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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Character Group Plc | CCT | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 276.00 | 08:00:15 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 276.00 | 276.00 | 277.00 | 276.00 | 276.00 |
| Industry Sector |
|---|
| MEDIA |
| Top Posts |
|---|
Posted at 11/4/2024 12:58 by arthur_lame_stocks I've just taken a look at the most recent results and have decided these are really very good value and generate an awful lot of cash in even the poor years. As far as I can see this last year they generated around £8m of free cash flow by my preferred measure against a market cap of ~£50m. In better years they have generated far more than this. The dividend yield is nearly 7% and the balance sheet is very strong.They've played the interest rate cycle very shrewdly, borrowing when money is cheap and paying it back when it is not. The board seem to have listened to investor concerns about their remuneration and this year have taken a far more reasonable wage. All in all I reckon this is a great opportunity at this price. |
Posted at 19/3/2024 04:12 by h1a3 Is this board dead?I have been a very long term investor but CCT appears to be drifting no where. Any thoughts? |
Posted at 05/5/2021 14:29 by davebowler htTPs://masterinvest |
Posted at 28/1/2020 09:29 by profdoc Orange1, Last week I posted the following to my Newsletter subscribers (Deepvalueshares on ADVFN)- it's a bit long but you might pick up something usefu:Character Group’s AGM: On Friday I travelled to London to attend Character Group’s (LSE:CCT) AGM, and to discuss some key issues with directors after the formal meeting. They were very generous with their time. Jon Diver, Joint MD, was willing to chat for half an hour after the meeting; Kiran Shah, FD, and Michael Hyde, MD for the Far East, each spent quarter of an hour with me. I’m very grateful for their welcoming attitude to a lowly private investor and for being so keen on informing shareholders. Toy market decline Before the 11am meeting started Mr Market had pushed the share down 15%. This was in response to a 7am trading update which described the Christmas period as extremely challenging with the UK toy market contracting for the second successive year. A little more on that: in the meeting the directors said they estimated toy sales to be around 15% down over two years and a further 7-9% might occur. Worldwide, the toy market is in decline, but not as much as in the UK. They were asked why the volume of toys sold falls like this. Answer: there are trends in fashions, crazes come and go. In the past Character has ridden some good trends, e.g. slime. This year there was no craze to boost sales. Ups and downs are all part of the game. Optimism for the months ahead The trading update also stated, “We enter the 2020 calendar year with a very strong product portfolio and, although the first half results will be below last year, we anticipate that the Group will deliver one of our strongest second half performances to date.” The foundation for this belief is “the reactions from our customers to recent product previews and presentations” They are used to talking with customers. Indeed, Jon Dover and other directors will be manning stands at the London Toy Fair this week. The enthusiasm with which Jon described the new products (those already announced and those which are still under wraps) is a sight to behold. He really loves this business and the way in which it is constantly renewed by exciting new toys (one is a giraffe which poos!). Putting some numbers on it The update said that despite the anticipated strong finish to the current year (yearend 31 August) Christmas was so poor that profit before tax is expected to be circa £10m (it was £11.1m in 2019). So around £8m after tax for 2020. This is substantially below the expectations of analysts, some of whom attended the meeting and made their displeasure felt (there was about 35 people in the room). At £8m of earnings, with the market capitalisation at £68m the shares stand on a forward PE of 8.5. Using the average earnings per share (35.1p) over ten years the cyclically adjusted price earnings ratio is 320p/35.1p = 9.1. The average for the UK market is 15-16. Dividend yield, assuming no diminution of the dividend in the current year is 26p/320p = 8.1. The company throws off so much cash and has such a strong balance sheet that the board have the task of deciding just how much to hand out by way of dividends or through share buy backs – this is true even in a year when profits fall to a “mere” £8m. In 2019 the decision was £5.3m for dividends and £1.27m for buybacks. I started my conversation with Kiran Shah by congratulating him on achieving rates of return on capital employed (averaged over a number of years) of 87% per year. To my great surprise he responded that he was not content with that number. He aims for more than 100%, as CCT has achieved in years gone by. They simply do not need capital to invest in factories, plant etc., because the heavy stuff is done by Chinese suppliers. Are you paid too much? An institutional investor asked the head of the remuneration committee, David Harris, if the director pay is too loosely linked to performance? After all, profit fell last year and yet board pay was £3.5m compared with £3.6m in 2018. Answer: In some years directors have forgone salary completely (indicating they share the pain in bad years). Also, base salary is not high relative to the market value of the individuals. They could take up posts in other companies in the sector at high pay (two directors are on a base salary of £245,916, but with bonuses total remuneration is £1m for Jon Diver and £0.8m for Kiran Shah). Diver is entitled to 4% of pre-tax profit, Shah to 2% and Joseph Kissane, another MD and co-founder 1% as bonuses. Half of bonuses are in cash and half in shares. David Harris concluded: “without them we would have a significantly inferior company”. I accept that for a £68m MCap company director remuneration around the million mark is high. But I also accept that these three, together with chairman Richard King, took an enormous risk with their careers in coming out of other toy companies in 1991 to set up Character Group, and so I have little difficulty accepting that part of their pay looks like that obtained by successful entrepreneurs. Is the board distorted? The institutional investor complained about the lack of independence of Board members, with five executives and three non-executives (worse one of the NEDs is a co-founder and another has been on the board beyond the corporate governance guideline limits). Response from Chairman Richard King: Yes, there is a limited amount of independence, but we are a small company which achieved good results, built a good team with a good reputation and relationships with suppliers. Then Richard attacked the policy adopted elsewhere of recruiting so-called independent directors as mere box-ticking. He said despite the Board having worked together for many years there is a diversity of views. When we have a (rare) contentious vote, we argue it through. Personally, I’d rather have a group of people who know the business inside out than a scattering of “independent&# There is a danger of group-think, or dominant-person stifling rational debate, but I’d rather face these risks than have most votes in non-active board members hands. How confident are you that new product lines will increase profits sufficiently to offset the Entertainment One losses over the next three years? Answer from Jon Diver: the loss of Peppa Pig was “a kick in the balls, for sure”. But there are reasons for hope, not least the wooden Peppa Pig toys license agreed with Hasbro (until December 2022). These toys are being launched at the London Toy Fair this week and have “great potential”. They meet the need for more environmentally friendly toys (than plastic ones). There are also international expansion possibilities. Later I ask Jon if Hasbro might, in 2023, opt for in-house wooden toy production. Apparently, Hasbro are wedded to plastic. And besides they won’t touch a line that offers less than $10m annual turnover. The company has ramped up development of own-brand toys where margins are fatter. Goo Jit Zu is in 30 countries now, with yet more international potential. I asked if I was correct in thinking that the Peppa Pig ranges due to cease in June 2021 account for around 20% to 30% of Character’s profits. Answer: Yes, around 25%. That gives a target for the directors to make up through new franchise deals and in-house toys. They seem bullish. Can you please update us on the losses at PROXY in Scandinavia? Answer: It’s been a challenging year. First, the largest Scandinavian toy retailer went bust. Then the second largest was offered the toy stock from the resultant shell. It bought the stock at a discount and proceeded to sell it through its stores at full price. This meant that it had little appetite to buy more stock from the likes of PROXY. However, the stock has now largely worked its way through and PROXY is anticipating more orders. There is a big push to get PROXY firing on all cylinders: CCT’s managers are over there, helping PROXY get its systems right; overheads are being worked on. But it’s still a “work in progress”. At least, CCT will not be paying more to the previous owner than the £1.44m already paid. But even at this level the meeting was told “with hindsight we paid too much”. Quite a lot of the inventories at PROXY have been cleared, much of it being sold in the UK. PROXY is still seen as a Brexit safeguard. Tom Spain, of Henry Spain, asked if the share buyback programme could be more aggressive (over the last few years the number of shares bought back roughly matched those given out as bonuses to staff)? Response: the directors would like to buy more but are limited by stock market rules. They can’t buy more than 50% of the average volume of the open market trades on the LSE. Open market trades average around 22,000 per day, so the limits is about 11,000 per day. Also, there are a lot of closed periods in a year when buybacks are prohibited. Richard King said that share options are given to all staff except the founder directors. They are very proud that few employees leave the company. Over 80% have been with the firm for at least 20 years. What is a sustainable level of dividends? Answer from Shah, FD: we follow a progressive dividend policy, but we are levelling off on that while profits are stagnant. But we will resume it when we’re back on track. What acquisitions would you consider now? Answer: At the moment, we need to concentrate on handling what we’ve got. How much forward visibility on sales do you have? Jon Diver: most customers order only 2-3 weeks ahead. I’ve bought some more shares. This time I’ve bought for my Warren Buffett-style portfolio. The company has some strong businesses/franchise I’ll go into more detail later in the week. |
Posted at 12/9/2019 21:52 by orange1 Forager Capital based in Birmingham Alabama now have a 5.4% stake. This is how they operate and the return they are looking for:"We are fundamental value investors applying boots-on-the-ground research methods to the microcap equity universe. We gain an information-based competitive advantage through research intensive due diligence and personal connections with management teams in companies that are overlooked by the market and have virtually no analyst coverage. While most investors automatically avoid microcaps, we focus on the large subset of them with long histories, high returns on capital, and capable management teams. Our typical investment is in a business with potential sources of free cash flow growth that the market hasn’t discovered. We invest when our base case expectation is to double your money in three to five years and downside protection exists to shield us from mistakes." |
Posted at 14/9/2018 10:45 by campbed Most small cap fund managers are pretty good and the ones at Ruffer are. But they can be obliged to adhere to the investment house rules. A good example is Versarien VRS where one 20%+ small cap institutional holder sold out at under 20p/share last autumn which were bought by retail investors who have raised the price to 175p currently.Not saying CCT will go up 10 fold but it could reach 700p within 6 months imo. |
Posted at 06/8/2018 08:14 by mip55 CCT website...Investor relations....financi |
Posted at 15/2/2018 21:00 by orange1 Maybe an idea then to quit posting on this board and concentrate your efforts on the N4 board. You are an incredibly gifted and able investor with enormous intelligence and foresight. Why devote any attention to the "losers" on this board?Unless of course, you are so unsure of yourself and your own worth that you feel that you have to prop up you new investment with a bit of gratuitous ramping. |
Posted at 25/10/2017 22:37 by dan_the_epic Still expecting some multiple expansion as investors zone into this being trough earnings ahead of a product slate that is there best ever moving forward |
Posted at 11/10/2017 19:22 by martinthebrave Pauly Pilot view of CCT today. He is remaining a holder and may add.Character (LON:CCT) Share price: 357p (down 19.8% today) No. shares: 21.1m Market cap: £75.3m (at the time of writing, I hold a long position in this share) Trading update (profit warning) - I'm quite surprised that the market has reacted so negatively this morning to the latest update. The company had already told us here on 19 Sep 2017 that market conditions were challenging, and that a major customer (c.8% of total sales, estimated by one broker) Toys R Us, had filed for bankruptcy protection in USA & Canada. Results for y/e 08/2017 - the company had already reported that results would be in line with expectations. This is reiterated today, as follows; As reported in September, the business has had a solid finish to the 2017 financial year. Accordingly, the Directors anticipate that, Group underlying pre-tax profits for the year ended 31 August 2017 are projected to meet current market estimates. The Group's balance sheet remains strong. To put a figure on that, the forecasts I've seen are around 51-52p EPS - so at this morning's lower share price, the (how historic) PER is just 6.9. As we know, the market looks into the future, not backwards. Results for y/e 08/2018 - this is what has spooked the market today - somewhat surprising, given that the company had already warned previously about the issues it was facing, but there we go; UK sales are OK. The issue is with international; Our international and "FOB" sales have been adversely effected by a combination of several factors, not least of which is one of the world's largest toy retailers entering into Chapter 11 bankruptcy protection in the US and Canada, which has had subsequent knock-on repercussions in every market where it trades (including the UK). Our international customers are also taking a very conservative approach to purchases. At this early stage of the Group's new financial year the Board consider that, based on the latest sales and market data available to them, the Group's performance for the year ending 31 August 2018 is now expected to be significantly below current market estimates. Broker forecasts - so far I've only seen one broker note this morning. Panmures have revised down their forecasts, in a new note this morning, which is available on Research Tree. Based on the new EPS forecasts of 38.1p 08/2018, and 45.3p 08/2019, then the forward PER is 9.4 and 7.9 - which looks good value - providing that this is the full extent of the damage. Bear in mind that the net cash is now 25% of the entire market cap, and the PER would be a lot lower still if you adjusted out the net cash. Also note that forecast dividends are 21p and 25p. At the current share price of 357p, that would produce divi yields of 5.9% and 7.0% - a very attractive return. Those forecast divis are still well covered by the reduced earnings forecasts. Note that Character has a strong balance sheet, with net cash, which further reinforces my confidence in the projected divis. Today's comments on divis are reassuring; Furthermore, we are committed to maintaining our progressive dividend policy and continuing our share buy-back programme, as and when considered appropriate. Note that the company's website shows 24.2m shares in issue, but about 3.3m of those are held in treasury. Stockopedia shows a net figure of 21.1m shares in issue, which is in the same ballpark. Outlook comments sound upbeat; Nevertheless, the Directors believe this to be a temporary downturn and that the Group anticipates returning to its previous growth pattern during the second half of the 2018 calendar year, and this ultimately is expected to be reflected in the financial performance for the year ending 31 August 2019. The single biggest factor underpinning our optimism is that during 2018 we shall be introducing exceptionally exciting new products, many developed in-house which, together with the current product portfolio will, the Directors believe, give the Group its strongest ever product line up. Additionally, even in these tough trading conditions, we expect our cash flow to remain positive, our reserves to grow, and our Christmas stocks to remain under control. So this seems to be a situation where investors who look through the current difficulties, and accept that they are temporary, could end up with a nice buying opportunity. The risk is obviously that problems get worse, and another profit warning has to be issued. Balance sheet - I thought it would be useful to refresh my memory on the most recently reported balance sheet. It looks excellent, here are a few key measures as at 28 Feb 2017; Net Asset Value (NAV): £25.2m Net Tangible Asset Value (NTAV): £24.5m (there is only £729k of intangible assets to be deducted) Current Ratio: 2.27 - very strong, and this includes net cash of £18.6m - that's almost 25% of the entire company's market cap. Overall then, this is a really strong balance sheet with plenty of surplus working capital. So there should not be any issues over solvency, even if trading deteriorates a lot more. My opinion - based on the information provided in Sept 2017, and more recently today, I see this as a good buying opportunity. So I've currently got a buy order in, to increase my existing position size. My main worry is that the price could fall further - my broker reckons that sellers have not finished yet. It's usually a mistake to buy on the day of a profit warning. However, when the price is falling, then you have better liquidity - so it's often the only time you can actually buy a stock like this in decent size. I've no idea what the exact low point will be in the share price, and don't really care particularly - because the price now looks sufficiently cheap on (revised) earnings forecasts, and with a very attractive yield, that it's cheap enough for me. I accept the risk that there could be another profit warning - that risk is why the share is now so cheap. The key points for me are that the main reason for the profit warning seems to be a one-off factor outside their control - the insolvency of Toys R Us. Also, the new products in the pipeline give good grounds for optimism in H2 of 2018 and into 2019. Therefore I see this as being a possibly bumpy ride, but where I should be paid nice divis, and see a decent capital return in say 1-2 years. It should be said that I generally tend to be a bit too willing to give companies the benefit of the doubt! Also note that the stock market has never really attributed a generous valuation to this company - it always looks cheap. As always, please remember that I'm only giving a personal opinion, and reporting what I'm personally doing with my portfolio. I might possibly add some to BMUS, but haven't decided yet. The onus is on readers to do your own research, and take responsibility for your own trades. Hence why I never give recommendations. If something in your portfolio goes wrong, you're to blame, not me! That's why I never give recommendations - because I don't want the responsibility or hassle of people blaming me for stock ideas that go wrong, as inevitably many will. I'm particularly keen to hear from anyone who's bearish on CCT - it's vitally important to consider the negative case on a share. Obviously I reserve the right to change my mind at any time, on any share. |
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