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thanks for the feedback but I just don't see it....
I dont think commerical elenctricity rates are much higher than residential..as they do have a certain degree of buying power. But lets play devils advocate...if commercial electricity rates were 2x residential rates.
Over the summer months electricity usage in CF stores will have been absolutely minimal - as they dont need lights and also limited heating I would say.
Going into the winter lets say to look at future costs..... If we figure the most of CF stores are quite small.... so lets estimate a 3x increase in electricity rates & gas for heating. If before the increases, their consumption is probably going to be anyway ...no more than a 3 bed property and in reality way below imho. for a 3 bed property if we assume an annual cost of £4k .... that is 4k x 1000 stores = £4m. Now this is really calculating imo way beyond the cost to them.
So a £4m cost hit would be approx. covered by a 1% increase in the prices of their goods. So that would be 1p on a £1 card.
Totally oversold imho.
Interims should be the best time to be there...UNLESS they are hiding something we dont know.
But if we think rationally the banks back earlier in the Year decided not to push anymore for a capital raise..Why?
IMHO- the banks had or would have been given info showing the theoretical 12m profits ....April to April this year...outside of any lockdown period...thats why they were happy to run without a capital raise as the theoretical profits MUST have been north of £30-£35m for the full year!
Does anybody have an idea why the CF share price is plumeeting as it is?
IS there some insider know how which we dont know?
If it is the Inflation fear - this is absolute rubbish!
CF is a company with low level of inflation exposure - from oil/transportation point of view, electricity as well.
UNLESS the company is hiding something from us, I expect 6 month results up to end July to be at least 20m in profits before tax. The inflation shock has hardly hit them- what electricity do they use in the stores from April onwards- nearly nothing. And lighting is the cheapest form of electricity. The only potentially large inflation factor will be wages...but then they can also just employ 17 and 18 year olds...
And recession, well cards is the last thing to stop being bought as it is a low cost item.....
I may be totally wrong due to unknown factors but in my honest opinion CF should be worth at least £400m i.e. 1.10-1.20 nearly 3x its present price....
Signed you are talking unfounded BS again.
The bankers will have seen the as if profits April 2021 to April 2022 ..likely at least 30 to 40m...
That's why equity raise was no longer required
You are coming out with unfounded and unbacked comments. I'm happy to evaluate your reasoning but first tell this board the reasons if your fantasy estimates????
Roxbury
It is sad sight when even you throw in the towel to a great degree. My only thoughts regarding CF are that it has been horrendously oversold, the market it is completely out of favour and keeps getting plastered whenever the markets go down and it is really difficult to maintain a large position when it is seemingly punished even when there is no bad news....the market seems to think the high inflation will destroy profits...I still believe they are earning at least 30m annualised profits if not more. The big day will be in October when we get the 6 months report.....but one thing I will say...I don't believe for 1 moment that the banks would have accepted for CF to not raise new equity if the company was not producing strong as if profits in the year to end April 2022 I.e.12 month period out of COVID restrictions I still believe they could show £17m net profits for half year...which should catapult the shares back to 1.00 to 1.10...
and similarly Eusebius ..electricity costs are a small cost for retail companies in comparison to rates, rent and staff which are the big three costs. So if you want to rant about significant cost increases you could look at labour costs maybe ..but then they are mitigating this with price increases and employing 16 to 18 year olds who cost less.
Your point about oil inflation is very relevant to transport companies and aviation yes who spend in normal times 30% of the sale price/revenue is oil cost. These companies will suffer by far the most...not a card retailer. Even if we have 40m in additional costs ..with 50% mitigation of costs that would translate still into likely 35m pre-tax profits for CF annually
I just did the full calculation Eusebius...1 million cards would fit into a 20 foot container. Now figure it out even at an average cost of 80p per card that's potentially £ 800.000 of sales. How much do you think that container costs to do a 500 mile journey...that's delivering to multiple sales outlets. Maybe £1.000. That's nearly 1 thousands of the price of the card . Wake up mate and do proper research ok. And by the way I am a trained fund manager.
Eusebius how many cards do you think you could transport in a 20 foot lorry container?
There are 33 cubic metres in storage space. On average each card has a volume of 24 inches area x let's say 20mm in depth. I.e. 5 cards per cm.
Eusebius
I don't think you are spot on at all with the costs.
First of all logistical costs for cards are absolutely minute. They do all their own printing as I am aware so buy ink paper in bulk. Material costs are probably the lowest cost item for card factory at probably no more than 10% So a 20% cost increase here translates into 2% only
Hi Roxbury and everyone else.....this fall from 65 to 46.5 in the space of a few weeks is truly unbelievable. I see no reason for it to fall beyond being horrifically and falsely dragged down by recession fear. What is even more amazing is that CF is highly immune to recession being a low cost operator ....so this is utter madness..OR it is share manipulation by somebody ..with a big buyer in the sidelines somewhere with a potential cheap take over in mind .
Yes I agree with most of what you say Lorenzo.
The UK Govt will for sure engineer a soft landing for the property market and that means as you say 15-20% fall only. However that would only bring back property prices to pre covid levels...
But yes the cat is out of the bag and the BOE is now the proud owner of an £800b balance sheet of predominantly freshly printed Gbp which it will be almost impossible to de leverage... The bad news is this further weakens the pound... which is where they have been letting the damage occur.
Indeed calls for Gbp parity to the USD are by no means far fetched and we may well be close to this later this year. To be honest it makes me cry and sad to see it decline in this manner with little hope of ever getting back to the 1.5 tho 1.7 range against the USD. This further creates inflationary pressures and leads to ever more cost of living problems for many. Looking at it this way UK property to an overseas investor could soon be 40-50% cheaper....!
Lorenzo
It is true that it is not in the interests of Govt or banks for property market to crash... but can they manage to prevent a correction is the big question?. The lack of housing stock is a well pushed lie by Government and estate agents. First check up how many empty properties there are in this country? 1m+ Europeans left the UK after Brexit... so the supply issue is not really true. What drives the property market 95% is the supply of cheap credit. How long can uk gilts pay under 2% rate.. not much longer... The BOE will need to boost base rate to ca. 2% or 2.5% which will lead to a 30-50% correction in the property market. Of course big brother Govt will juno in already to save the shipwhen prices are down 20-30% for sure... but then the damage is done. I fully expect shareholder stocks to half in value over next 12M....consumers are struggling.. and don't forget the UK housing market is in its biggest ever superbubble across all centuries..!!! If interest rates were actually normalised property prices in the UK would fall a full 70-75% in value... That's right 75% of UK property prices are government ponzi scheme fuelled 13 year emergency interest rate fuelled prices... normalise the base rate to 5% with 8% mortgage rates and your house value falls 75% in value... Thsts a fact!
Short term I think housebuilders are a very risky bet to get those large dividends which in 12M are unlikely to be repeated.
Persimmon is trading at 2 x net assets of which most assets are of course landbank.
I think in not so distant future they will have a profit warning as sales plummet.... and landbank prices fall.... Expect it to fall by up to 50% over next 12 to 18 months possibly as early as later this year. Housebuilders are a trap right now.
Lorenzo
Many thanks for this... very interesting.
I'm guessing the media company is Itv and the beauty company Coty Inc??
I'm interested in finding out about pawnbriking Co so will research this one. Oil Co also interesting.
The house builder I would forget as UK likely to see housing recession 2H 2022..Also same applies f or furniture company..