Member Info for lemonade311

To answer your question on why it's priced for bankruptcy, there's 2 explanations from the market POV:

1. The market thinks more cladding provisions will come (not unjustifiable given the uncertainty).

2. The market thinks the business model is broken at higher rate level and they will not be able to generate profits.

Obviously I disagree with point 2 which is why I invested (admittedly too high initially at £1). Rates should come down to 3% by end of 2025 and so should 10 yr government bond yields (when gov bond yields are high, institutional investors buy those instead of BTR's/PBSA) imo.

When 10 yr government bonds are at 4%~ as they are now, institutional investors demand a higher yield % for riskier BTR's & PBSA, that's why WJG is having trouble selling their stock right now, because they can't offer those yield %, even though rents have gone up with inflation + a bit more.

> leading to 82% of available inventory being sold.

Although this does seem big, it isn't clear what the previous % year was as they didn't disclose it I think.

Political US election is not really relevant and should already be priced in for the extra listeners and ad-spend from advertisers so this RNS is quite meaningless imo. It actually makes YOY/QOQ comparisons harder because how much of that 34% is related to the US election? We don't know.

Also:

> report partnership renewals and a substantial increase in audience and advertiser demand for its political and news programming slate.

No mention of gross margins on the renewals which is what actually matters so pretty much a pointless RNS.

> With a market cap of 71m and net cash of 44m, this company is being priced for just 27m at the moment.

You need to add leases + debt and use Enterprise Value, not market cap to get the real liquidation value.

Also, if you mention reach as an argument for why national world is undervalued that is a poor argument cause Reach PLC is a garbage value trap too

To me this looks like a classic value trap unless anyone wants to explain the thesis to me.

Acquiring bad businesses doesn't automatically make your valuation go up. I mean just look at their cash flow statement, constant £1m incomplete transaction costs. Do you shareholders really think this is a good use of shareholder money? I don't.

> payment of incomplete transaction costs of £0.8 million both accrued at the year-end

The standard response to this will be, 'Look at their PE ratio & cash flow. It's so cheap!'. Yeah because the cash flow will be lumpy/declining and that remaining £13m in cash will be spent on bad acquisitions that will never generate a positive FCF or good ROIC.

Unless someone wants to really explain why I'm wrong here, I'm all ears.

This is rising because of the BOE comments by the way, in case anyone is wondering. They said more aggressive rate cuts will come: https://www.telegraph.co.uk/business/2024/10/03/ftse-100-markets-latest-news-uk-interest-rates-pound-oil/

And obviously that would mean better liquidity in the forward-funds market.

However it's pretty silly that the market didn't price this in earlier imo, the BOE doesn't decide rates really, they simply react to inflation and growth numbers and the service/wage inflation expectations are consistently dropping.

Explained in this video pretty well: https://www.youtube.com/watch?v=RpuuRS6mkx8

Https://pbsanews.co.uk/2024/10/03/watkin-jones-sizes-up-brownfield-site-for-bristols-avon-street-pbsa/

Also, one more thing. Businesses are holding off until clarity on October budget, i.e they don't want to buy properties or invest while they are unsure of tax changes coming so their won't be any improvement in the next results/update for sure.

Although Bellway increased their provision (before WJG latest trading update that stated no provision change) due to price increases in tender offers from contractors for replacing cladding.

A rushed timeline of 2 years would make provision increases go up probably again as their would be more demand and a limited supply of contractors replacing cladding.

Their isn't much more to add apart from what's already been said but as I said before, I think an increase in RCF is the best way. The existing RCF is secured against land inventory. It's a very safe type of loan for a bank to do because land just doesn't fall much (unless you have 2008 scenario again).

Why do people post these behind a payment wall? Hardly anyone is gonna pay for small cap AIM research. Just post for free please like I do

Https://www.reddit.com/r/ValueInvesting/comments/1ftnv4y/podcasting_stocks_acast_audioboom_valuations/

Some of you people are so deluded on here it's quite funny, I don't even know who those users are. You will believe whatever your bias wants you to believe. I raised valid points about gross margin, capital allocation and competition.

I didn't even say it's not a buy, it's simply a wait and see about gross margins as that's what this companies value comes from.

Anyway, enough of commenting on this board, on to valuing the next stock.

Thanks for clarifying the trident rankings.

Yes Acast seems to be more Europe focused historically.

> all future bookings will translate directly to growth

Yeah, revenue growth is what he means I presume, but they need that gross margin % to start coming back to 25%, anyway we will see if it does.

Also, one more thing, when audioboom says they are in the top 5 podcasting platforms, why do they leave out Acast from that list? Very strange to me.

Thanks, that was what I was suspecting.

Seems as though Acast was the innovator on stuff like DAI as well.

Low switching costs between podcasters is an issue, there's no inherent moat here it seems and unlikely to ever develop. It seems very easy for a top podcaster to switch to a competitor unless the existing one pays more which hurts their gross margins like you said.

The big issue here for me though is that Acast gross margins are going UP in a recessionary ad market, while audiobooms are going down (not accounting for onerous contracts). This means that we cannot just blame the macro environment for audiobooms current lower margins, it seems they are structurally losing to acast right now as you said.

To me it seems at this point that Audioboom is a wait-and-see, I've added to the watchlist but they need to show they can improve their gross margins, revenue growth doesn't matter if you are only getting 17% of that to trickle down to oper. income.

Without onerous contracts their gross margins in 2023 are 17%~ and historically have never been above 23%. Onerous contracts don't explain why they have half the margins on average in normal times than Acast.

Also, all the feedback looks good so far apart from one thing. They need to fix the UI on PC. Gamers aren't happy about it being dumbed down for cross-platform. I emailed the CEO/CFO asking if they will fix it before release as it's an easy thing to fix the UI for PC.

Does anyone have the pre-order numbers for planet coaster 2 right now? I don't have a subscription but there's sights which estimate the sales for games like this one: https://vginsights.com/

Wondering if anyone is tracking it here?

Planet coaster 1 sold 50k (£1.9m) in pre-orders up to 2 months before release. I want to track that we are on a similar path.

I've been keeping track of it on the steam top sellers list and it's consistently around the 60-40~ mark. No idea how much this is in copies sold though.