soi
04 Jul 2018
Card Factory Hello bill 5 day old post and no reply, saddened by the ii change, many have stopped posting. Couple of suggestions for you A small and friendly board barcplus.proboards.com Login Required | Barcplus Visit our forum at: barcplus.proboards.com It requires initial registration ( mere formality ) Non commercial, no adverts, abuse and flame free. You would be more than welcome. I am on there and have been since inception, I like it, as said small board. There is a a CARD topic on there, under the " General Retailers " section. If you have any difficulty navigating, just ask, you`ll be helped, very quickly. You could also look at advfn, massive board, quite a few varying views on CARD there. I read there but rarely post. Have same username on both mentioned. For fundamentals/RNS alerts rather than discussion, I have switched to using Money AM. All the Best soi
ballymena_bill
29 Jun 2018
Card Factory Where can I find a decent discussion board for card factory
Muzzletoff
08 Jun 2018
Borrowing As with all borrowing, its OK, if you have a healthy economy/company.If a black swan event comes along, such as a big credit squeeze, the headwinds can be pretty strong.Some years ago, in a Company I once worked for, we were in relatively stable times, and considering borrowing a reasonable amount to buy out shareholders. We had talked to the banks, and they had agreed outline terms,but one of the directors objected saying that it placed the company in jeopardy if economic events turned against us.That stalled the whole thing, and sure enough a worldwide credit squeeze took place, when banks were suddenly calling in their loans, or renegotiating conditions. Whilst we will never know for sure, it could have meant severe trauma for the business. In good times, all these loan arrangements are perfectly rational, but in difficult times they seem like a foolish risk.
frusset
08 Jun 2018
Re: NEW ARTICLE: Card Factory runs into ... Bill, your reasoning about CARD's financial health seems reasonable. But it's only reason, which I believe isn't as strong as logic (which has its own pitfalls). So I also consider cases, although they are also flawed, because you'll never get perfect comparability. I think Weight Watchers had a lot more leverage than CARD, but their cash flow probably seemed strong enough to support it, with a strong brand and no material prospect of obesity going away in the foreseeable future. But they got into serious trouble and needed Oprah Winfrey to help them out (details on [link] ). As usual, I'm trying to make the best use of partial information. If I had access to the right data I could find more and better comparisons. Without it, I'll err towards caution, which in this case means not believing that borrowing to fund a special dividend is a good idea, which affects how much CARD I'm willing to hold.
frusset
08 Jun 2018
Re: NEW ARTICLE: Card Factory runs into ... Bill, your reasoning about CARD's financial health seems reasonable. But it's only reason, which I believe isn't as strong as logic (which has its own pitfalls). So I also consider cases, although they are also flawed, because you'll never get perfect comparability. I think Weight Watchers had a lot more leverage than CARD, but their cash flow probably seemed strong enough to support it, with a strong brand and no material prospect of obesity going away in the foreseeable future. But they got into serious trouble and needed Oprah Winfrey to help them out (details on [link] ). As usual, I'm trying to make the best use of partial information. If I had access to the right data I could find more and better comparisons. Without it, I'll err towards caution, which in this case means not believing that borrowing to fund a special dividend is a good idea, which affects how much CARD I'm willing to hold.
soi
06 Jun 2018
Re: Hi billI bought 2 share tranches yesterday, 200 + & 195 +I`ve been trading it on and off.Consider it currently oversold.I`m looking more with a short term view but also think that on a long term view the upside potential is a fair bit higher then the downside risk.GLsoi
Muzzletoff
05 Jun 2018
Another dividend yielder Interesting to see some other strategies for decent yielding stocks. Paypoint have rallied recently from mid 800p per share to 1,000p per share following a breakeven trading statement. They are again a strongly cash generative organisation, and this year they have announced a special as well a modest increase in the standard dividend.They usually pay divis on an interim and final basis, but as from 2019 they will pay their dividends quarterly, to smooth working capital flow, they say. But I think this is appealing to the divi hunters, no doubt of a certain age, who may like its bond like qualities. Obviously you have to look at the underlying business, but it has strong base. It could smooth out the dips in its share price. However, as Bill points out, a market undervalue, is quite useful for contrarians, especially if you opt for dividend reinvestment in tax free wrapper, such as an ISA, as effectively the reinvestment buys more shares, and creates a greater base for more dividends. Potentially a win win way to compound returns over the medium to long term.
ballymena bill
05 Jun 2018
just bought back the shares I sold in M
Guitarsolo
05 Jun 2018
Re: Yet again........ CTA - from memory, I believe the last update from CARD said there would be a special but in the 5-10p range. To be honest, that seems to fit with both sides of the debate! I would probably prefer it to be at the lower end and see further debt reduction. But as Bill intelligently argues, they have in fact deliberately tried to get to this level of balance sheet leverage so they probably won't prioritise debt repayment now. Whatever your take on the balance sheet, the FCF thrown off by the company is impressive and to have a well-covered 7% dividend is no bad thing! Guitarsolo
Bill1703
04 Jun 2018
Re: Yet again........ "I get the point about "optimal gearing" and whilst the balance sheet concerns aren't in any way related to solvency, the balance sheet is certainly the weaker of the statements in relation to the p&l and cashflow. In relation to the special dividend I would disagree that management have it under control though."Cta - I generally agree with you on the investment case and key CARD attractions. On the balance sheet / special dividend, I suppose a few points spring to mind:When trying to explain the SP reversal following the Q1 statement, you mentioned balance sheet "concerns" - you may have such concerns (rightly or wrongly, but it is your prerogative) but that would not explain a general market reaction. As I said, I do not believe there are such concerns across the market. The Board have paid out dividends (inc specials) of £268m in the short period since IPO - while net debt at end April last was £148m. If that isn't a balance sheet under management control, I would like to see one! Again - you can take issue with their strategy and the (not unrelated) theory of "optimal" capital structure (and many do), but it's hard not to see the current balance sheet position as entirely a product of their own conscious design. The 15p annual "special" was entirely that - it was never going to be sustained for ever... it was partly a function of the strong free cashflows, but also partly due to the sub-optimal capital position. Now they've (broadly) got there, future overall payouts are going to be more measured - and predominantly based on FCF. Anyone hoping otherwise either hasn't been paying attention - or hasn't been doing the sums. "A 10p special could be made, but then would have to scrap the special to 0p for the year after unless trading pick ups significantly; so think better off just getting rid of it now than ratcheting it downwards. It is a solid business with a decent ordinary yield anyway and think the market would reflect that in the share price to a greater extent if just ran the balance sheet / distributions in a more sustainable manner."I take your point - I am sure at least some others would join you in preferring a more rapid increase in the ordinary divi from here, as long as business (and cashflow) performance warrants it, and it's a fair argument. I am more agnostic on this, preferring to focus on FCF (here and elsewhere) and letting the actual level of payout take care of itself over the longer period. But as to whether the market would give this greater credit... I am not convinced. I think the market will remain most concerned by near term pressures elsewhere on the P&L (mostly) and will continue to undervalue both the relative predictability and scale of free cashflows and the longer term strategic and structural position in a comparatively resilient industry segment. Therein lies the opportunity for the anywhere-near patient investor... whether or not you go with the efficient market theory, you cannot escape the truism that it changes its mind all the time, and often in a big way. That is what will happen here - IMHO and in due, indeterminate course, as per the usual caveats!
cta100
04 Jun 2018
Re: Yet again........ I invested here relatively recently so want the business and share price to do well etc, and think there is a solid bull case built primarily around the simplicity of the business model, strength of the brand in terms of value for money, strong operating cashflow, as well as expanding when most retailers retrenching and that high street rental costs will be coming down quite aggressively over the next couple of years.I get the point about "optimal gearing" and whilst the balance sheet concerns aren't in any way related to solvency, the balance sheet is certainly the weaker of the statements in relation to the p&l and cashflow. In relation to the special dividend I would disagree that management have it under control though.The retained earnings (per the 2018 accounts) are only £15m, which is effectively the distributable reserves. So given the p&l is running at £65m pa and the divi (inc of special) is currently a £83m clip, there isn't actually the ability on the balance sheet to pay another 15p special this year without going through a court order / creditors approval process to release the share premium account. All the cashflow metrics in terms of the interest / debt are very safe as highlight, but the full 15p special divi isn't being maintained due to the bottom half of the balance sheet. A 10p special could be made, but then would have to scrap the special to 0p for the year after unless trading pick ups significantly; so think better off just getting rid of it now than ratcheting it downwards. It is a solid business with a decent ordinary yield anyway and think the market would reflect that in the share price to a greater extent if just ran the balance sheet / distributions in a more sustainable manner.
Bill1703
02 Jun 2018
Re: NEW ARTICLE: Card Factory runs into fres... "But having previously said that a payment of 5-10p will be made with the interim results in late September, Card Factory's guidance today is for this return to happen "towards the end of the current financial year". No figure was mentioned, with the return being subject to trading performance. This slight change in tone contributed to a disappointing session for Card Factory shares..."Sorry, this is totally wrong IMHO. The pattern in recent years has been to confirm the special dividend at the interim results in Sept, with the special and H1 ordinary both then paid in December (ie. only a month or so before the financial year end). So, what they have now said with the Q1 statement looks ENTIRELY consistent with this? Not that a minor change in timing should make much difference anyway - but there is NO evidence for even that here.Another poor piece, IMHO, from iii on CARD... they should stick to making sure their website and trading platform work properly, rather than putting out misleading guff which only confirm the adage about a little knowledge being a dangerous thing.
Bill1703
02 Jun 2018
Re: Yet again........ "... share price reaction today isn't a response to LFL being slightly negative, which in current retail context is a reasonable number, but more either disappointment over the online comments or continued balance sheet concerns - but then neither of that is really news. I don't see why management just drop the special divi, rather than starting to manage it downwards, and get on with building up a cash balance / paying off the debt ."Cta et al - not sure there are any balance sheet concerns... and not sure why would there be? CARD's superior free cashflow generation is on display yet again - with net debt reduced by some £14m over Q1 (vs £10m previous Q1) - and what debt they have is essentially self-determined, driven by successive large special payouts to get to their chosen level of "optimal" capital efficiency.So whether you agree with their view on the balance sheet or not, they have it entirely under their control - and leverage is below the UK market average (on both ND/EBITDA and, in particular, ND/FCF bases), with interest cover well into double-digits. So... where is the concern?I am with the others on Q1 LFL - actually not too bad at all, given the conditions, and never forget that LFL is a delta, not a quantum and hence only a partial and indirect measure of value. The Board sound pretty confident and upbeat - all things considered - for the FY outlook... and so am I!The market, yet again, doesn't know what to do with this. It was up 6% on the release, and then quickly reversed to down 9%... a full 15% swing, on this?! Seriously?! You also have that demi-wit at Peel Hunt getting the wrong end of the stick, yet again... fine, let the market do its worst, that is what creates opportunity for those of us who know what we're doing.And please note - the iii article alleging a change of tone on the special divi has also got it all wrong. Also, not for the first time... will post my thoughts on that thread.Still see this as 275p "fair value"... still a Strong Buy, whatever the likely timescale for realising this.
frusset
01 Jun 2018
Re: Yet again........ Thanks CTA100. It now seems head-slappingly obvious to check Royal Mail, about GDPR and junk mail.
soi
01 Jun 2018
Re: CARD trade 197.19 long................................202.29 closed + 5.Happy with that smash and grab intraday."You`ll never starve on a profit." I remember those words from many years ago.Served me well.ATBsoi
