Gear4music (holdings) Share Discussion Threads

[larva] 01/11/2016 09:03

PS comment on currency


Hi jraitt,

Sorry if I confused you, and beatingmrindex with my recent comments on exchange rates.

The point I was making yesterday was this;

Sterling has devalued by 25% against the US dollar in the last year. Since goods imported from China & other Asian countries are usually billed in US dollars, then we might have expected prices to rise by 25% in UK shops for many goods next year.

However, the Chinese currency has devalued somewhat against the US dollar, therefore the sterling impact is more likely to be around 17%, not 25%. Furthermore, retailers are finding other ways to mitigate the price increases further.

So whilst these factors mitigate the problem somewhat, UK shop prices will still have to rise and by a considerable amount. I seem to recall Next said by around 5%, but I reckon that's likely to be one of the smallest levels of price increase. Think nearer 10-12% for most products made in the Far East, is my estimate.

[johnyee 7] 31/10/2016 14:40

Aren't we getting a mention in scsw this week?

[themaker] 31/10/2016 12:47

"My Go-To supplier.

Ordered some stuff. Arrived two days later as I chose free delivery. I have bought a bit of stuff from this company and am now a Platinum VIP which entitles me to money off selected items. I alway go here first before looking around on other sites. Nearly always come back to Gear4Music."

Trust pilot review (4 days ago)

[taurusthebear] 31/10/2016 12:18

There's also the fact of increasing Scandi sales if customers can expect deliveries faster. G4M evidently have a good customer rating, and this should endorse that in northern Europe. :0)

[alphabeta4] 31/10/2016 11:48

Thanks Paul for the extra info on the carriage margin of 4.8%. It's a shame we don't have the breakdown of what this is currently in the EU.

I've just been trying to break down how this impacts future numbers. I would assume there's a decent difference in margin as otherwise it wouldn't be worth opening the warehouses. If on the half year we take the figures of c37% revenue being EU and 63% UK then say the UK margin is 4% and EU is 6% to get the 4.8% average then there would be a long run saving of 2% on the EU turnover. If the Swedish warehouse opens November then for this year there's 3 months left, albeit this does cover Christmas so say 4 months equivalent.

For H2 given the way the respective sales have been going and 2/3 of sales in H2 then say £20m UK, £20m EU then for this year £20m*(4/6)*0.02 gives £267k of extra profit. By my calcs though the key benefit is next year as get four months equivalent benefit this year vs 12m next.

All of this of course depends on the estimated margin difference and I've assumed that it makes the margin the same for the whole of Europe as the UK which is presumably an overestimate as there would otherwise be no need for an additional planned EU warehouse on top of Sweden if this was the case (beyond improving customer service). I would welcome others thoughts (and assumptions behind them) on how this might impact the profit as I didn't have this in my calculations until now.

[geheimnis2] 31/10/2016 11:35

hmmm...I can see £5 post Jan trading update

[mr.elbee] 31/10/2016 11:27

believe the exact opposite of post 459 and you will make money

[interceptor2] 31/10/2016 11:03

cfro :o) I will pass your helpful advice on...........

[rocket fuel] 31/10/2016 11:00

she will pop 400 again very soon and then a steady climb to 650 for crimbo. Trading update in Jan will send it to a tenner.

[cfro] 31/10/2016 09:44

Reading interceptor2's post above i think that family alluded to buying their 5 year old daughter a £5000 Yamaha piano is so very wrong.....

......they should instead buy her a £10000 drum-kit! LOL :0))

[bigbigdave] 31/10/2016 09:15

Interesting posts over the weekend, thanks gents. Have added this morning chart looks like it may be turning up.

[paulypilot] 30/10/2016 21:36

Taurus - thanks re post 448.

Regards, Paul.

[taurusthebear] 30/10/2016 16:46

PE is not the most telling metric with a company that's just turned a profit.

If a company makes a grand profit after turning a large loss previously, would you say they couldn't possibly have a market cap. of a million quid because that would put them on a PE of a thousand!?

Basic stuff but it seems it needs to be said. :0)

[interceptor2] 30/10/2016 13:07

I have to admit that the majority of my investments tend to average a period of 3 or 4 month's, yet the intention is always to hold longer term. I have made a rare exception with G4M when I bought in here, and that is to hold and increase my relatively small holding for at least 2 years. Just feel that G4M are a niche operator with extraordinary growth, if allowed to continue without the usual larger company acquiring them, then the prospects and potential share price appreciation might be significant.

FWIW, I have EPS of 16.8p pencilled in for this year, which would give a PER of 22 at 370p. Some might think this is rather optimistic, yet if the growth rate continues in H2 and Adjusted EBITDA margins are used, which I think is fair at this stage of their growth, I think it is a fair estimate.

We had family over this weekend who have a 5 year old daughter taking piano lessons, they will soon be buying a Yamaha Electric Piano. I showed them the G4M website and asked them what they thought. They loved it and said it offered the most comprehensive range of Electric Pianos they had seen, and found navigating and content very easy and impressive. Think they will be using G4M to order their new Piano. :o)

[nurdin] 30/10/2016 09:59

Sorry Hydrus,misread your post.But the question is open for discussion nevertheless.

[hydrus] 30/10/2016 09:11

Nurdin not sure who that question is directed at but of course I'm using PE acronym to refer to Private Equity in case of any confusion

[nurdin] 30/10/2016 08:54

If you think PE is the wrong metric to value G4M,then pray tell me what is ?

[hydrus] 30/10/2016 08:49

Because PE backers want to get their money out and move on, they've already made loads here. Same thing happened at FEVR where PE backers sold out a while ago. Share price has continued to rocket since.

[spooky] 30/10/2016 08:04

Any thoughts on why Key Capital sold ALL their shares when the shares are going to £10. Not sure that they can be regarded as stupid having backed the company in the first place. Selling some or even quite a lot would be reasonable, selling ALL of them suggests one should at least ask the question.

[taurusthebear] 30/10/2016 01:09

Sorry Paul, I didn't mean to offend, maybe I was being a tad pedantic.

I meant that price and timescales are separate things. If you saw £10 before Xmas, would you hold or sell? I'd probably sell, even though I can see G4M potentially well above that in years to come.

Maybe that's what you thought with BOO. I top-sliced there at 40p, so maybe I'm having a dig at myself?

Well done on your ample profits. Most sell out when they see full value, nothing wrong with that. But we both know that successful Internet stocks can get very high valuations (or even unsuccessful ones such as OCDO). :0)

[stampylong trader] 29/10/2016 21:16

You've got to think what type of people pick up growth companies when they are at £1bn odd market caps.

If you're a city fund manager clocking off early Friday afternoon, and driving your Range Rover Vogue down the M3 to your weekend retreat in Dorset - the last thing you want to worry about is a volatile junior company messing up your portfolio performance. They want to make sure they can come back in Monday morning with no surprises, and still pick up their 2% fee on their £1bn+ assets under management, as long as they beat the benchmark. Whilst the private Investors [PI] fret if these companies move 10p or so, the pros aren't even thinking about it over the weekend. They can't even jump in and out of a stock as quickly as PI's.

Thus they are going to pick up stocks that may look expensive to PIs- £50 shares, and at £1-50bn market caps. So BOO starts to look attractive to fund mangers in the city at £1bn+ market caps. G4M will be the same past if their growth can continue.

[paulypilot] 29/10/2016 20:26

Hi,

Taurus - you just can't resist a little dig at me, can you?!
I don't do disingenuous, but instead just tell it how I see it, with every stock.

dgbell7 answered for me - and is spot-on. I'm kicking myself for closing out of BOO way, way too early, and missing out on a big gain - I was £4k a point long from the 23p level, but sold far too early.

Am not going to make the same mistake with G4M. Yes, I know obviously there are big differences between BOO and G4M, but it's the very high organic growth, and relatively small market cap at G4M that excites me so much.

It won't happen overnight, but personally I see £10 per share being entirely possible.

Regards, Paul.

[allstar4eva] 29/10/2016 19:59

I think all sensible posters know what Paul meant and value his input.

[dgbell7] 29/10/2016 18:56

Taurus I doubt Paul is being disingenuous. I think he was so disappointed at selling out of BOO so early he was just making the point he won't be selling up easily here.I have done so well with BOO (and still holding) I give considerable weight to Paul's views.I recognise quite a few names from BOO board here,including rocketfuel whose optimism always amuses me-although to be fair I think he was proved right with BOO.