Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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!
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.
You might be right. It is Wednesday! Got my dates slightly mixed up there - apologies. So lets see what tomorrow brings.
I think that the RNS (4th qtr trading update) due out on Friday is going to be a good one, and the Market Makers have probably got a bit of advanced notice of what's in it. Or it could be just coincidence!!!! 30p anybody?
Slight drop on profit taking. Should start the climb again soon. Still not sure if we have a takeover, or the result due out next Friday are driving the SP up? Ideas?
Could this be the start of a takeover bid?
All signs are looking good for next weeks RNS. Looks like it may be a good one folks. Just remember, although sales may be down, the drop in cocoa and sugar prices will have a dramatic positive affect on the bottom line. We may even see a token dividend at year end.
RNS due out next week (13 July). Looks like we maybe seeing upward signs in the run-up to next weeks news.
For information, during the crash of 08/09, HFDs hit a low of 204p on £91M profit (vs £98M seen today) if FY13 is looking dissapointing so far, then perhaps the SP may revisit the £2 mark again.
For information, year to dates sales are £191.3M (last trading update) and not £138M as you incorrectly stated in your post today at 15:34.
I think perhaps you need to look at the fundamentals of this business before you make unfounded comments. Sales are down 2.7% against 2011 (due to the loss of sales associated with poor performing store closures). This means sales are marginally lower than last year, but still ahead of 2010, 2009, 2008 and 2007 sales. A quick comparison: 2012 sales are expected to be £214M vs £186M sales (£8.85M profit) in 2007, so as you can see, even with the small drop this year, the figures are still well ahead of previous years! The significant drop in profit (not sales!) is associated with business transformation, so is short term! As you will understand if you interrogate the balance sheet for the business, a drop in sales of £4M does not mean a drop in profit of £4M! It doesn't work like that. The transformation programme has a lot of positives that are going to significantly impact the business positively such as: closure of unprofitable business, outsourcing distribution, efficiencies in manufacture and improvement in store products. An additional and significant bonus is a 40% drop in cocoa price (could improve bottom line by £4M) a 20% drop in sugar prices (could improve bottom line by £2M) and a more favourable £/$ exchange rate, which means import of sugar and cocoa are cheaper since they are bought in $, which is positively compounded on top the drop in futures. This will feed in in this years and the next years figures. In sum: Mr under hill "YTD sales..... Long way behind previous years" - incorrect - slightly behind last year, but ahead of 2010, 2009, 2008, 2007...... Agema "poor sales cancelling out coca price fall" incorrect - sales are marginally down on last year. Sales still better than 2010, 2009, 2008..... Profit is down because of restructure (see above) which is short term and with impact profit. QueenElvis? Wally...Don't know precious little about their products!!!!. Well I can tell you that the dark chocolate with mint chocolate bar I'm eating at the moment with mexico 66% cocoa is fantastic! Would highly recommend it!
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.
Next trading update 13 July. Looks like the trading year for Thorntons may be good after all.