Member Info for Slipperman55

This was an incredibly low margin business at the best of times. Add in lower travel volumes and an inability to recruit and you have a long term structural nightmare. Wages are rising 10 % per annum and even then staff are impossible to recruit. Hard to be optimisitic for a company with low quality brands.

Total value of trades £1k!

I have been in and out of this stock over the years but decided to keep clear due to the limited liquidity for shares when trying to buy and sell realise sized share parcels (1-2%). I'm thinking that the next 12 months should be generally positive but worry that they will start to get low on cash. Euro footie should help but they won't get the foreign fans they were hoping for. The market cap valuation looks pretty punchy if you divide by number of stores. When down at 4-5p they looked worth a punt but pretty risky at above 6. Is it correct, no new own stores in last 12 months?

I don't think many people understand how big the electric bike market is and how big it will become. Halfords have significantly more buying power than all other operators combined and will clean up.

It worries me that they are taking back sites from franchisees. To grow they need to do the opposite. Well done to the team for keeping it together but their real estate model isn't ideal for a delivery biased product. If you devide market cap by number of stores - it doesn't look great for a low margin business.

It's very tightly held. If JPM get to 7-8 % it will attract attention.

Looks like JPM hae been chasing stock for one of their clients.

I'm guessing that a broker has recommended Halfords.

Post vaccine there is lot of cars that that will need servicing, MOTs etc. Small bike store operators don't have the working capital or supply chains. Looks a cheap stock. All the way to £4 plus

It's not impossible that they put some pro-bike policy into the spending review. Will look good at a time when there isn't much good news. The company is still pretty small in terms of market cap and there must be a lot of cheap real estate if they want to expand. Looks like a very good post pandemic stock.

Great that they are still operating and I guess providing an important service. The will miss out on Euro 2020 and the Olympics this year. They really weren't big buys. By value they are very small fry and there is a big spread.

This still looks a very high risk play. If we are brutally honest SSP is a collection of mostly short term poor quality leases mostly contracted out of the LTA Act, small kiosks, very low margins relative to peers, and mostly very low quality product offerings. Their kiosks and buildings have a very no intrinsic value. When did you last go to a Ritazza, Upper Crust or other brand and think that you received a high quality product from a motivated and well trained employee. Were you happy with the pricing. For a long time SSP has operated on the elastic part of the demand curve. Their response to lower margins has been higher prices and fewer transactions. Other than the few very large rail and some air sites they haven't invested in their units and staff turnover is crazy high. To avoid paying turnover rent tops up they charge very high prices which helps the margins on any sales but means lower total revenues. If you question any of this, when did you last have a truly great experience at an SSP unit. The need new owners and major investment. If they survive this maelstrom they will limp along just above the surface, but remember what they offer is significantly a luxury purchase particularly at their price points.

Just following up on my earlier note on Friday. They have no rates due, labour is 80% covered and Network Rail has stated no rent due on next quarter. Just need rent free from airports. The one downside from the virus is that we know from the South Western strikes that trains not running changes behavior with more and more people working from home.

Late yesterday the govt announced a deal on all business rates which will have helped. They will be trying to get a deal on rents with rail and air landlords, nothing announced but rent due in a week or so. Also need a way to pay staff. I'm surprised there has been no company announcements. Price did bounce back but very unpredictable. Need courage to jump in now. Key moment to pile back will be when we are confident there is a vaccine or over 50% of pop have immunity... along way away. This company trades at very low margins relative to peers so can't stomach anything that hits costs. A company announcement post next rent quarter would be welcome. Their rent agreements have minimum guarantees which are normally 80% of sales and then a turnover rent top up. I don't seem them have any cash in 2-3 weeks.

It's not about what price to buy at but when to buy.

The two big fixed costs are obviously rent and staff. Their rail landlords are statutory, or quasi statutory bodies (Network Rail or Train operators), so possibly they can get some sort of rent holiday, and airports which will be closed which may also offer a rent holiday - less sure. The govt may help with staff costs, but I don't see how they can fund this. Many staff have short term contracts, so expect redundancies. If they have to pay full rent for the next two quarters there is a question mark if they can fund this. Any sort of VAT holiday wouldn't help. A sale to Coke (Costa) would be a very good but that needs optimism! Buying SSP isn't about the SP to enter at, it's about when. Suggest sit tight for now until some confirmation that we are coming our the other side.

On sales of £2.7b I get a quarterly rent due of circa £125m. UK rent quarters are end march and other countries will vary. SSP is normally a business with very positive working capital (receive cash and pay suppliers end next month), I'm assuming suppliers will be renegotiating terms. Any deals with landlords to reduce rent will have mean landlords change terms, protected rail leases will go. Hard to be positive for SSP. Matter of time before they run out of cash.

I got spooked by the Coronavirus and bailed out yesterday. Poland seems very unaffected by the virus to date so hopefully it won't impact DPP. There seemed to be very strong support at 6.5p.

Possibly, hopefully.

Hi Peterson,
I'm not on the ground but my understanding is that the Telepizza deal wasn't consummated, bizarrely on competition grounds and their business is in a state of flux. My guess was that there were other reasons why it fell over. I'm not sure that sunk costs are totally irrelevant. There is some step function capex that can't be avoided as the model grows. There is also a cost to support new sites (mostly corporate) in new territories and there is a cost (fixed and variable) to grow a brand. Don't underestimate this. Regardless, negative cash flow is negative cash flow which can't be ignored. I know that Costa has struggled to bed in Coffeeheaven so you can't ignore what it costs to build a brand in Poland and some of the TV adds will be to comfort franchisees. Once they get closer to reducing or stopping negative cash flow they will become a better bet.