Member Info for Reswod

What happened today? -6% on such a strong risk-on day?

Does QinetiQ also sell drones? Or drones components/software? Or do they just tests them?

Hi everyone. New to the name. How come that this defense company is so cheap compared to all the others out there in Europe? Is there anyone that can explain to me what I’m missing?

The silence on this thread, following strong results posted amid previous doom and gloom, underscores the opportunity that existed (and may still exist) in WOSG.

Despite the reorganization announced - which looks like a clear value unlocker to me - and massive volumes traded, the stock has barely moved. Clearly some big sellers taking advantage to liquidate. I wonder if for any reason they are forced or if they don’t like the proposal… Anyone attempting an explanation?

Any thoughts re minimum wage increase occurred in April and a potential further increase next year? It’s something that impacted some retailers’ results recently with big share price drops… Does anyone did some work to understand to what extent Wickes is vulnerable to that?

I don’t understand on which basis you always assumed that none of the IIs was tendering. For someone that has 23% in a rather illiquid stock a tender offer might be a unique opportunity to, at list, reduce the position… I don’t think it necessarily tells something about the prospects of the company. Just my opinion of course…

From Electra 2021 interim report I read the business interruption insurance claim could range from nil up to 15 m.
From the fact that during negotiations with WoolOvers the board sought to include the CVR as part of the consideration I would deduct that the board thinks there is a good chance to get something out of the insurance claim…
So my question is: why the market is assigning no value to something that could alone be worth more than Unbound current market cap? Am I missing something?

I agree with Tarquin34 - Marwyn proposal was supported by the board and blocked WoolOvers. With potentially a great deal of new shares to be issued, it would have been very difficult for WoolOvers to carry on a takeover without the board support…
On Marwyn, I might be wrong, but I don’t think they can walk away at will: the proposal was conditioned only on panel waiver and shareholder approval - I haven’t read of any other conditions… so I think they have to go ahead and honor their commitments.
In any case, the stock still look quite cheap for a company with 50-60 m sales and there is the business interruption insurance claim still there - potentially they could get an amount of cash greater than their market cap just form that.
Would be interested to hear from any different view…

Anyone has a clue for the disastrous performance of the last two days? Can’t find any specific news out on the company…

Today’s price weakness is strange especially considering Fulham reported decent results with no major warnings about the alleged “consumer squeeze”… I really don’t understand what’s happening with this disastrous price action

Increased my holding on the news - had a small position already before. I only see negative comments on their restaurant chain, but here it’s simply too cheap and a good risk/reward at least IMO… I understand there are some issues to fix with Fridays but still, pre-pandemic they were doing more than 10 m in true free cash flow and they have the potential to roll out the new 63rd + 1st concept pretty quickly considering the post pandemic environment. At 50 million market cap simply too cheap even for a skeptic like me. Just my opinion… Any different view?

I’m holding and I like Wickes especially for how it seems positioned to gain market share and grow its online presence. That said, I’m considering to switch a part of my position into Kingfisher because it’s a lot less leveraged and it’s buying back shares. While operationally I favor Wickes on Kingfisher, it seems to me that Kingfisher capital structure is more conservative and this is important especially when a potential recession looms. Both are valued roughly on the same multiple if I’m reading the numbers correctly. You keep saying that Wickes has no debt - this is certainly true, but debt is not the only form of leverage out there… Kingfisher owns a good chunk of its stores and has a good amount of tangible equity on the balance sheet, while Wickes is leasing all its stores and is highly leveraged on an equity to assets ratio. It is not a surprise therefore that Kingfisher can afford to give excess cash back to shareholder through a large buyback program. To be fair Wickes paid a nice dividend but I’m not sure it will have the same financial flexibility going forward. Looking to the balance sheet it seems to me that they are running it quite leveraged already and that there is no material excess cash in the business… While I understand Wickes has no financial debt, I can see the difference between the risk of going into a recession with lots of leases obligations to meet vs owning your properties instead. What do you think about that? Am I missing something?

...I have the following concern In the long run: the main thesis here is that since AD is a “niche” retailer, targeting hobbyists in a resilient market, with no competitors up to the challenge but only unsophisticated mom&pop shops, it should have a reasonable chance to succeed and capture market share both through m&a and organic growth. It sound logical and I like the story. But when I look to the facts I see that another company embarked in the same journey before: Fishing Republic. And we all know how it ended... So I really cannot reconcile the story the company is telling with the evidence by Fishing Republic that maybe the journey is not so easy... Does anyone know some detail about the reasons that pushed Fishing Republic into administration? Was it just mismanaged? An issue specific to FR? Why that happened and what’s different with AD that makes you believe they can manage when others have failed? I really like the story and I like even more what seems to me an absurdly cheap valuation. And with lots of cash on hand they must be pretty safe at least for some time... But still, when I found out FR going went into administration I was concerned and I would like to find out more about it... Anyone can help? Thanks in advance.

Haha I must admit that maybe you are right! I have seen that several companies in the same or adjacent sectors are buying back shares at richer valuation than Wickes. maybe I should just stop ruminating on it and buy more...

...and I’m trying to find any excuse to understand why the stock has been sold down so much, till now ...and I noticed that on 27 April 2021 Travis Perkins general meeting there was a pretty poor voting outcome (only 55% votes in favor) for the resolution re the Wickes share incentive plans. I had a quick read to the plans and found nothing too worrisome, even if it always depends on the tastes and perspectives one might take... But since so many shareholders voted against that particular resolution, I wonder if this could be one reason for many Travis Perkins shareholders to dump Wickes shares received? Could be that dissenters sells out of spite... Have anyone read the share incentive plans and found anything wrong with it? I want to clarify I’m an holder and just trying to understand the motives behind the selling pressure and have no clue if this could be one of the reasons... I would appreciate anyone’s opinion and also any other explanation which is a little more elaborated than the usual “spin-off overhang”. Thanks in advance.

Thank you Culpepper. I could be wrong, but I don’t think the debate about leases and debt is holding the stock down. I think it is clear for most that debt and leases are different kind of liabilities... The reason why the stock is so cheap IMO is the market is taking the view that 2021 profits are not sustainable and that’s why I was trying to see if I could find any reason to agree with the market (cost inflation for example...). But I agree there are multiple facets to that: for example, as management argued, shortages have the effect to differ revenue to future periods and this might mean 2021 earnings could be sustained more easily than the current P/E ratio would suggest. Strong outlook on housing market another factor probably. I agree with all you are writing about wickes and enjoying your analysis... Personally I believe the focus should be more on profits sustainability than debt. But you have discussed it in several previous posts as well... So again... thank you for your answer.

Hi Culpepper, I would be curious to know what you think in general about the impact of inflation on Wickes business model?
Personally, I’m not too much concerned on products shortages because those sales are deferred to future periods and therefore should increase profits visibility; I’m not too concerned on renewal of leases either going forward cause it seems there is an oversupply in commercial spaces given the migration towards e-commerce and Wickes themselves reducing the footprint a bit for this reason; what I’m a little concerned about is Wickes working force of 7000 employees and how they deal with labour shortages... I see this as a weak point in their business model with regard to inflation. I also notice their sector is correlated with the housing market - so would this help in an inflationary environment? I heard, on an anecdotal basis, in the 70s with the housing market boom fueled by inflation home improvement stores enjoyed quite prosperous years... Not sure if it’s true... I would appreciate if you could give your view on the topic... Thanks in advance.

...it’s important IMO to highlight that and consider what would have been the results if shop had trade for 52 weeks. 16 weeks are not a small detail and I wonder how the result would have been on a normalized base... Impressive.

Low cost is exactly the place you want to be when there is inflation... Today’s price action was caused by short term trader trying to bet on results, bad sentiment coming from US and illiquidity... Shoe Zone is easily worth 200p in the medium term IMO.