Member Info for CVB123

The trading update from Shoe Zone wasn’t particularly positive highlighting reduced high street footfall however at the same time they only revised profits from +£1m to -£1m. Assuming this might be Shoe specific rather than a broader read across to Card.

I am hopeful they increase the dividend. They can certainly afford to. The last thing I want to see is management wasting our profits on dubious acquisitions like Garven in the US. The jury is out of Funkypigeon but at least on paper it makes strategic sense. Whether management can actually execute on the online strategy remains to be seen. Moonpig has revenues of £360m so the prize is massive if they can find a way to uncage the pigeon!

Will want colour on Funkypigeon, YtD trading and dividend increase. Hopefully management now focuses on investing in Funkypigeon and shareholder returns via dividends and buyback. No more acquisitions please. Buy back shares because they are super cheap.

I will be looking out for the following on the 28th:

1. Does PBT come within the £55m-£60m range as per the 12 Dec 2025 Trading Update?

2. Any update on Funkypigeon, how is integration going? Costs associated with ramping this up?

3. Share holder returns both in terms of dividends and potential share buybacks especially after the AGM statement

4. Update on previous acquisitions

5. Outlook

Https://www.telegraph.co.uk/business/2024/11/28/aviva-asks-direct-line-shareholders-to-back-second-bid/

Adjusted EPS of13.5% with close to 100% cash conversion implies a free cash flow yield of 12.2%. Can easily see this repricing to 8-10% or 135p-168.75p with 150p mid point.

Added at 189.5p today. Think we see dividend resumption in the summer and the stock reaches the Ageas indicated bid level in next 12 months.

CEO buying £50k worth of shares suggests he has confidence in Kettle Controls returning to pre-Covid sales. If that happens and Billi continues on its current path, we should expect faster deleveraging which should benefit the shares.

Couldn’t agree more. I’m fuming. I notice the debt is due Feb 2026 and it is highly unlikely DOCS will be able to repay. Refinance will be much more costly assuming we don’t breach any covenants ahead of it. Dividend has to be cut. More pain to come I fear.

To me it looks like management have done the right thing. Loan covenant pushed to 2.75x from 2.25x which removes the right of a rights issue. In return they have cancelled the dividend for 2024. I think this is the right business decision. I’m happy to be patient as I do think Strix has tremendous potential once Kettle controls starts firing on all cylinders. Happy to stay on board.

Oh dear. Back to the drawing board. Monday is going to be painful. If we assume net income of £225m for 2024E, 10x net income implies a £2.25bn market cap or 170p share price. I think we test that or lower on Monday. In time, DLG should recover but Monday will be a bruising day.

But let’s not confuse losing the battle with losing the war…

Https://tools.euroland.com/tools/PressReleases/GetPressRelease/?ID=4478933&lang=en-GB&companycode=services

If I were Ageas I would wait for Winslow to show his hand on 21 March and then tailor my bid appropriately. I don’t think we see anyone gate crashing until Ageas has shown their hand. We sit and wait now for DLG numbers.

McCormick / Premier Foods would be the counter example. McCormick offered 55p a few years ago for PFD which was rejected. Stock sank back to 30p but is now at 155p with management actions and Covid helping the business.

I tend to agree with you - a knock out 300p bid and I’m taking my chips off the table. Do not trust to hope for they have forsaken these lands.

On a personal level, I would love to see a credible plan to get us to 400p in 3-5 years with some dividends along the way.

Https://www.thetimes.co.uk/article/2eef76f1-2960-4f5f-8d0b-358b3b096788?shareToken=24e704bc52ba1a298d99421f3af65230

I think DLG resumes a small dividend albeit for probably the wrong reasons. The challenge Winslow faces is the turnaround he envisages will take a couple of years and involve some investment. At the end of the turnaround there is a good chance we are looking at 275-300p with a dividend yield of about 5%. Can he show us a path for this stock to be worth 400p over a 3-5 year horizon? This is more difficult especially with the asset sale last year but it is what he needs to do for investors to stay on board in my view.

Running some numbers. The consensus analyst estimate for net income is £237m for 2024. Assuming DLG pays out 70% of net income, that is a £166m dividend which implies a yield of 6% at the current market price. If we assume net income recovers to £275m in 2025, a 70% payout assumes a dividend yield of 7%. £300m net income in 2026, 70% payout means a 7.65% yield at current levels.

In the absence of a bid, I think 275p share price by end 2025 assuming £300m net income and 6% dividend yield sounds about right considering where rates are. So looking at 60p or 28% capital appreciation and roughly 15% in dividends. 40% return over two years and still have the company paying dividends as opposed to taking a 275p offer today and losing the right to future dividends.

I’m actually happy to own the shares and collect the dividends. I will be collecting about 10% return on my capital as I bought shares below the current price.

Hard to find other places to invest wot make that kind of return.

I actually tend to agree with you. Once DLG starts paying a normalised dividend (likely 2025), the stock will be back to 275p and you can continue to collect the hefty dividend. Better to milk the cow…

Https://www.gov.uk/cma-cases/veterinary-services-market-for-pets-review

Surprised at the share price weakness. I don’t think the net margin margin for CVSG is much different to a dental business. Similar economics and good idea for seeing private healthcare prices. The CMA case is still open.