Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
I have added here and there, but I am also wary because the share has not performed. I think this is mainly due to poor liquidity (generally within small caps and specifically for this share due to small free float) and low volumes, as well as absent communication from the company. However, all noises appear to be positive, it just depends on how their trading financials look. I do wish there was a plan for the director to reduce his share holding without crashing the price or dilution.
The small free float works both ways. I think based on pre-covid financials this should be worth multiples of current levels.
Managed to pick more up at the recent lows a couple of days ago, been a good couple of days since with big rises. Crazy value here. The business is well run, with lots of positive characteristics.
Anecdotally, I went sofa shopping over the weekend and went to SCS. They have a good selection but I didn't find their showroom as nice as DFS or Sofology. The DFS sales assistant explained the existence of Sofology in terms DFS having to avoid being too much of a sofa monopoly.
One thing I found interesting was the SCS offer of "20% off carpets when you a buy a sofa". I think this is smart, given the amount of new homes being built (which often people don't want to pay extortionate amounts for "upgrades" by which they mean basic necessities). SCS also had longer waits for sofas (around 21 weeks for what seemed like most sofas, compared to DFS of 7 weeks), but SCS does have a high amount of UK based manufacturing. The sales assistant explained the reason for this wait being due to being consistently outbid for container shipping - suggesting SCS haven't been willing to pay high amounts (thus eroding their margins) and have instead opted for longer lead times. I don't know if these longer lead times create an inflated order book number (as these orders are remaining as "orders" and simply building up and not being fulfilled).
Buybacks and dividends are key here. But, even if no share price growth, the dividends are comparable to a tobacco stock without the perceived sector decline.
The worst thing would be an unwise acquisition.
https://travelweekly.co.uk/news/air/new-shops-bars-and-restaurants-to-open-at-stansted
Nice to see another Bobby Axelrod!
I think I may have talked myself into adding tomorrow now!
Good luck
Hi flyer2020,
I agree ASOS is stronger than airlines. I also think ASOS is a better position than most, and is currently my own largest position. I think that ASOS may have some struggle absorbing increased costs due to a combination of low margin and reverse supply chain logistics costs (I read somewhere the cost per refund is around £2.50). I am surprised there has not been more positive share price movement since the last update, but we are facing a general multiple contraction for most shares - so while ASOS appears undervalued historically, this is largely due to multiple contraction, and it is unclear whether multiple expansion will return, in which case we are looking for profit/earnings growth (set to be constrained by large CAPEX over next few years).
I think the long term view is still bullish: young demographic continues to progress as ever larger spending ASOS customers (although I think doubling down on being the "go to destination for twenty somethings" is focussed but eliminates many customers - for example, Next online saw largest sales growth in their youngest teens/20s and oldest >65s groups). However, these customers are likely to stay customers and expand their spending overtime. They also have their "prime" service which is great. ASOS revenues, cash position etc all strong. Move to main market positive. Awaiting announcement of CEO which could be well received.
Rather than bricks & motor (which would be good, as I like NEXT for their online and logistics set up - for example, they can have staff in stores start the "return process" reducing reverse logistics costs), I would rather see ASOS retain focus on its core ASOS offering, whilst building (not necessarily continue buying) brands, maybe investing by taking equity positions in 10-20 brands per year internally and using their platform to test for success. I like their move into 3rd part fulfillment, especially as a way of retaining brands (who may be disincentivised to strengthen their own direct to consumer offerings) which as a I understand it removes inventory risk and probably represents a better use of their operational leverage.
With AI (ASOS working with google and this is noticeable when searching the website and being given suggestions), automation in warehousing and deliver (e.g. drones), perhaps ASOS will benefit from many inflection points over time.
I was tempted to top up today, but holding off for now. Asos is completely undervalued, but there is some risk they mis-execute (lower profit than forecast, higher CAPEX etc). But that's not the main reason for holding off - I think the overriding narrative is the "cost of living squeeze" playing out at the minute due to inflation, energy prices and so on. Looking at other fashion retailers (and other consumer stocks generally) including inditex, zalando, nike, boohoo etc, it can be seen they've all had bad falls, with some holding up better than others. I think this share price action is due to the macro picture of consumer confidence and pockets.
The question is, what would it take for this narrative to change? A few suggestions:
(1) Inflation seen to be coming down
(2) Energy prices coming down
(3) Wages rises
(4) Employment improving further/remaining high
Could there be some selling due to people not wanting to deal with loss of inheritance tax relief caused by a move to the main market?
Hope the following is useful.
The IFRS accounting with the leases and right-of-use assets makes their balance sheet much worse, but yes they have implied their position when negotiating with landlords is strong, and said they have renegotiated a lot of leases onto lower rents/turnover based rents and exited other leases. I think when you excluded the lease related items their balance sheet is not in bad shape. Looking at their market cap of 6.75m: at the last interims 9.1m cash (with a 2.7m increase in payables) and 7.4m PPE against 3m in borrowings.
I would be interested in them expanding via franchises too, although we do not know the exact terms of these, I'd imagine the cost control side of things is more efficiently managed by an appropriately motivated franchisee. Comptoir Group already have a centralised facility from which to service their franchises. This solves the structural problem with the restaurant industry of costs rising (e.g. staffing) when times are good, then subsequently being too high when times are bad.
For the 5 years 2016-2020 they had an average adjusted EBITDA of £3m per year. I usually don't like seeing "aEBITDA", but I think their definition of it is somewhat fair, and closely matches their operating cash flows. Even a 10x multiple assuming no growth would give a market cap of £30m, or nearly 5x today.
For some perspective on the possible growth:
Nandos 450 restaurants in the UK, Toby Carvery 150, Miller & Carter >100, Bill’s 78, TGI Fridays 80, Wagamama 149, Slug and Lettuce 70, Harvester 220, Zizzi 130, Prezzo 207. Nandos makes a £40m loss on £1bn revenue. Wagamama bought for £560m; they have 6x the number of Comptoir Group restaurants, 560/6=£93m, then you can further discount the £93m to allow for stronger Wagamama brand and you still end up way north of £6.75m current market cap. There is around 160 total Lebanese restaurants in the UK at present.
Also, the Kaye family is behind Prezzo, Ask and Zizzi and invested £4.7m in the Comptoir Group IPO (around 10% of company). Jonathan Kaye was founder and CEO of Prezzo and listed in 2002 at a market cap of £9.1m, later selling to PG capital in 2015 for £304m. He grew Prezzo 13 year period to over 207 restaurants (also included Chimichanga 39 units).
So, I think much of the poor performance is related to the poor liquidity (the shares are very tightly held with a small free float). I think the directors hold too much. For example in the last week there have been 6 days with almost no trade as far as I can see. Hopefully the poor liquidity works both ways and this ends up flying. The other restaurants like Restaurant Group, Fulham Sore, etc, have not performed as badly as Comptoir Group.
Most importantly, the food, general offering, atmosphere and culture in Comptoir is excellent.
What are you thinking they will update? Seems stupidly undervalued, but low liquidity has worked against it. My holding gets especially hurt by the spread. I will probably do another review at some point - I felt confident when I looked at it deeply so chances are I will add. For 6m you get 20-30 restaurants, generating each over 1m turnover in normal year, with some cash. Most of their liabilities are lease related, which has hurt how the balance sheet looks. Just surprised that the value here has gone under looked (although I am willing to concede that I may be completely wrong here!)
If we exclude any accounting issues that I need to properly digest, then the business could be justified in trading on a higher multiple due to its favourable model & economics (franchising, operations, etc) and expected expansion (maybe 2x more in the UK alone, who knows international)
I'm a holder of MANO, and think is a great business backed by a strong model. I've been considering adding to my investment, and have ended up wandering down a rabbit hole into the IFRS9 accounting used by MANO (I'm not/nowhere near an accountant, so apologies if the following post comes across as dense):
It is the interplay between realised revenue, unrealised revenue and investments which causes me headache, as well as the relevancy and utility of unrealised revenue for an investor valuing the business.
Revenue = Realised Revenue + Unrealised Revenue
Whereby: realised revenue is the revenue received when a case is settled, and unrealised revenue represents change in fair value of "investments"
Investments = Insolvency cases purchased my MANO capitalised on the balance sheet at fair value (which is re-assessed regularly). The fair value reflects the net settlement value of the claim (settlement value - total costs) adjusted by probability of success. Adjustments in fair value (due to either value of the claim or probability of success increasing through the legal work done) is recognised as unrealised revenue. I have no issue with the procedures used to arrive at fair value, but just want to understand the actual accounting better.
I have 2 questions which hopefully someone can help with:
(1) In "Investments" (see Notes of Annual Report Section 13) - How are we to understand this?
fair value movements net of transfers to realisations = sum of (new case investments + net increase/decrease in existing case fair values + case completions
(i) Are "case completions" the transfer to realisations?
investments = additions + realisations + fair value movements net of transfers to realisations
(ii) Since "realisations" are recognised, but the value is always less than "case completions", does this reflect an adjustment for the previously unrealised revenue?
(iii) As "new case investments" is already recognised in "fair value movement", what is the meaning of "additions" under Investments? Are these the immediate fair value uplift on the "new case investments"?
(2) How useful is "unrealised revenue"? I am close to trying to avoid using it at all and focusing solely on "realised". I had problems understanding how the "adjustment" is made to account for unrealised revenue that later becomes realised. I have the following example of 1 case to try make sense of it:
Year 1 - Buy 1 case for £4m, net settlement value is thought to be £8m with a success probability of 75% so capitalised as an investment at £6m
Therefore: unrealised £2m, realised £0, total revenue £2m
Year 2 - Case is settled for £8m, and removed from the balance sheet (held at fair value of £6m) as an investment. As no new cases are purchased, the fair value movement is -£6m.
Therefore: realised £8m, unrealised revenue -£6m, total £2m
Thanks for anyone who read this, I think, for me, the accounting creates difficulty in being able to confidently value the business.
I just watched it - I think the market will only reward the share price once there is a meaningful & definite return to shareholders. Compared to the last talk there seems to be little progress aside from reducing net debt, for example still awaiting sale of solar assets or at least a move forward in the sales process, no definite plan for returning cash to shareholders despite the in depth coverage of balance sheet strength, and vague notions about possible ESG investments (whilst still insisting they should sell the one they have).
I have to think some more about this one, because the business has good fundamentals (they are at full capacity and provide cheaper energy than the other available options) and the talks from the CFO have been good overall and he seems very competent. Certain things are red flags, such as net debt forecast to increase and the possibility of ESG investments being made before shareholder returns reducing the credibility of the company in the market. They should return the cash and invest in ESG projects via remaining cash, shares (with share price supported by buybacks) and equity raises (given it is institutional pressure pushing for ESG and ready/cheap financing available for ESG)
I do think coal market are more likely to push coal price down over time which should help.
I am a small holder of GEM Diamonds, bought in on the basis of its apparent undervaluation but seemingly sound operations. I was tempted to add today, but ran out of time before market close to do further research.
I posted before on here regarding the apparent undervaluation (I am about 25% down since investing) but still cannot get my head around it. They are worth £65 with cash and inventories (i.e. diamonds, not a bad inventory item) greater than this. Going off the H1 update it appears that they will come out similar to previous years with revenues around £200, gross c£50m, EBITDA £30-40m. Their retained losses are being eroded away each year suggesting the business fundamentally is working. Their SGA seems stable. Their balance sheet seems strong, although with big tax deferrals. They spend most of their operating cash flows on CAPEX, but surely this needs to start to reduce - this would be the biggest red flag. On top of that diamond market fundamentals, as well as ability for large diamond finds, would seem to create a good set up. They are also demonstrating that they are planning to pay dividends (which some could consider an overdue token gesture) each year going forward.
I need to do some more digging (or I guess it would be "sifting" for a diamond share) because I cannot understand the undervaluation on the basis of "fundamentals". I would say the downward drift must be due to poor liquidity, geopolitical risks (including just generally doing business in that area of the world) or a complete misunderstanding on my part of the business.
Open for a discussion to understand what I may be missing or need to research further. For me, the main draw back is the strong but messy balance sheet as well as the massive CAPEX that does not seem to stop - is this just a very CAPEX intensive business or are they classifying costs under here that are normally found elsehwere?
Does anyone have a contact email for investor relations?
I don't need to comment on how undervalued this is! They can have the best of all worlds from this base: dividends, buybacks, selective well-thought out acquisitions and capital allocation strategies... whether they can materialise this or not is the question
Hopefully... trading at (increasingly) less than their cash position. I am always tempted to add
How does the offering of Glantus differ from what other companies like Coupa (or Tradeshift, Ariba, Tipali, Ivalua) offer? One of Coupa's 3 main areas is accounts payable (along with procurement and expense management)
Is part of Tekmar's lack of profitability due to its 5 separate operating businesses? Can anyone give a good justification of why these need to be separate entities?
Thanks, yes I read a negative comment on advfn, then spent some time reading about death spiral financing and the RNS again - but it didn't seem to fit. For me, the funding arrangements seemed reasonable, but more specifics about the loans are needed. Plus the related party aspect always make me a bit wary
Anyone have any views on today's RNS? I myself have no idea.