Scs Share Discussion Threads

[thomasthetank1] 13/4/2016 12:27

Read finnCap's note on ScS Group (SCS), out this morning, by visiting www.research-tree.com …
“We are upgrading our EPS forecasts by 5% over each of the next three years post yesterday’s H1 2016 numbers. ... we expect the share price to remain range bound in the near term given uncertainty around May Bank Holiday trading and, more importantly, the EU referendum.…”

[simso] 13/4/2016 08:33

I am going to quiz the management about those costs today. As a retail FD myself, I would have expected a lot more of that Sales Overperformance to come through as profit. The margin rate alone was up 1.2% points because of their not repeating a free carpet promo that they did LY...and 1.2% points of margin would have driven profit/EBITDA forward by over £1.5m v LY on its own. The total profit/EBITDA is up £2m so it feels to me like the magnificent sales performance has NOT translated through to profit as I would have expected, and that is because the sales increase has been matched by an almost proportionate cost increase. In a Retail business of any sort, a high proportion of the costs are "Fixed": Head Office Overhead, Rents, Rates, Heat Light and Power etc. I would not have expected costs to go up in direct proportion to the sales, and therefore really want to understand that.

[mattafc] 13/4/2016 07:41

Davidosh - do I remember hearing or reading somewhere that you have a meeting or similar with the management or CEO at SCS this week?

[dlku] 12/4/2016 12:45

the thing is do you believe them , as they lied once before

also, Sun VC probably has a massive stake to dump here

[salpara111] 12/4/2016 12:33

The figures are rather more impressive when you strip out the net cash position.
I am actually surprised that their target share price is only 206p given how bullish these guys usually are.
Personally I don't think that they are overvalued at 220p so that is my initial target.

[davidosh] 12/4/2016 10:30

FinnCap morning view....

ScS: Impressive H1 2016 results (BUY)
H1 2016 numbers were better than our expectations with an operating loss of £3.4m (finnCap estimate -£5m) and LPS of 7.1p (finnCap LPS 12.5p). H1 is traditionally loss-making and can, therefore, make forecasting difficult. Post period trading is encouraging, with LFL sales order intake +12% for the 37 weeks and management expects the FY outturn to be modestly ahead of market expectations. While consumer confidence around bigger ticket items remains elevated and H2 comps weaken significantly (LFL order intake +1.4%), we are mindful of the upcoming EU referendum and key May Bank holiday trading days, and are likely to make only marginal increases to our numbers. Our 206p price target (+10% upside) values ScS on an undemanding 12M P/E of 12.2x including the 7.5% prospective yield.

[simso] 12/4/2016 10:18

Yes Salpara, plenty of good news here, with better LFL's and margin % increase than I was expecting, and strong cash generation.

Two points though:-

1) Why have Administrative Costs gone up by £5.4m, almost in direct proportion to the sales? Most of these HO costs should be fairly fixed. Only £1.5m of it is explained as being increased marketing, and that would make sense if they have spent heavily of marketing to get that sales growth. Whats the rest of it, though? I only hope this increase has more to do with "stuffing money behind the clock" or more prosaically "Taking a prudent view of provisions" which would be sensible in their circumstances. The Profit and EBITDA have not benefitted as you would want and expect from an operationally geared business. the very strong Cash Generation perhaps hints at that

2) I think their guidance about "modest" increase against brokers forecasts reflects their sensitivity around what happened last year around May Bank Holiday and the Election...it was 5 weeks of double digit negative LFL's. I think thats a big opportunity of soft comps in the base. However, they will be bruised by teh experience and if you count how many times they say "the May Bank Holiday is still to come" in this announcement, they will not give a more bullish tone to the market until thats past.

[salpara111] 12/4/2016 08:28

Excellent results with a current year divi of 7%
Really strong like for like sales growth.
Cant believe the share price has not moved a penny!
If I was not fully invested I would be adding.

[mattafc] 11/4/2016 18:10

Nice strong close tonight, looks good for tomorrow's interims

[mattafc] 07/4/2016 16:56

Thanks Sismo. Everything you say there makes perfect sense, I do see it as a buying opportunity, especially with the 'significantly ahead' update. Would seem very hard for the board to justify anything other than an upbeat set of interims next week given that last update. If the projections lift higher than current estimates this will look ridiculously cheap, even by LAKE standards which has a lot more turmoil at board level!

[imranawan] 07/4/2016 15:47

Would agree with your comments simso. Game Digital (GMD) who were also listed a few years ago, ENTU and HSS are all examples of recent IPOs, and where they've announced profit warnings. In the case of GMD I believe its been two. I think once a company's issued a profit warning shortly after listing a lot of people lose trust and it takes time to build credibility.

In the case of ScS its the same management at the helm, and very exposed to the economy and consumer spending. I agree ScS looks good value, but personally don't have a position and won't be buying in as I don't want exposure to the market they operate in. The yield is nice, and is the main attraction, but I've been burned by chasing a high yield where I don't have great conviction in the underlying company/sector they operate in.

GLAH.

[mattafc] 07/4/2016 11:19

Starting to take an interest in ScS ahead of interims. Keen to get under what's holding it back. Is it the previous problems in 2008 and then profit warnings with fairly weak rationale in May 2015?Apart from that there's a decent cash pile, with a 'significantly ahead' update. What am I missing?

[davidosh] 15/3/2016 23:48

simso....I totally agree and mentioned SCS on the radio a couple of months ago and that the positive LFL should be doubly positive in the second half.

The interim results are only four weeks away and will be announced on 12th April.

[simso] 07/3/2016 09:52

I think one additional point about ScS to all the numbers discussed (low PE, no debt, Div Yield etc) is that first half LFL growth of +8% is against a similar +8% in the the first half last year....so effectively they are c+16% on two years ago. In the second half last year they hit problems with a warm Easter, Election Uncertaintly, and had 5 terrible weeks of double digit negative LFL, and the second half in total was only +1%.

If they are travelling through H1 at +8% against strong comparative numbers are strong, how will they fare in H2 against much weaker comps?

[bergster56] 20/2/2016 07:38

Interesting one,,,No debtLow peBeneficiary from floodsOccupies 'lower' market end vs dfs which is higher priced/spec Benefits from BTLIssues are very economy dependentLots of customer credit

[davidosh] 21/1/2016 16:04

SCS are mentioned here

[salpara111] 19/1/2016 14:24

Interesting that there is no interest in SCS.
I just took my first stake here.
valuation looks undemanding and the divi is rather chunky.

[essential] 07/12/2015 08:11

Scsw said they would be selling Scs from their growth portfolio 3 as the big dividend is not accounted for in the portfolio performance and so holds performance back. It will be replaced by Sct - hence a strong start for Sct. However, they did say Scs is performing well so holding for recovery and that great dividend

[liquid millionaire] 23/11/2015 10:00

Thanks bergster56.

Out of interest the shares appear to have limited liquidity....not sure what the NMS is? Do you happen to know?

[bergster56] 23/11/2015 09:43

excellent find.
of course in my previous post i forgot to add the presence of a dividend

[liquid millionaire] 23/11/2015 08:33

MOS article