Gear4music (holdings) Share Discussion Threads

[franki8] 21/10/2016 11:52

Looking good, everybody wants a slice. No one wants to sell considering co's prospects.

[fruitninja84] 21/10/2016 09:44

Is this a £100M company? The collective minds of the market seems to think so. This is a land grab play imo, there platform and software is top-notch. Just shop around online with someone looking to buy a drum-kit or google search guitar piano ect,, you will find G4M very fast ;)

[kcr69] 21/10/2016 09:44

Hi Nurdin.

You are correct in that Gross margin in H1 was 26.5% and PBIT was 4.1% with earnings at 3.4%. Off a gross margin of 26.5% you are never going to see double digit PBIT and Earnings, and clearly high 20's margins is about as good as it is going to get in this sector at the moment for G4M to remain competitive, which quite frankly they are clearly doing a fantastic job of with running rate growth of 90%.

As clearly stated in the interims the board are continuing to invest in marketing from both a growth and customer service perspective, at 8.2% to sales, and labour at 8.0% of sales (up from 6.7% in H2 2015/16) just to run the growing business. I would expect the cost of labour as a % of sales to reduce through H2 and into 2017/18 by circa 1% - 1.5% although there will always be spikes as they re-align operating requirement with business growth.

Not that I like ASOS, however as a comparison of a similar model, they recently reported earnings of 3.4% to sales off a gross margin of 50% plus. Boohoo, who I do like, operate off circa 8% earnings as a % of sales off a gross margin in excess of 55%. Against these 'operating model' peers G4M are clearly doing an above average job.

And at todays prices, the forward earnings multiple for 2016/17 is circa 25, a long long way from sector 'averages' of 40++. I think there is lots to like.

Does that help or do you see another angle?

Best wishes

[nurdin] 21/10/2016 09:24

Interceptor...gross margins have been running at 26%.Operating margins were at 4% in the first half which looks pretty poor to me.I must be missing something I am sure.

[kcr69] 21/10/2016 09:08

Hi Glaws2. The following is a copy of what I posted on Tuesday with regard to the latest Edison note. I think some of the commentary is ok but their numbers don't look like they have a great deal of thought put into them!!

Each to their own, but for me the latest Edison note, while being an upgrade, is ridiculously conservative, bordering on predicting a disaster in the UK or a huge fall off in running rate in Europe, which post the referendum is apparently running at 240%.

For a full year revenue of only £55.9m, and if Europe delivered in line with its first half of 170%, it would mean the UK delivering a second half of just 1.1% growth. If Europe continued at its current rate of 240% in H2 it would mean the UK would need to deliver a 27% decrease in H2 to get back to £55.9m. Finally if Europe only delivered a 100% increase in H2 (less than half current running rate), it would mean the UK delivering 28.5% off a 44% running rate in H1.

As I say each to their own, however whichever way you spin it, the latest update from Edison is in line with previous updates, overly conservative, and to my thinking slightly worthless as investment advice, particularly given the outlook momentum stated by the management team in the interims. Just my opinion obviously.

[glaws2] 21/10/2016 08:52

Interceptor2 - they already have

[interceptor2] 21/10/2016 08:07

I am also holding here from Tuesday, thanks to Saucepan who highlighted the company last month.

Was waiting for interim results which far exceeded what I anticipated, particularly the profit generation, adjusted net margin figures are already at the level I thought they would achieve for the full year, which bodes well.

If revenue continues to accelerate at similar level, brokers are likely to be busy increasing their expectation in the second half.

[battlebus2] 21/10/2016 07:29

Think we all are. :))

[bigbigdave] 21/10/2016 06:35

Many thanks Paul, I'm with you for the ride to a tenner :o)

[taurusthebear] 21/10/2016 03:45

Thanks for the feedback, Paul.

Late to the party, but started buying yesterday. Despite the amazing rise since June, it's hard to see any downside here, apart from profit-taking or a market crash. :0)

[paulypilot] 20/10/2016 23:25

Hi,

Bit of feedback from meeting today with G4M.

It's the first time I met CEO & FD, and they're exactly what I wanted - totally focused on the detail of running the business - bespoke eccomerce platform, only got 1% of European market share, clean numbers, profitable business, improvement in conversion rates, getting product to customers quickly, outstanding customer service, gaining market share, delighting customers, TrustPilot 9.5/10, low returns rate, all about service & building customer loyalty, growth into Europe, hubs will reduce carriage cost, more hubs watch this space?


Overall - I bought for medium to long term.

Fantastic management, exactly what I want. So I'll hold to 1000p per share, however long it takes.

Just IMO. DYOR.

Regards, Paul.

[kcr69] 20/10/2016 17:39

Pretty thin volume today all things considered, but good to see £3.75 being paid into the close. I always try to post something based around fact, however as an exception I just can't believe there are many shares around to be bought at the moment given what has happened this week.

Hi Alphabeta4, not worried about falling in love here, it'll be the cheapest date I have ever had, and thats definitely a fact.

Best wishes all.

[fruitninja84] 20/10/2016 14:23

Lovely spread on this now :) unlike the 10% spread it had in June XD

[alphabeta4] 20/10/2016 13:12

No worries kcr - I'm trying to avoid falling in love with this share so I thought I'd challenge myself to see if there seemed anything odd with the sale.

Ironically I suspect it might have done holders a favour by avoiding the price jumping up too much in one go and it may have even left a little back now there's not the large seller to plough through.

[cfro] 20/10/2016 10:11

All good news this morning with KCP selling the last of the shares as unlikely to be any more institution selling now for a while imo.

[kcr69] 20/10/2016 08:13

Hi Alphabeta4, Many thanks for that. To my thinking KCP probably never wanted the stock in the first place, but accepted it as part of arriving at a sale price they were happy with when G4M was listed, without destroying the capital raise which was integral to the listing for G4M. It isn't the norm for Venture Capitalists to hold stock of a company they have previously bought as they tend to want the cash and move on to the next project.

I have to say I think KCP have been fantastic in how they have managed the sale of their stock and clearly somebody / someone was more than happy to pay £3.60 yesterday for 1.6m shares.

Genuinely can't see anything but good in the sale and how it has been managed. Just looking forward to knowing who now owns 5.5m shares given to date only Hargreaves Hale have owned up to a further 0.5m.

Thanks again and exciting times.

[tony773] 20/10/2016 08:11

LUFC5

well what is it ???

[battlebus2] 20/10/2016 07:58

Peter Armitage is basically KCP (partner) for those who don't know.

[alphabeta4] 20/10/2016 07:49

Thought I would take a quick look at the Key Capital Partners website to try to get a feel for the thinking behind the sale.

The impression I am left with is that G4M has become a bit big for them or they are keen on exiting post stock market listing - they have a list of investments at the bottom of their webpage and from what I can see none of them bar G4M are listed entities (I did a quick stock search on the company names across all markets on FT.com).

[battlebus2] 20/10/2016 07:19

Looks like job done for Peter Armitage and Key Capital...

[lufc5] 20/10/2016 00:26

Anybody still in from sub £1.40, as I am? Bought in on 31st July....after extensive research. The bb was dead then. You lot just buy on the rise. GL though. It's best to buy before. Happy days.

My next one looks primed for a substantial re-rate within the coming Weeks/months. Pre Xmas are when the next results will be announced. My prediction?......a certain 1-2 bagger over the next few months. Any guesses so far?

Better than putting ya hard earned in the vault,.....earning less than 0.2% gross.

[bamboo2] 19/10/2016 22:01

kc, chart patterns are formed by trendlines. We often see recurring patterns and where these can be identified, they can be subject to interpretation based upon previous statistical experience with their outcomes. It's been noted by the likes of Frost and Prechter [Elliot Wave etc] that Triangle apexes are associated with turns in share price Bulkowski has backtested the theory and suggests that this phenomenon has an approx 60% chance. Bulkowski's article explains...



This is the G4M chart, the apexes are marked in red. It'll be interesting to see if they have any effect. btw I am positive about this stock and have a chart target around 390.

[saucepan] 19/10/2016 19:16

Paul: thanks from me for your excellent analysis of G4M; much appreciated.

[paulypilot] 19/10/2016 19:13

Hi,

Sorry I seem to have inadvertently caused some confusion.

To clarify, I'm meeting G4M management tomorrow, at Panmures offices. Happy to give some feedback here afterwards.

As a separate thing, I'm trying to organise a telephone interview with G4M for my website QualitySmallCaps.co.uk - but this has not been arranged yet, as I'm still waiting for a reply from the company's advisers.


Regards, Paul. (long G4M)

[bigbigdave] 19/10/2016 19:00

Know where you are coming from Saucy, anyway we are holding G4M and KWS and they are not at the moment!! (no subscription atm here either)