Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Gotta luv these professionals...
'Following Peel Hunt’s latest price target of 400 on the business this highlights that the broker now believes there is an increase of 60.84% from Card Factory Plc’s current share price of 248.7.'
I have no idea what the share price will be. I can't guess what the market will do.
What I do know is that CF ebitda will be circa £25m max. Net profit perhaps £15m. Sales declining. Margins narrowing. Costs increasing. No growth. Losing money on web sales. The board having no idea what to do about it. I haven't followed this chat for long but were there equally optimistic posters when the share price was £3? Where are they now?
Rox Early bird gets the worm - well done for that.
Can anyone enlighten me? Most posters here assume a recovery in the share price.
Other than debt repayments being made, what are the expected drivers of this recovery?
With no growth in sales, costs increasing, lower margins, no dividends and constant bad news - where is the recovery coming from?
Rox - Read into it what you will but to me the fact they are talking about ERP implementation shows the total lack of priorities and experience from the board. Much easier to bleat about that than sales. It is meaningless drivel with disaster written all over it. A bit like the 'new' store layout.
Rox - Even I wasn't expecting it to be this close to the 30's so soon. Anyone would think a substantial profit warning is on the cards? You wouldn't have thought a steady business like selling birthday cards could fluctuate so much. However, it is amazing how quickly and substantially a board with no relevant experience can screw a business. Be careful.
Yes Roxbury I agree. No one wants to lose £ and with these chats at least they can make an informed decision. I'm not really sure that your posts are that balanced! The funny thing is, although my view is the SP will be 20-30p in time, it may be possible to double your money in the meantime. Who knows?
The most important thing for every investor to remember is this - do not have blind faith in the board. I promise you, they are like rabbits in headlights at the moment.
Roxbury - thanks for that. This is the important bit:
(Note 5.
EBITDA numbers are post-IFRS.
On a pre-IFRS basis, EBITDA for the full year to 31 January 2022 is expected to be in the range of £30.m - £33.0m)
The issue is that my £25m is almost already admitted and any expected growth on this, is for the fairies.
The £123m is an anomaly. It was probably more like £80m before financial shenanigans. That £80m is easily cut down to £25m via cost increases and lower sales. They have already admitted £30m. More to come with the year end figures. I could write the report now if you would like...
A realistic ebitda for the next few years is £25m or so. It is very unlikely to be higher than that, but could well be lower. Fair value for market cap based on that, no growth prospects, and current debt, is probably about where the share price is now. Much more bad news, and lower ebitda than that, and the SP will be looking like 20-30p.
Roxbury - Well it didn't come from net profit did it? Therefore, can only be by moving around the balance sheet.
The issue with CF is not that cards will stop selling. It is simply that the ability to generate previous returns is not there any more, and it won't be coming back. The company has never provided any evidence that they can overcome the cost increases, or the sales reductions. Rather than solve that issue, they have come up with a ridiculous strategy to go worldwide etc, take on web businesses (that are a lot cleverer than they are), and do some wholesaling. Mix that with dubious changes to the existing stores and it doesn't bode well. Future profits are not going to be more than £20-30m , if that. Any update is going to be big time negative with the usual spin.
Be very careful about going into a store and thinking 'this is busy, easy peasy money'. So were Woolworths. And 99p stores. And Poundworld. And others...
Nothing changes the fundamentals. Growing costs. Lowering sales. No answers.
Any trading update will be negative, and there is no chance of a 'turnaround'. The 'headwinds' are just getting larger, and the sales are getting smaller. What that does to the share price is anyone's guess, but don't be surprised if the next update drives the price down to the 30s.
l0101270 & Roxbury
Your right about the debt - I don't see it as a major issue, although it would be better not to have any in the current trading environment. It seems to me that the debt is due to overpaying dividends historically rather than covid.
Yes, CARD's net income will be circa 33% of previous levels (and possibly lower) and to never recover. Those days are long gone.
I don't think they are foolish to own up to a £30m hit - they had no choice. The real problem is, there is no mitigation, and no sign of any. Unfortunately in this situation, the lost likely reaction will be to spend, spend, spend, on a host of superfluous activities.