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Real-Time news about Game Group (London Stock Exchange): 0 recent articles
|bobsidian: I can just imagine the nature of the approach by OpCapita to the lenders of GMG. "We will offer you 30p in the £ for your debt which will be about 20p in the £ more than you will get if GMG enter administration." The response by the current lenders will be a snort of haughty derision followed by the comment of "We would prefer to take a complete loss on our lending exposure." The politics of finance particularly when a supposed offer comes in so close to a possible administration deadline.
And it is amazing how often a Walmart rumour is trotted out when a retailer appears to be either in trouble or appears to be cheap enough to generate bid interest. I recall TSCO were mentioned as a possible target back in 2003, MKS in 2008 and more recently HOME throughout 2011. It seems to be the City "go to" rumour to generate interest in a share in full knowledge that Walmart will not respond.
If there was any truth in the 12p rumour the share price of GMG would already be well en route to that price. Instead there is heavy selling going on as private investors are drawn in to the prospect of a supposed 250% upside from current levels. Almost criminal. But the cautious private investor scales back their holdings as the share price grinds higher.
Good luck to all.|
|bobsidian: Sad to see the "demise" of GMG. But now that the clock is ticking before it enters administration, it just seems like desperation for the management to be seeking a buyer at such a late stage whilst having a firesale of remaining stock in the vain hope of meeting the next quarterly rental payments.
As pointed out by other posters, why would any interested party wish to buy the entire portfolio of stores when such parties could cherry pick the best locations from the administrators and have a slimmed down portfolio of outlets better suited to the current economic climate ?
When GMG rung the changes in management they had a window of opportunity to accelerate the closure of stores which may have been cannibalising their own sales. But it seemed GMG wanted time to close the stores at their own pace as leases reached their break points or expired. It would have been costly but they could have used their stockmarket listing to raise the necessary finance to cover the outlays. Perhaps that financial avenue had been closed to GMG because of the absence of willing underwriters and institutional support.
I am sorry to read about significant losses being taken by certain posters but GMG at the most recent share price level was really a "shot to nothing". The Balance Sheet of GMG was nowhere near as bad as other more vulnerable retailers. That GMG has succumbed suggests a whole raft of other retailers may be about to follow suit, particularly if RBS is their bank or is the lead in any consortium of financiers.|
|marab: A few general points,
'These lenders consisting of Royal Bank of Scotland, Barclays, HSBC, Caixa, Allied Irish Bank and Bank of Ireland have demanded approval on certain elements of strategy,' - no problem there surely, as they will no doubt be offering 110% mortgages at 2.5% interest on self certified accounts. (that's sarcasm in case anyone thinks I was quoting a new article). These banks will only have some input until GMG arranges better financing deals at some point in the future, and I am pretty sure that those trying to appear tough now will lose business in the future.
That broker report looking for 1p share price would put a value on GMG at about £3.3 million. This for a business with large market share in many geographical areas, 1271 stores and a turnover of about £1.5 billion. I think there may be a few offers long before that level was ever reached. I agree with other comments made here that brokers notes are basically worthless at best and positively dangerous to your wealth at worst.
Tesco can undercut GMG on games. Judging by the many stories of Tesco and the other big supermarkets screwing down the margins on suppliers, would you rather a) sell through big supermarkets which will only take the block buster titles at minimal margin and a cardboard cut out for marketing purposes, or b) GMG who have over a 60% market share, a loyal customer base, a history of working with suppliers on advertising and promotion, who will stock your other titles as well and value your relationship. Same applies to consoles.
The games market is currently in a slump for various reasons including many waiting for new consoles to come out or just being short of funds to buy new stuff. The whole world is threatened with financial Armageddon. The banks are nervous about lending money despite the fact that they are only paying 1% for funds from the ECB.
On the other hand GMG have increased market share and the more that drop games from their stores, like HMV for example, will only help GMG get a larger share of the market. People short of cash can still buy 2nd owner stuff from GMG which forms a significant part of turnover at good margins. The console situation effects the whole industry equally but console manufacturers are still fighting for market share and will be bringing out new consoles. People buy what they value in life, and the worse life gets the more people try and escape reality and electronic games is one of the more socially acceptable ways of doing that. The banks are p*ssing everyone off which means politicians will have to keep attacking them to keep their voters happy, and banks need to lend to make money. With bank interest rates at basically nothing this is their prime time to make serious profits, but to do that they have to lend.
GMG were already focused on cost cutting and have produced savings of £8 - 10 million over the last year, closing some stores and with more planned to close. In addition they have been slowly increasing their online business and their 2nd owner business remains strong. At a current MC of £23 million and a turnover of about £1.5 billion they have to present some value to predators. I don't believe that the business is over valued at current levels and expect a slimmed down version of GMG to be profitable in the future, and at these share prices well worth buying a few to stick in an ISA. imo dyor etc. etc.|
|undervaluedassets: From a risk reward perspective I think that GAME is the most compelling medium term trade.
There is risk yes - but GAME has been here before (in a cyclical trough) with the 2 massive declines (over 80%) in 99/00 and 02/03. After things had bottomed out and gaming markets turned GAME stock multi bagged both times.
This time the decline is much larger and yet the company is no-where near bust and has diligent, honest and proactive management who are working hard to grab as much business as they can in a market which is for the moment retrenching. The banks understand the cyclical nature of the business and are backers.
What makes GAME such an interesting prospect is the scale of the mispricing this time around. As it is a much better and bigger company than the previous time that it declined. In horse backing parlance It is as if GMG was a 5 to 1 shot priced at 500 to 1.
The current price in insane:-
here are a few measures of how rediculous the current share price is:
By price to turnover GMG is the cheapest stock amongst retailer's with a price to turnover ratio of .0112. Mulberry the luxury handbag manufacturer is the most expensive at 7.7.
In other words Mulberry's market cap is 7.73 times it's turnover whilst game's total market cap is is barely 100th of it's turnover.
Put another way as a ratio you get more than 700 times as much turnover per share with GAME shares than with Mulberry shares.
Game of course could go bust but given everything that seems a long way away as there remains a strong possibility/probability that this is simply a cyclical low as has happened before.
Let us assume that the year after next game returns to profitability (a bold assumption I grant you).
Having assumed that they are again profitable let us make some more very modest assumptions.
The smallest profit that GAME made over the last 10 years was 6 million and the largest 110 million. well profits of 6 million gives a pe of 3 at Friday's close and game has had an average pe of 12 over the years. this neatly gives us a price of 22p.
Those numbers are still incredibly conservative. Let us look at it another way:- GAME's average operating margin over the last 4 years has been 5%. Let us knock a whole 200 basis points off that giving an operating margin of 3% and let us assume that a leaner GAME now only has turnover of 1.3 billion down from 1.6 billion that gives a profit of £39 million which with a deeply conservative pe of say 8 gives a share price of around 95p.
There are many assumptions there (the biggest of which being that GAME will return to profitability and survive). But the fact is that GAME remains the best route to market for the hardware suppliers; If you want to go and 'have a go' on the new consoles with a knowledgeable nerd by your side to help you you go to GAME.
The current price represents a huge mispricing of the outstanding risks IMHO and I now have a small percentage of my portfolio in the company. My thinking is that this is a 'heads I give you £5 tails you give me £1' kind of situation. I may lose but not to have some money on the table is a equally a mistake as the risk/reward ration is so badly mispriced.
Those who have bet the farm on GAME shares are foolish. but those who have put say 2% of their net worth on a modest amount of stock are very sensible. GAME management clearly think the same as is demonstrated by their monthly purchases of stock.|
|togglebrush: HMV RNS was issued at 1302 which was when the GMG share price began to rise.
Yesterday was the Maximum Trading Volume I have seen using stats on ADVFN
Trading Volumes since Jun 2006
A 1 in 100 day__17,287,771
09/01/2012 7.30 7.30 6.70 6.75 ___926,764 V low
10/01/2012 5.99 5.99 3.80 3.80 35,918,525 1 in 100____Xmas TS
11/01/2012 3.91 3.91 3.05 3.46 48,580,392 1 in 100
12/01/2012 3.50 3.64 3.25 3.40 16,838,515 V High
13/01/2012 3.36 3.66 3.20 3.35 10,779,597 V High
16/01/2012 3.57 3.70 3.30 3.48 13,153,667 V High
17/01/2012 3.49 3.59 3.36 3.40 _5,614,583 V High
18/01/2012 3.50 3.50 3.32 3.39 _7,812,510 V High
19/01/2012 3.59 3.59 3.20 3.26 _7,325,790 V High
20/01/2012 3.40 5.25 3.33 5.25 59,193,245 Max|
|bobsidian: "GMG share price has never been 29p..."
Yes it has. Back in 2003 and 2002 and 2000 and 1997.
"...which is below their cash level..."
A common misconception by individuals who do not understand Balance Sheets. GMG does not have surplus cash. Its current assets are more or less in balance with its current liabilities.
Surely you are not suggesting that the normal state of working capital for retailers should be to have net current liabilities ?
The cash flow statement is a reconciliation of operating profits to the cash on hand as at the date of the balance sheet. As such it is detailing the flow of cash through the business.|
|wskill: GMG share price has never been 29p which is below their cash level before, anyone can see its a gift to Game Stop only fools would short GMG below its cash level.|
|masurenguy: justthemoney - 17 Jun'11 - 4799: It's all about demographic super cycles.
And you really believe that's the main driver in the GMG share price !
Good luck - I think you'll need it !|
|masurenguy: justthemoney - 17 Jun'11 - 4796: You need to ask yourself one question only.
Is GMG going bust? If not, then buying anywhere up to 60p is a bargain. If yes, then buying at 1p is money down the toilet. Looking at the fundamentals and the projected earnings, GMG is here to stay. Don't forget that we'll be out of recession by Q1 2012.
It's not purely a question of extremes with either some big upside or the company going bust ! The GMG share price could just also stagnate in the doldrums for quite sometime. Furthermore, who on earth can possibly say that we will be out of recession by Q1 next year !|
|bobsidian: An 8 year low for the share price at a level last seen just after the end of the 2000-2003 bear market.
Then the share price was clambering back from crushing lows of around 32p per share. I recall the stunning share price collapse back in December 2002 when it lost 70% of its share price in just 4 trading sessions. And it was not alone in suffering such a share price massacre around that time. I recall all manner of shares losing 30%+ just on opening on the mere hint of negativity.
Judging by the last 2 posts we may be getting to a stage where investors and traders alike just abandon the share to its possible continuing freefall. 32p once again ? Maybe. But not without some significant counter trend bounces or short covering rallies in an attempt to attract the unwary. Witness the recent 90%+ bounce in HMV subsequent to which its share price has ground back down to find yet another lower low.
Why look here when the likes of MKS, HOME or KESA are the safer recovery plays in any sector rebound ?
GMG currently looks like a share for the gamblers.|
Game share price data is direct from the London Stock Exchange