Cake Box Share Discussion Threads

[discodave4] 28/12/2018 17:37

Wonder if they will provide a trading update in Jan?.s_a_bIMO It may be slightly H2 weighted due to Diwali (Nov), Christmas and New Year, as well as the fact that the long hot summer had a negative impact on H1 revenue, yet despite this they beat EBITDA expectations due to improved margins.IMO could see close to 9p adjusted eps for year end, so a PEG of about 0.5 which still indicates value.

[onjohn] 28/12/2018 15:34

Founders looking to offload a load of shares to mug punters

[nitbhav06] 28/12/2018 15:26

What do DpZ do? You just have to look at Coca Cola, Subway, Domino's, Pizza hut etc and the potential can be seen. I see the brand having an international presence. The UK market will start to saturate in the next few years when competition comes in. Hence revenue streams from other territories is crucial. I think £150k per store will be close to the ceiling especially where there are several other stores in the area. They've got a cracking location in Holloway recently with no other store near it so this is great. I'd like to see more new products like the cheesecakes and maybe a lunch menu in the next few years?

[s_a_b] 28/12/2018 14:57

Agreed although DPZ shares (the US master franchiser) have had a phenomenal run over the past 10 years.

[discodave4] 28/12/2018 14:54

Hasn't worked everywhere for Dominos - look at DPP shares.

[s_a_b] 28/12/2018 14:30

While there's plenty of scope for growth in the UK I think it's great that they may expand internationally in the longer term. I'm no expert on franchising but quite like the overseas master franchise concept and it has worked for Dominos Pizza. Guess the benefits are not having to invest directly in infrastructure and less need to worry about monitoring local franchise performance and compliance with laws and regulations?

[discodave4] 28/12/2018 14:30

Shouldn't worry yet about international expansion, they seem to have their feet well planted and are in no rush.Although they said that at the moment they haven't reached a sales ceiling at their stores my guess is they will eventually. Plus there is and will be greater competition, success attracts competitors so whether the growth slows at 150 or 250 stores only time will tell. That's what they need to plan for as that will dictate timing of any international expansion.

[nitbhav06] 28/12/2018 14:16

Yes the business model is superb and I highly rate it. By only nervousness is around international expansion. Sukh mentioned his mate has over 200 dessert stores in Mumbai. Imagine if we could get 50 going someday. Also there is scope in the UAE also which is excellent for us. In the long term I'm bullish but when we hit our ceiling off 250 stores, these guys must have a plan to continue revenue growth. Also we're making 70% margin on sponge but once we hit scale, I'd like this to he around 80% with our economies of scale.

[discodave4] 28/12/2018 13:41

They mention in the Nov Investor Day presentation that they will limit existing franchisees to 10 stores, some already have 7 stores. Would imagine for any future international expansion (India the obvious choice) they may IMO just increase that limit but fundamentally the business model is just the same as it is now in the UK.

[discodave4] 28/12/2018 11:31

Will take a look at the video.No expert but would imagine their margin will not be as good with a MFA, plus they lose a certain degree of control over who they sub franchise to. So quality/reputation etc., could suffer. But that said imagine there are some positives in that a roll out is likely to be quicker and less direct input from themselves.

[nitbhav06] 28/12/2018 11:09

Disco, Sab, not sure if you've seen presentation on youtube with Sukh and Pardeep but they made a very good point. For every new franchise we open, Cakebox has a new customer so there's an incentive to keep on opening new stores. Also they mentioned with international expansion that it would be awarded to a master franchiser, which I personally don't like if I'm honest. What's your thoughts on this?

[discodave4] 27/12/2018 23:08

Is that right, I best sell up quickly then!, many thanks, much appreciated.Filtered

[onjohn] 27/12/2018 20:02

Founders looking to offload a load of shares to mug punters

[nitbhav06] 27/12/2018 20:00

Thanks Sab, I'm also looking for broker forecasts but can't see anything just yet. Expect that to change next year. Standard life have a big chunk so they'll probably demand some type of forecast as the company grows. I don't think we're far off a 100m market cap, the way the company is growing.

[s_a_b] 27/12/2018 07:26

Happy Christmas N. I'm hoping for at least double the half year results (so turnover c£16.5m, PBT before IPO costs c£4.0m) but if they can continue opening at two sites per month and maintain or improve LFL sales then scope to do better. Does anyone know if there are published broker forecasts in the market?

[nitbhav06] 24/12/2018 22:06

Merry christmas. What's everyone's views for 2019. I think we'll smash 2018 revenues and profit levels at least 10 to 15% uplift.

[nitbhav06] 22/12/2018 07:23

Axa now own 8% of cakebox. No wonder I couldn't buy any shares yestersay. Super bullish now on this company.

[nitbhav06] 21/12/2018 15:43

Is Coke good for you? It has a market cap of $206bn. Is starbucks/costa coffee good for you? Everything is fine within moderation.

[jh420] 21/12/2018 14:53

The cakes actually taste good. Any cake is probably not going to be good for you if you eat it all day long. Most of their cakes will be bought for an occassion and therefore eaten in moderation. So many shops, so many sales if they were all that bad, then people would simply stop buying them? Like S_A_B said, nobody is being forced to buy them and there is plenty of choice out there, including your M&S among other retailers. You make your choice.

[verulamium] 21/12/2018 10:29

s_a_b Marks and Spencer produce cakes on a commercial scale without using rubbish ingredients. Life's too short for rubbish cakes... especially ones that are liable to shorten your life further.

[s_a_b] 21/12/2018 10:16

Agree looks very positive at the moment. They have demonstrated product market fit and have a clear plan to roll out franchises across the UK. The beauty of the franchise model is they don't need much capital to expand so should throw off free cash and dividends in the meantime.

[nitbhav06] 21/12/2018 08:48

Sab I think next year we will smash our revenue and profit numbers. As every new franchise opens, we are making money. I keep saying this but I just really admire our business model. We will see divi at least for next 10 years. Our new products are coming out. Cheesecakes, red velvet etc. Imagine when we hit 150 stores and expand internationally. Not ramping but I can see this hitting £500m market cap in the next 5 years easily.

[s_a_b] 21/12/2018 08:20

Think cake production on a commercial scale is different to cooking Mary Berry recipes at home! They aren't forcing anyone to buy their products but the demand is clearly there so far.

[verulamium] 19/12/2018 23:05

The ingredients list for the cheesecake is just shameful - it's like something out of a 1970s packet mix. How could anyone eat that muck?

They must be proud to use rapeseed oil for their sponges. I'm always miffed when I run out of rapeseed oil at home and am forced to use butter.

[s_a_b] 19/12/2018 08:51

FYI this is the ingredients list. As far as I can see it's only really the cheesecake and icing/sauces that contains palm oil. The cake sponges are made with rapeseed oil. https://www.eggfreecake.co.uk/ingredients