still? I've had no luck finding a link
Promising noises from Tasty and Everyman too. Consumer spend in Feb shows a rise in eating out spend.
Can anyone explain the pace of "transaction in own shares" recently?
Am I right in saying that these are not buybacks (i.e. the shares are not being cancelled)? Are they for employee benefit/bonuses?
So the dividend still works out to about 7% (not taking into account the buyback) plus 10% for the buyback, not bad. Would mean return of all your money within 4 years - not bad for a continuing non-palliative business.
I would also add that the buyback DFS announced of 25m with a market cap >500m is less than half of that announced by SCS (7m with market cap <70m). The main concern is the net loss, but also the fact that SCS sales dropped 16% versus DFS drop of 2%, suggesting they are losing market share. Once I go through the results I will have a better idea of their strategy to grow/at least maintain market share but it is hard to see how they do this (I don't think online is the answer, perhaps making a "Sofology" equivalent, flooring is good especially with 20% off carpets with any sofa purchase). With weakening UK consumer spending/sentiment expected later this week, it is uncertain that the share price will rise significantly in the short term.
The fact remains that the cash not only reflects a healthy balance sheet but is indicative of future orders (of which only the deposit has been received). I haven't yet read through the results in detail. A £7m buyback with a market cap of less than £70m is positive (surely this equivalent to a 10% yield) alongside an increased dividend (hopefully suggesting the final dividend will also be increased). The recent big director buy was at a level higher than this.
Did anyone attend the management talk?
https://masterinvestor.co.uk/podcast-master-investors/?mc_cid=90ab45b2c7&mc_eid=edd8ee24e7
The most recent podcast on there is from Northcoders