Member Info for HunSen

Hi Trent, (and all),

Happy New Year!

We talked about some of the other shares we are interested in before the New Year. Coincidently, there is a series starting tonight on 5Star on Hotel Chocolate (HOTC).

I have been looking at this stock for six months, it has a high PE ratio, and the bid offer spread puts me off, but I believe they have massive room for expansion.

If you get time to watch this, let me know your thoughts (on the HOTC board).

Sorry to post off topic guys!

Morning,
there is a series starting about HOTC tonight on 5Star I believe.

I have been watching HOTC for some months, what concerns me is the high PE ratio, the bid-offer spread and low volume (possible liquidity issue).

I believe it is however, a very sound business, with plenty of scope for growth - America and Japan has started, but this is also ideal for Europe.

I would like to hear others thoughts on this company, I would also like to get a feeling for when they might leave AIM for the main market?

Reading a little more, there is one important aspect that would make running DEB into administration more attractive and logical for MA;

- DEBs property leases are (on average) 7 years
- IF DEBs goes into administration, these can then be re-negotiated

Some of the HOF stores did re-negotiate, rents have been dropped to as little as £zero, I presume short term. Other HOF store who failed to re-negotiate rents will be closed.

"Debenhams’ shares have fallen by more than a fifth this week, and now stand at less than 4p. At that price, buying the remaining 70 per cent would cost a little over £30m, without any premium. But one senior retail executive thinks Mr Ashley would prefer to push Debenhams into administration rather than acquire the additional equity, even at its current rock-bottom price" - FT

Pearls,

I realise now I misread your post. While a going concern, I believe you may be correct. Apologies.

Pearls, your list seems to be the wrong way round;

Lenders and bond holders would always be paid first, which is why bonds have a lower return (depending on risk), in the event that DEB goes into administration, bond holders will be the first to be paid.

Lenders may have security on property, bond holders have a preferential claim against assets.

Other debts to suppliers may be next.

Last, is the shareholder, who has some rights, including "to receive a proportionate allocation of the proceeds if a company liquidates its assets (however, creditors, bondholders, and preferred stockholders have precedence over common stockholders)"

I believe DEB will be looking for finance, the cost of finance is related to risk. I don't believe (on the basis of a sales decline and meeting profit) that they will get better terms than previous. If they issue bonds, they may have to offer a high coupon to attract high risk investors (whick bond holders are not typically). I'm sorry, but you should all know DEBs is high risk - and yes potentially high return.

If there is a rights issue, share holders will need to do 1 of 2 things;

1. take up the right and invest more (in order to not lose out)

2. ignore your rights and watch the share price get diluted by additional shares

Or you could sell. The case(s) for selling include, will someone lend at a better rate? Do you want to invest more or cut losses? There are other possible options, e.g. selling your right. But if you don't have more cash to pour into this investment, you should be very worried.

Looking at takeover talk, I just don't see a long list of takers for this type of business, even the properties have few options for re-purpose. Without competition, MA only needs to buy from administrators, this is cheaper.

I'm sorry to be the bringer of bad news / balance, my advice is do your own research.

I found the answer to my own question, yes, MARS give a trading update on 23rd January.

From AJB / Shares Magazine

At the start of this week STV (STVG) and Sky announced a five-year deal giving Sky customers in Scotland access to STV’s programming in full HD for the first time. This has direct relevance to ITV (ITV), as we now explain.
STV shows will also be available on catch-up using STV Player on Sky Q and Sky+ set-top boxes and mobile streaming from the second half of this year. Programmes include flagship ITV1 shows such as Britain’s Got Talent, Coronation Street and I’m a Celebrity.
The news went down well with investors who sent STV shares up 8% on 7 January, giving the company a market value of £145m. The STV-Sky agreement is a re-transmission deal in all but name. Sky and Virgin Media have insisted in the past that they won’t pay to re-transmit ITV1 so there is no direct reference to it in the STV announcement but it seems to be implicit from the programming. ITV agreed a transmission deal with Virgin Media last year and is due to renegotiate its agreement with Sky this year.
On the basis of the deal with Virgin, analyst Ian Whittaker at broking firm Liberum estimates that a new Sky deal could bring ITV an additional £120m of revenue per year. That may not seem much given 2017 turnover of £3.1bn but as with the Virgin deal there is no additional cost so the extra revenue translates directly into profit. ITV’s pre-tax profit was £500m in 2017 with Liberum forecasting profit of £777m for 2018, then £858m for 2019 and £1bn for 2020 excluding the uplift from the Sky deal.
Despite the rise of pay-tv and streaming video services ITV’s family of channels still had the highest total share of viewing in 2017 with 22% of the market. It also led the television advertising market with a 48% share. In its third quarter 2018 trading update in November ITV warned that overall advertising revenue was likely to be down 3-4% in the final quarter as Brexit uncertainty continued.
That would mean advertising revenue for the full year to December would be flat compared with a rise of 6% in the first nine months. In the last fortnight ITV shares have been trading at 125p valuing the firm at just under 12 times 2018 forecast earnings and under 11 times 2019 forecast earnings.

H-hi,

thank you for your friendly and well qualified response - I knew I could get an informed and professional opinion from here.

Morning,
ITV is my worst performing holding, even with the recent recovery, I am still down 16.5%, needing an increase of 20% to break even. Holding for dividends will help a bit (providing they aren't cut).

I'm also considering the growth opportunities I am missing by holding this stock.

Any thoughts or opinions on where ITV may go from here? Is there anything significant in the broadcasting calendar this year? What will the potential SKY deal add to the business?

Morning, Happy New Year,

it's great to see the SP recover in the last week. I took the opportunity to sell at 103p making 6%, with the aim to buy back at 102 or less (gaining some shares after costs), recently mars seems to be trading in the 90-105p range, but anything can happen in this current market.

I still have dividends to come in, now as cash rather than shares.

The AGM is due later this month, but no results until May. Do they normally give a trading update during the AGM??

Buyers in large retailers like this use the following process;

1. They have a sales / profit budget for each category (e.g. ties) ahead of the season
2. They commit to take 80% of this forecast (volume) to the manufacturer - 20% is taken if sales are good
3. Sales forecast may be (e.g.) £5m, GROSS profit £1.5m
4. The season starts at full price and full margin, they may clear £2.5m and make full margin of £1m
5. They can now use the remaining stock to make their remaining margin of £0.5m
6. They can make substantial discount to clear stock ahead of the new season and still make profit forecast

So, big 50% or 70% sales could mean both bad news and good news (i.e. margin is covered and we are clearing stock).

Debenhams
“Cynics who had been sharpening their knives in anticipation of another profit warning from Debenhams will be disappointed the retailer hasn’t come out with a shocker of a Christmas trading update.
“While like-for-like sales were down 3.4% in the six weeks to 5 January, you have to appreciate that expectations were already very low.
“Important is that fact that earnings are still expected to hit current market expectations, providing much needed relief for shareholders who had been fearing the worst.
“This stabilisation in trading, if you can call it that, also raises the likelihood that it will try to raise money by issuing new shares. It makes reference to bringing in new sources of funding in the trading update, so one could expect news on that front soon.
“Debenhams may have bought itself some time with the latest trading update, yet you cannot ignore that fact that its business model is less relevant in the modern world of retail.
“As such, anyone brave enough to pump new money into the company would want a cracker of a discount to the current share price in order to be adequately compensated for the risks they would be taking on.”

https://www.youinvest.co.uk/articles/investmentarticles/163565/debenhams-and-Halfords

Tip Update: Sell at 5.1p
Tip style
SELL
Risk rating
HIGH
Timescale
LONG TERM
Our previous tip
We said SELL at 16.5p on 28 Jun 2018
Tip performance to date
-69%

By Harriet Russell

Debenhams' (DEB) shares lost further value despite the department store chain claiming it was on track to meet full-year expectations, following its Christmas update. The market was clearly spooked by the company’s confession that it needs to refinance its banking facilities within the next 12 months.

As "constructive" discussions with lenders continue, further asset disposals have been put on hold. Over the six weeks ended 5 January 2019, group like-for-like sales fell 3.4 per cent, with a 3.6 per cent slump in the UK blamed on lower footfall to stores.

IC View

Debenhams faces an extraordinary challenge to turn itself around in this kind of retail climate, and its funding crisis only seems to be worsening. Indeed, before Christmas, Sports Direct (SPD) boss Mike Ashley – who owns a 30 per cent stake in the department chain – claimed the group’s management rejected his offer of a £40m emergency injection. At 5.1p, sell.
Last IC View: Sell, 9.9p, 26 Oct 2018

INCOME TIP OF THE YEAR: Marston’s
2018 got off to a difficult start for pubs and brewing group Marston’s (MARS). Snowy weather discouraged punters from heading to the pub, especially Marston’s destination and premium locations. The taverns business has proved more resilient. This is in line with general market trends, where drinks-focused pubs have done better than those also selling food, and oversupply in the casual dining sector prompted Marston’s chief executive, Ralph Findlay, to express an “appropriate level of caution” at the full-year results in November and slow opening plans. Ten new pubs and bars will open during the year to September 2019, down from a previously planned 15, focused on cheaper suburban areas.
We hoped that Marston’s would turn itself around over the 12-month period, but at this point it doesn't look as though much progress has been made. But Mr Findlay believes dividend payments are "sustainable", being covered 1.9 times by earnings. We’ve started to feel less sure given the high debt levels, and we’re taking this opportunity to move our recommendation to hold. JF

I'm often shot down here for posting negative news, but I believe that people should look at all sources of information, better to know bad news now rather than later. We should welcome all factual/credible views and discuss the arguments to buy, sell or hold.

This is from an interesting article I came across today;

"Mistake No. 1: Seeking validation about your investing beliefs
Smart investors must be flexible and willing to change their approach. As Robbins points out, "you cannot get bogged down by biases that get in the way of intelligent investment decisions."
The key is to actively seek out qualified opinions that differ from your own. Many famous investors like billionaire Ray Dalio who founded one of the world's largest hedge funds, are obsessed with searching for divergent viewpoints to find out what their reasoning is and uncover facts he may not know. "

https://uk.finance.yahoo.com/news/tony-robbins-5-money-mistakes-200000402.html

Afternoon,
there is always so much debate on this board regarding BREXIT, I created a simple poll, the links for the poll and results are below. It would be interesting to see what the overall sentiment is here.

Your opinion / vote here
https://linkto.run/p/TQQDJE78

Results
https://linkto.run/r/TQQDJE78

From independent

https://www.change.org/p/theresa-may-mp-give-people-a-final-say-on-brexit-deal

Sorry, a little off topic, but this affects the markets and (remain or leave), I think it's right to have the final say.

Happy New Year guys,

at least the SP is rising, I think this got oversold at the end of last year, we got above 100p again and that should have been a good level for support.

Looking at the wider picture, the FTSE is doing okay so far this year (!) against some countries doing far worse.

Perhaps people are starting to look at the UK as being over sold?

Hi Nezlob,
there is a bit positive in that report, being that it is very undervalued;

“Debenhams is now worth a mere £57m which is astonishing for a business that generated more than £2 billion of sales in its past financial year"

I don't think it was supposed to be nice or nasty - it's a slow news period and he was being creative. Everyone is waiting for the first retailers to report - Next is the biggest FTSE gainer today, so it could go any way.

Hi radiogent,
yes, it seems like a strange move, I used to manage for WHSmith and I remember in the 90's when the Radio and TV Times started to get completion from numerous upstarts, and then the free guides in the weekend press - this category has been trading down ever since.
I'm amazed that they have focussed on Waitrose? Not exactly core ITV demographics.

Still, I'm deep in the red on ITV and it's good to see today turning around!