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Character Grp. Share Discussion Threads
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|This from the DHX earnings call following the release of results on 28.09.16:
"As the flagship property in DHX Media strategy to build global brands, Teletubbies continues to perform extremely well and is gaining global momentum. This morning, we announced the appointment of a licensee called FieryLight production to create and produce an international touring show for the new Teletubbies.
We expect this live theatre production to begin in the U.K. and Ireland in 2017 and to eventually tour in North America, Australia and Asia. This comes on the heels of our announcement earlier this month of a licensee fee to design and build solutions for location based Teletubbies attractions such as theme parks and family entertainment centers for the U.K. Continental Europe and the Middle East.
We are very excited about the launch of this new component of the Teletubbies merchandising and licensing program which will allow fans to extend their level of the brand and enjoy a more immersive experience. We are also proud that Teletubbies now boast more than 85 consumer product deals complimenting the 23 broadcast deals for our new series and the Amazon SVOD deal I spoke about earlier.
Our licensees are reporting strong sell through on the first wave of products in the U.K. with some ahead of expectations. The show continues to score strong rating on CBeebies - the BBC's preschool channel and the Teletubbies is the number one new preschool toy property by sales in the U.K."
|Now if only there were some toys in these nurseries...
|Crazy spread makes me reluctant to reinvest|
|Judging the IC tip after 2 weeks is the mindset of someone who shouldn't be investing.
They have come up with some very good small company tips in recent years.|
|Yes I saw that it is a worry|
|Just broke out below 12 month low!|
|well aware of that Paul... IC treated as a contrarian indicator for some years...lol
however, i do like Character , the last trading statement was encouraging.. jsut seems the weakness in £ is providing headwind..|
|the curse of Investors Chronicle strikes again...
cant believe Character are down at this level again..
surprised company has not bought back more shares at this level.
still a great medium term buy IMHO..|
|Hi All, another article in today's IC.
Article: 3 Stocks where director buying counts:
PS the other 2 are Craneware and McBride.
While shares in toy wholesaler and recent IC tip Character (CCT) are up on the past three months, this reflects a rebound following a post-referendum savaging. The market's concern is that the group will suffer due to the fact that it outsources manufacturing to China, which means most of its costs are incurred in dollars. And despite considerable overseas growth in recent years, three-quarters of sales are in the UK, which means there is a painful currency mismatch in prospect even though hedging should help delay the hit for a while.
Another Brexit-related fear revolves round the fact that the toy market is very sensitive to the broader health of the economy, so any slowdown would hurt. That said, the market seems to be becoming more relaxed on this front and the international toy market has been in rude health. Perceptions of the quality of Character's business are not helped by the fact that it licences the characters it makes into toys rather than being in the more powerful position of owning its own brands. That said, it has proved good at winning and holding on to work over the years, having made Peppa Pig toys for 12 years and recently winning the Stretch Armstrong master licence from Hasbro, among others.
It's not only the directors that are keen on Character's shares. The company has a long track record of share buybacks and over the past 10 years has reduced its number of shares outstanding by 60 per cent. Management has recently got permission to spend up to £5m until 20 January 2017 buying back up to 15 per cent of the remaining shares.
Importantly, Character's strong cash generation has ensured healthy dividend growth has accompanied the buybacks over recent years. And the case for using buybacks to enhance shareholder returns looks compelling based on the group's net cash position and its shares' lowly rating (see table), although the low rating admittedly reflects some of the inherent risks in the business model associated with cyclicality and licence negotiations (last IC view: Buy, 455p, 29 Sep 2016).|
|I have bought in after the IC tip.|
|here we go again with the £/$|
|With a progressive dividend policy, good cash generation, a 40% hike in the interim dividend, a prospective shrinking of the shares in issue by 15%. If all that doesn't shift the share price nothing will!
Today, Investors Chronicle are stating: Buy the Buyback King Character.
Their comments are:
Anyone with children or grandchildren will know the powerful pull the likes of Peppa Pig, Teletubbies and Fireman Sam have on young folk. Toy wholesaler Character (CCT) licenses these brands and many more.
The business, based in New Malden, is awarded licences to develop toy ranges based on children's TV and film characters. The manufacture of the toys is outsourced to a company in China, meaning Character's capital investment costs are kept low and its main competencies are focused on in-house design and development.
Manufacturing in China also means much of the company's purchasing costs are in dollars, which has posed an issue due to the pound's post-referendum slump. While the shares have fallen since the vote for Brexit, management hedges its currency exposure, which should help. Also, the group's success at boosting overseas sales should act as a natural currency hedge - US sales rose to 24 per cent of the total in the first half, up from 17 per cent for the same period in 2015.
Character's reliance on licences means its relationships with intellectual property owners are key. It has a good track record on this front, having had the licence for star character Peppa Pig for 12 years. Other encouraging recent developments include its appointment by DHX as global master toy partner for Teletubbies and appointment by Hasbro for the iconic Stretch Armstrong brand.
Conditions in the international toy market currently look buoyant following 7 per cent growth in 2015. That said, the market is very sensitive to the general state of the economy. This cyclicality, coupled with Character's dependence on licences, rather than company-owned brands, creates inherent uncertainty, which helps explain Character's shares' lowly rating of just nine times forecast earnings.
However, we think that rating looks too low. What's more, so does the company - it has a huge appetite for its own shares. Last financial year alone it spent £6m buying back 11.2 per cent of its shares, and over the past 10 years buybacks have reduced the number of shares in issue by almost three-fifths. The company has also recently announced it has authorisation to spend up to £5m on up to 3.1m shares, or 15 per cent of those in issue, until 20 January next year, which could allow it to take advantage of the post-referendum share-price fall.
Importantly, strong cash conversion means it has been able to substantially reduce the number of shares in issue - thus driving up earnings per share (EPS) - while also pursuing a progressive dividend policy. Indeed, the company reported a £10.3m year-on-year rise in net cash at the half-year stage and hiked the interim dividend by two-fifths. The increased payout was still 4.7 times covered by earnings.
ORD PRICE: 455p MARKET VALUE: £96m
TOUCH: 445-465 12M HIGH / LOW: 572p 425p
FORWARD DIVIDEND YIELD: 3.6% FORWARD PE RATIO: 9
NET ASSET VALUE: 101p NET CASH: £14.5m
Year to 31 Aug Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2013 67 0.2 0.7 6.6
2014 98 7.1 27.7 7.3
2015 99 12.3 48.6 11.0
2016* 111 12.6 49.1 15.0
2017* 121 13.6 53.1 16.5
% change +9 +8 +8 +10
Normal market size: 2,000
Matched bargain trading
*Allenby Capital forecasts, adjusted PTP and EPS figures
The IC view is: The group's top management have been with the business for a long time and have dealt well with past fluctuations in consumer sentiment and swift changes in its young clientele's fickle tastes. We think the shares' rating looks too low and that buybacks make good sense at this level. The well-covered dividend is also an attraction. Buy.|
|unbelievable they were sold down to £4.50|
|Well done h1a3. You're bang on in your prediction!|
|I think the MM's have been keeping the share price down to facilitate today's 3 very big buys of circa 450K.
I am expecting CCT to be issuing a RNS tomorrow and if that happens, I would expect the share price to rise.|
|There will be a big bounce when the results come, if, there is a positive statement on progress at christmas. Consumer spending is up, their export market should be boyant.
this isnt going to be a dull christmas online for sure though shops are an outdated concept for mid priced item sales.
brexit is fairly neutral for the company but margins have been cut a bit they report in pounds so dollar earnings will help next year with teletubbies, growth in volume that counteracts profit margin tightening would be very positive.
I still think this is a good point to buy back or buy in again,|
|I don't know if they have to be that quick. We'll see what tomorrow brings. I wonder if they put out their announcement and made their purchase after worried shareholders contacted them to ask them how their plans to enhance shareholder value were progressing.|
|If they did, then would they not have issued an RNS after the close stating so?|