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CVSG Cvs Group Plc

1,012.00
-7.00 (-0.69%)
Last Updated: 10:03:49
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Cvs Group Plc LSE:CVSG London Ordinary Share GB00B2863827 ORD 0.2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -7.00 -0.69% 1,012.00 1,007.00 1,012.00 1,040.00 1,008.00 1,040.00 63,335 10:03:49
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Veterinary Svcs-animal Specs 608.3M 41.9M 0.5843 17.18 720M
Cvs Group Plc is listed in the Veterinary Svcs-animal Specs sector of the London Stock Exchange with ticker CVSG. The last closing price for Cvs was 1,019p. Over the last year, Cvs shares have traded in a share price range of 950.00p to 2,226.00p.

Cvs currently has 71,712,970 shares in issue. The market capitalisation of Cvs is £720 million. Cvs has a price to earnings ratio (PE ratio) of 17.18.

Cvs Share Discussion Threads

Showing 201 to 223 of 950 messages
Chat Pages: Latest  14  13  12  11  10  9  8  7  6  5  4  3  Older
DateSubjectAuthorDiscuss
30/6/2011
07:38
Hopefully the trading update will be out any day now, they release one on 29th June last year.
lomax99
31/5/2011
15:48
Looks like a revaluation in proper flow this time. I'm expecting next set of results will look quite a lot better than the last, probably beat consensus.

There were some large cash hits from acquisitions in the last results, with few months of their profits consolidated into the annual performance. Also some external economic pressures then, causing customers to delay standard treatments. So I think next time we see:
1. sizeable upswing in revenue and profit £ from the recent acquisitions now fully consolidated
2. return to lfl growth as they lap a bad year and consumers stop putting-off spending.

Hopefully management will also make a statement about their future plans to stay focused on the core business too (see my earlier post)

Does anyone know when next trading update comes out?

androvitch
25/5/2011
15:46
I would be hoping to reach something at upper end of 150-200 range. But let's see, I've been waiting so long for a move on this that I don't mind waiting a bit longer.

And if it falls back again, I'll be buying more...

androvitch
25/5/2011
15:37
lomax99: you got your 10% move up today, though no newsflow and no reported large trades on LSE.
campbed
10/5/2011
16:13
About time this started to move, especially given the steady flow of institutional buying.
lomax99
10/4/2011
20:18
I thought it rather funny that CVSG came up as a Zulu Principle stock in my latest screen. I've been watching it a while for purely value / cashflow purposes, but it seems that the growth boys might start coming back with the current feature set.

i.e. Mark Slater and the PEG crew.

stockhound
22/3/2011
16:08
Per my last post...

Summary investment thesis

1. True competitive advantage in small animals sector
2. Short-term external effects impacting headline economics, but structural business model is sound. Expect a rapid improvement as lap the impact of winter weather, and further rebound if/as consumer confidence grows
3. Undervalued today for level of cash generation and growth
4. Clear upside opportunities to drive value from the core business
5. Potential to crystallise value in the future, e.g. sale to trade buyer (pet product retailer), or defensive stock offering annuity dividend


Competitive advantage

1. Cost advantage
- Procurement scale
- Shared admin platform
- Staff rostering efficiencies in geographies with sufficient surgery density (especially important for out-of-hours)

2. Capability advantage
- Roll-out of efficient surgery management practices and approaches across estate
- Best practice sharing between practices and continuous development

Very significant advantages vs small, independent surgeries. Smaller, but relevant vs larger chains of surgeries.

Allows the company to provide better services to customers, price keenly and/or generate better profits than competition and successfully drive growth to further extend advantage.


Key risks

1. Like-for-like sales growth
- Falling like-for-likes have become a bit of a recent concern with recession and weather impacts both noted in management and analyst notes
- Without lfl sales growth, wage and cost inflation will eat away at margins
- Investors should be looking for lfl sales improvements in future RNS, especially coming of the back of depressed sales due to the recession and weather points
- Given CVS's #1 position and cost advantage, it should be able to win customers and lead pricing in the market
- Additionally, there are almost certainly opportunities for better cross-selling of diagnostics and products (e.g. pet diets)

2. Size of transactions
- Acquisition synergies come from transferring small, inefficient surgeries to the scale CVS platform and processes (huge scale effect)
-- Very large synergies for small practices moving onto the CVS platform
- However, larger chains will already have achieved some/most of the scale benefit prior to CVS acquisition. So capability-based synergies become more important
- As CVS grows larger, need to acquire larger number of surgeries each year to maintain growth rate
- The trade-off is either the complexity and costs of multiple small acquisitions vs the lower benefits of larger acquisitions.
- Ultimately, this closes down the attractiveness of acquisitive growth, but it looks to be in the distant future for the time being (perhaps one to become more worried about when the business reaches 20-30% market share)

3. Reputation impacting availability of transactions
- Ask a few independent vet surgery owners what they think of CVS. You'll hear both some very positive views and harsh words
- Surgery owners tend to be in the business because of their love of animals, rather than love of money. In CVS the 2 come together, but there is some scepticism about whether CVS can care as much for the animal's welfare
- Up till now, CVS has managed this well, but it has the potential to impact availability of future deals should the reputation worsen

4. Deal premiums increasing
- There is a risk that management is finding that it needs to complete deals at less attractive premia in order to continue to drive growth, especially in current trading environment of poor lfl's
- Unfortunately, management does not disclose much info on this, and so little evidence is available at this point
- One has to assume that non-disclosure means that they have a reason not to share this info (e.g. highlights the risk to shareholders or impacts competitiveness of future transactions)
- However, it is also possible that the prices of acquired surgeries are falling, e.g. fire-sales of poor or bankrupt businesses due to the recession, difficulties for small business borrowing, and competitiveness of the market


Cash considerations

One specific area that is not a concern is cashflow (others have mentioned the low cash balance, lack of dividend and high leverage as an issue)
- Cash balances have been low recently as management chooses to invest everything in growth rather than distributions. This seems like a very sensible strategy for now, while dealflow is available
- The business is highly cash generative in the current model, around £15M annualised EBITDA, of which £2-3M goes on interest and tax payments, leaving best part of £12M for other activities
- At the moment, the business is rapidly repaying debt and deleveraging. Even with the current leverage and reluctance of banks to lend, the business should have the capacity to take on more debt if needed.

The cashflow should grow quite quickly, as LfL's recover and synergies from recent acquisitions are realised. This is even without any further acquisitions.

It's incredibly rare to find a business generating lots of cash, with a solid growth history and trajectory and clear competitive advantages at this level of 6.5x EV/EBITDA. This alone indicates a significant upside, and the business would be fairly valued at approx 150-180p per share, depending what you believe on the risks above. As this business grows this will also increase.


What management should do

1. Focus on the core cash generation model, i.e. acquire small surgeries > massively improve economics > grow cash > acquire etc

2. Restart LfL growth – get the customers in, care for their pets, cross-sell products (direct to online platform, below). As market leader, it will also start to pay to encourage pet ownership in areas with a high concentration of CVS surgeries.

3. Aggressively drive growth of online platform
- Drive trial by existing surgery customers, with direct marketing, incentives and training of surgery staff
- Acquire customers from store-based competition with worse economics
- Need to target leading scale in some product segments to ensure online cost advantage that can be translated into pricing and 1st consideration

4. Reduce distraction of ancillary pet cemetery and diagnostic lab businesses. These have the potential to suck up a lot of cash that would be better directed to improving and growing the core business. The businesses will create more value if built in the future, when the core business is at an even larger scale. At this point, it will be possible to drive to scale in these ancillary businesses very rapidly and make more efficient investments using the latest technology only available at larger scales and in some cases still under development.

5. In time, look for ways to crystallise the value created. The most obvious way is to be acquired by a major UK pet supplies retailer (similar logic to Halfords' acquisition of Nationwide auto centres). This would drive significant synergies.
- revenue synergies from leveraging the combined customer base and brand strength
- cost synergies in some product segments, G&A and marketing expenses

androvitch
22/3/2011
16:05
I don't post my opions online very often, but I have been following (and investing in/out) this stock for a long time and believe this presents a very exciting opportunity. I wanted to crystallise my thoughts for myself on paper in the first instance, and I'd welcome your feedback and challenges to refine this view. Right now, I'm 100% convinced in the med-term large upside potential.
androvitch
20/3/2011
20:30
The company is clearly heavily indebted but its generating plenty free cash flow. Something like £7m last year. It used all that cash to make acquisitions - it's clearly comfortable with the debt burden as otherwise they'd have just used the cash to pay down debt.

I don't know enough about it yet, but when a company has a free cash flow yield of 14% + it makes me sit up and notice. Question is.... are the acquisitions adding value? They are paying no dividend as they are busy acquiring small veterinary surgeons. Would be much more comfortable investing if the company was already mature and spitting off that cash as divis... needs more research.

stockhound
23/1/2011
00:00
I'm going to buy! Who's with me? People will always have pets!
uncletomg
30/12/2010
07:29
Not many 'paws' venturing out in the snow and the heating bills are running !!!
farmsted
11/12/2010
09:16
unconvinced.

very slim margins (which perplex me somewhat)

And balance sheet is parlous

And now, even at these subdued levels for the share price quite chunky director selling - and this the second batch....

...Ceo Mr Innes sold 3/4 of a million quids worth at 1.75 and now another 100k at 95p.

not very confident behaviour... which gives me 'paws' for thought ( I am so funny)

undervaluedassets
09/9/2010
07:11
Fall was completely overdone, results should bear this out.

For a business that had grown largely by acquisition, I am surprised that it took as long as it did to replace the Ops Director.

lomax99
01/9/2010
11:50
Overhang has gone.
u813061
31/8/2010
15:25
Up 14 per cent today but no news as far as I can see.Wassat about.....?
standish11
20/8/2010
09:23
a whole bunch of trades just raced through in under 60 seconds. Wassat about?
m.t.glass
09/8/2010
11:37
Given that the venture capitalists who puffed this up for flotation at circa 230p are known to have made 10 times their money when CVSG came to market..

...Does it not follow therefore that this (patently struggling) - business might logically be worth what the venture capitalists originally paid for it - ie one tenth of the float price...

Not a dificult sum - you just knock a nought off the float price.....so 23p then.

23p has a right kind of ring to it. At that price risk and reward may come back into some sort of balance

Investors who bought the IPO were clearly shafted as promised synergies have not materialized.

Ceo appears to be no fool either and has fallen over himself in a rush to divest himself of nearly £1 million worth of shares in the last year but at rather nicer prices than todays

see my post 127

undervaluedassets
09/8/2010
10:25
Like the concept but not the debt or financial model. Some 60% below their IPO and I can't really see what will turn the share price around at the moment !
masurenguy
09/8/2010
10:21
overambition is the problem here.

october's result will be horrid - the company has said as much.

undervaluedassets
05/8/2010
20:33
They say you should invest when there is blood on the streets. Does that mean in the case of CVS a few poodles will have to be sacrificed?
uncletomg
30/7/2010
14:47
there is something so wrong here
undervaluedassets
23/7/2010
14:48
It looks from the trades this afternoon that 400k shares may have been found new owners. There certainly has looked to be an institutional overhang here from disappointed holders. Some may return from their hols and decide to get out as clearly buy and builds like CVSG will be out of favour until bank credit becomes more available.

So I reckon there is not likely to be much point in adding, even at a share price of 75p, until after bank credit eases and a future trading update indicates organic sales growth and operating margin improvement.

campbed
23/7/2010
09:14
I know that a similiar operation to the one my dog had is one third of the price in Germany.

He (a border collie) had replacement cruciate ligament and it cost £5,500.00. He bit me hard when I went to pick him up I might add.

I think we get taken for a ride in this country by the vets.

If the regulators swarm all over them then margins could well collapse. As dog owner I think rightly so.

As a potential investor I am more ambivalent of course.

Was cvs group mentioned in the panorama documentory? does anyone know?

undervaluedassets
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