Member Info for Yanar

Three Directors of Thorntons, bought combined shares at a total cost of some £221,000 yesterday at just under 30p. That's an amazing vote of confidences in the business..... Or they know something we don't?

Someone just bought 2M shares at full ask!

I've at last had chance to review these figures in detail. Everything is in line with last years forecast: sales, net debt, pension provision, closure programme, cash flow, etc. the only number that has significantly changed is profitability - improved from an expected loss of (£2.6m) to a profit of £0.9m. A swing of £3.5m, which I would argue is attributed to the benefits of the drop in cocoa price. Not only that, as betsybloom pointed out, the company would have used financial derivatives to lock in this price improvement over next years reporting period too, meaning we get a double improvement hit - the profit over the next period will be better than expected too. With all the benefits of improvement trickling through as well this is going to be one of those classic recovery companies. One to hold very tight onto, and my opinion, if anyone is interested, is a target of 35p to 40p over the next few months. Then rising +50p and beyond when dividend is re-established. Fill your boots!

Investec raises Thorntons target price from 25p to 30p.

Thorntons makes a profit of £0.9M, instead of an expected loss of £2.6m!

You need to look at the futures chart. It fell just under a year ago, so will be well and truely in this financial period.

I've been researching and posting regularly on Thorntons. For those that have missed some of my research (if you interested of course, I believe the dominant factor tomorrow will be the drop in cocoa prices through this year. Posted earlier this year. Cocoa prices have dropped even further over the past month and the futures are pointing towards a 5 year low of $2,000 per metric tonne, from a high last year of $3,500 per metric tonne! That a 40% drop in raw materials costs. I've been trying to figure out what this means and here are my calcs: from the company balance sheet, raw materials comes in at about £45M ish. Cocoa represents about 25% of raw materials = £11.25M for 2010/2011. If an improvement of 40% is realised, then that means gross profits will improve by £4.5m over 2011/2012. This represents x5 of last years gross profit alone, or 60% of gross profit in 2010, without doing anything different to the business! This also doesn't even factor in the drop in sugar prices, closure of loss making stores, restructure of the distribution business, or transformation of the long term business. If all this plays out to plan, we should be back above 50p and well into dividend territory! Keep a close eye on interims on 13 July and end of year results in sept 12.

Resistance is holding well at this level. I expected to see a fall this morning as per the last 2 RNSs, but as I think it might, it looks like a repeat of the 15th of feb RNS with a build Upto and through the RNS tomorrow. Good luck.

The chart this time looks different. instead of the rapid boom as per the last 2 RNSs, this has shown a climb on the run-up very similar to that around 15 Feb. after that RNS, the SP jumped 65%. We'll have to wait and see!

I wonder if we will make 30p by results next Wednesday?

Is it too early to call a breakout yet? Or am I just getting carried away?

I've spent the last year researching this share in depth. Normally you would see a big spike a few days before the run up to the RNS (as per the last 2 interim THT RNSs see 6 month graph) - if the RNS is good it should continue to climb, if it's in line with expectations then there is a tendency to retrace. I firmly believe from the research I've done (please do your own research and please don't use my posts as a basis for buying or selling this share - I offer no advice or recommendation, but just my own personal opinion), that THT is going to be a recovery stock and will be re-rated. I've been in a few recovery stocks previously, and all of them had a tendency to start their recovery before the normal climb a few days before the RNS release (on the three I've held, recovery has startd around 2 to 3 weeks before RNS, with a steady climb), continuing up thereafter. That is why I am now buying a few weeks in advance and not waiting for the climb a few days before RNS.

Starting to increase my holding from today, on expected good results on 12 Sep. Profit for the year is the one to watch; after researching this stock and crunching a few numbers, I think profit for the year will significantly exceed all current brokers targets. I also think sales will come in slightly ahead of expectations. Good luck all.

What you fail to mention, is that the area affected only contributed 8% of total cocoa production (so they may only produce 80% of the 8% due to drought). You also missed out the very important bit of information about Brazil and Equador over producing this year. That's why the current prices and futures prices are at a 3 year low - are down by 40% on the spike (approx 20% on average) from last year. So I would suggest profit margins for FY11/12 will be significantly better than expected. End of year results out first week in September - I will be buying a couple of days before the RNS. Good luck.

Let me try to underrstand what your trying to convey. Please correct me if I get this wrong. A 40% reduction in the basic raw material - cocoa (which is the biggest cost to Thorntons in terms of RM) will have NO impact on the bottom line. A corresponding drop in sugar (the second biggest raw material used by Thorntons) will not have an impact on the bottom line? OR are you saying that Thorntons already factored this drop into their estimates over 12 months ago, before prices fell and even before the markets, traders and producers knew about this future fall? If this is the case, Thorntonrs should move into commodity trading and forget making chocolates!!!!!

I think you missed my point. Whether cocoa prices had risen or fallen, the same closures, redundancies, eronious charges, etc that were planned to happen would have still been initiated. What has happened here (by happy coincidence), is that cocoa and sugar have dropped in price (massively) within the last 8 to 10 months; and this drop couldn't have been forecasted in Thorntons last financial planning round when 2012 estimates were generated in 2011. So straight away, Thorntons should see some £4.5M in additional cash that was never ever provisioned for or anticipated. What does this mean? Well they can use this to boost profit figures, reduce net debt and may even pay a token dividend. Don't forget Thorntons were anticipating a loss of £2.6m this FY, due to their reorganisation of the business. £4.5m extra windfall profit due to price fall in raw materials will wipe this loss out totally. Then the SP will climb!

http://www.dailymail.co.uk/money/markets/article-2172042/Thorntons-kickstarts-recovery-Best-British-range.html

Just to re-iterate my post to you in May this year about bottom line/profit. Cocoa prices have dropped even further over the past month and the futures are pointing towards a 5 year low of $2,000 per metric tonne, from a high last year of $3,500 per metric tonne! That a 40% drop in raw materials costs. I've been trying to figure out what this means and here are my calcs: from the company balance sheet, raw materials comes in at about £45M ish. Cocoa represents about 25% of raw materials = £11.25M for 2010/2011. If an improvement of 40% is realised, then that means gross profits will improve by £4.5m over 2011/2012. This represents x5 of last years gross profit alone, or 60% of gross profit in 2010, without doing anything different to the business! This also doesn't even factor in the drop in sugar prices, closure of loss making stores, restructure of the distribution business, or transformation of the long term business. If all this plays out to plan, we should be back above 50p and well into dividend territory! Keep a close eye on interims on 13 July and end of year results on 7 sept 12.

You missed out the last bit of the RNS. Note the total company sales, ex private for the latest Qtr of +8.1%.....right at the bottom. Sales growth %   Q1 14 weeks to 01-10-11     Q2 14 weeks to 07-01-12     Q3 16 weeks to 28-04-12     Q4 9 weeks to 30-06-12     Full Year 53 weeks to  30-06-12 Own Stores -10.1% -6.8% -6.1% -4.7% -7.1% Franchise Stores -6.4% -17.3% +12.6% -24.0% -8.6% Thorntons Direct -8.1% +8.0% +2.2% -1.3% +3.5% Total Retail -9.7% -6.4% -4.1% -6.0% -6.5% Commercial Channel -4.9% +16.7% -0.8% +45.4% +7.4% Private label +15.7% -19.8% -9.8% -22.7% -8.3% Total Commercial -4.5% +16.1% -0.9% +42.6% +7.1% Total Company -7.6% +0.4% -2.7% +7.8% -1.6% Note:- Total Company excl Private label -7.8% +0.5% -2.7% +8.1% -1.5%

A good RNS in difficult times. This to me looks like the turning point for Thorntons. Sales are pretty flat for the year, however note the big turnaround for like for like sales: last Qtr from -2.7% to this qtr +8.1%. The next big push in SP should come from a jump in profits, caused by the big drop in cocoa and sugar prices over the past reporting year. Still very very undervalued at this price.