Cake Box Share Discussion Threads

[justiceforthemany] 27/6/2022 08:04

EPS has doubled Forward P/E is around 6. Full year dividend has increased now to around 8p.

[terminator101] 27/6/2022 07:20

Pretty decent results. But only justifies fair value at a P/E of 10.

[justiceforthemany] 24/6/2022 14:09

Results Monday. Hopefully raised dividend and growing EPS. Spread is silly here.

[saurish] 23/4/2022 22:03

Fair point, but there is plenty to choose from at various price points. We ordered the smallest most basic cake as it was only for few. We had no complaints about the quality or taste. I think the cheaper priced ones are great to lure in customers who could potentially spend more once they taste the product.

[onjohn] 23/4/2022 20:27

At cheap quid u got to worry of quality of ingredients How many 20 quid cakes will cover the 40-50k rent and rates bills

[saurish] 23/4/2022 19:17

Just a quick customer update to the holders here. Bought an 8 inch celebration cake online through click and collect. It was ready in 2 hours for pick up (in London) cost me £20. It was a seamless experience from start to finish and a delicious cake which we felt was outstanding value for a fresh cake and the taste they delivered. Spoke to the staff in the shop who told me click and collect has been very popular method of ordering off late and they expect the shop to be very busy with Eid soon.

[pogue] 22/4/2022 10:00

Sorry to harp on but it appears the BBC is reading my posts. Here is an article today pointing out what I have said above. hTTps://www.bbc.co.uk/news/business-61157856 UK retail sales dropped in March as the rising cost of living hit consumer spending, according to official data. Online sales fell sharply as people cut down on non-essential spending, the Office for National Statistics said. Fuel sales also dropped as people cut travel amid record petrol and diesel prices. However, overall retail sales were still above pre-Covid levels, the ONS said. Retail sales fell by an unexpected 1.4% in the month, and February's sales figures were also revised down. Darren Morgan, ONS director of economic statistics, said "Online sales were hit particularly hard due to lower levels of discretionary spending. "Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month." The cost of living crisis is being driven by surges in fuel, energy and food prices, with inflation running at 7% - its highest rate for 30 years............

[pogue] 21/4/2022 19:58

I bought and sold on the way up the last spike so not like I havent bought here before. I am not into 5 year long buy and holds in AIM I see too many black swans in this market for that approach this share is a prime example of that this year. I like to see a share that is undervalued or has a rerating coming for either a world event change or about to possible strike something like gold, oil or drug discovery that can cause a rerate. I have generally lent towards pharma, miners and O&G stocks for that reason. This is a bargain just now but it could go lower I am not seeing where the upside drivers are in the macro, inflation and recession are not good for retailers. Miners and O&G on the other hand should do well as commodities will rise in value, their production costs will rise as well though. Here costs are rising and the value or desirability of a cake is likely to fall as the price rises. It maybe it has a loyal following but even oil which is a necessity really is seeing demand destruction at current high prices.

[sid_b] 21/4/2022 17:28

Pogue, I feel you are trying to time the market perfectly as you see the value in the offering but unwilling to take a long term bet (5+years). Would you consider taking a small position and buying the dip from thereon? No advices here :) one ultimately needs to stick to their personal investment strategy.

[pogue] 20/4/2022 12:41

So the plan is to absorb some costs, pass some on and increase the retail price as they did in January. So more expensive product and potentially lower profit margins. So they have no magic plan. Netflix I suggest is less of a luxury than a birthday cake and its getting hit hard with a price rise making people cancel. Still not seeing why this is a good place in a high inflation recessionary environment. Would like to as I want to invest but not ticking the boxes.

[brummy_git] 19/4/2022 09:17

Find out here from CEO Sukh Chamdal & interim CFO David Forth, why its still 'all systems go' at Cake Box www.linkedin.com/posts/paul-hill-a5994116_qa-with-cake-box-ceo-sukh-chamdal-interim-activity-6922095094732840961-C87i?utm_source=linkedin_share&utm_medium=member_desktop_web

[brummy_git] 19/4/2022 07:29

Positive trading update from Cake Box today. Find out all the news & commentary here - alongside sector multiples & KPIs. www.linkedin.com/posts/paul-hill-a5994116_cake-box-sector-multiples-kpis-190422-activity-6922064887187660800-Zemf?utm_source=linkedin_share&utm_medium=member_desktop_web

[pogue] 13/4/2022 23:12

Let’s see what inflation does my experience of it was things can get very brutal very fast and luxury, ie non essential, items don’t fare well. I will continue to watch here.

[saurish] 13/4/2022 21:27

I'm aware fall was due to accounting errors however now inflation is added on that is stopping it from recovering. And at forward PE of 14 if we take out accounting issues it is cheaply valued. The point is not what customers did before, the point is there is an option now. Also, are you thinking 1 customer buys 365 cakes or 365 customers buy 1 cake a year? And if you think times are so bad that 1 customer cannot buy 1 cake in 365 days you should not even waste your time researching this business as there would be no business left in a year, genuine advice.

[pogue] 13/4/2022 21:13

I am indeed doing my own research Saurish I thought the fall was due to the write up on previous errors by management I dont think the fall was making it ex growth it would not be so precipitous if it was, besides they are still expanding are they not? What did SE Asian families do before egg free cakes from cake box for birthdays Saurish genuine question?

[saurish] 13/4/2022 20:47

The point is most of the inflation factors are already priced in. It is being priced as ex-growth. However, any signs of costs being managed efficiently & financial documents in order, could lead to a strong re rate. If we go by management RNS dated 14/03/2022 they state, trading has continued strongly and performance will be in line with expectations. According to sharepad consensus is 14.3 eps so they are at a PE of 14 at 200p a re rate to 18 and it's at 250p. However it could as easily go back down if weak holders decide that the topic of inflation is new and increasing costs should not be mentioned in RNS and company is immune from them! As for the customer base, most of it consists of Southeast Asian customers who prefer eggless cakes. Also, IMO most of their customers belong to the middle class who would still be able to afford a celebration cake once or twice a year. I'm one of them and I would certainly be buying a few cakes from them for family birthdays even if that means I have to cut back a little elsewhere. DYOR

[pogue] 13/4/2022 16:39

saurish thank you for the reply. That is the reason I am still sitting on the fence. I cannot see how going forward the profits can remain the same. The company wont go bust, some of the franchisees might if the costs get too high and demand drops. I mean what did people do before egg free cakes? There are other options people dont have to buy a cake from CBOX. The coming storm is going to be bad I am looking for places to put my money that is safe retail is a hard one to find someone with a must have product that the price can be increased to cover rising costs for no loss of custom. CBOX does have the moat of being unique in the market but I cannot believe people will keep buying cakes over normal food and fuel so its customer base must decline at the margins and its costs must rise. Its whether they can balance that by cutting into their large margins but does that not then just reduce profitability and thus the share price?

[justiceforthemany] 13/4/2022 16:16

Narrower spread today. Still >50% down from its high.

[saurish] 13/4/2022 13:50

I think like every business they will not be immune to rising costs. They would do well to mitigate some of it by forward buying etc Most importantly the management has a bit of leeway with operating margins averaging around 22% and growth potential by their side. However, as per your argument cake will become a luxury now, however with CBOX cakes priced towards the reasonable end of the market for celebration cakes with a unique eggless offering I suppose the sales would stay steady. Where their could be a drop is in the takeaway cake slices etc. which do not constitute a huge percentage of sales. As per price increases I think management will have to strike a balance between raising prices and absorbing some proportion of cost so as to not affect demand too much. They'll also have to look at tightening up any loose ends for expense leakage and save money. Going forward I see some shrinkage in operating margin which should be absorbed by growing sales in short term to keep profits steady but if the costs keep increasing long term then like any retail business it would start taking its toll on the bottom line. However, IMHO in the retail spectrum the business is in a much better position due to its strong margins, unique offering, steady demand and growing franchisees. The management however will have to stay nimble in these rising cost waning demand times to keep the business steady and achieve some sort of growth. I'm a holder. DYOR

[pogue] 13/4/2022 12:51

Belgian bakers and pastry chefs are struggling with fluor and power costs rising. Really cannot see how Cake Box are immune to this. If you cant make money making bread or pastries in Belgium things are tough. hTTps://www.euronews.com/my-europe/2022/03/10/brussels-bakers-struggle-to-make-ends-meet-as-flour-prices-soar .....Szalies has already had to let go of one of his team and now has a single pastry chef helping him across his two workshops. Albert Denoncin, co-president of the Belgian Bakery and Pastry Confederation, has warned that the problem could be about to get even worse. “We must not forget that Ukraine is the granary of Europe, and with what is happening at the moment, there is nothing more coming out of Ukraine,” he said. “This means that tomorrow we could see the price of flour quadruple, which wouldn't surprise us, given the current circumstances.” For Belgium’s 3,500 bakeries and pastry shops, wheat is not the only thing that is getting more expensive. Energy prices have skyrocketed and are set to increase even more during 2022 as Europe slashes the amount of natural gas it imports from Russia and oil prices rise. "Last year we were paying 3,000 euros a month for electricity and we've just received an adjustment of 9,000 euros,” he said. “So I'll let you imagine, the worst is yet to come. Next year, how much we will pay, I have no idea.”

[pogue] 13/4/2022 12:19

Do you expect them to increase prices due to the rise in flour costs or swallow the cost? Regards birthday cakes being non luxury there are people who cannot pay their fuel bills I suggest you have to redefine your view of essential and luxury. Once inflation really starts going things become a lot more black and white, I am assuming you did not live in the 70s or 80s?

[pogue] 13/4/2022 08:24

Can anyone explain how a luxury retail business can do well in a high inflation environment? I lived through high inflation when I was young and my experience is people stop spending on anything not essential and prices of goods keep rising whilst wages lag by a long way and strikes are common. I would add the main income for CBOX is selling sponge to their franchisees and wheat is going to skyrocket in price going forward so will margins be cut or will they just attempt to pass onto the consumer the price hikes? Sensible answers please.

[justiceforthemany] 12/4/2022 21:38

Looks good value here. Low P/E and good balance sheet. Growth stock.