Its a pretty clueless thing to say to be honest, and i think Verulamium probably knows that wont happen. Why would they fix something that does not need fixing? Clear distaste towards cakebox and spreading negativity.. |
Verulamium I think you have got this completely wrong. The takeover has nothing to do with "changing what works" so to speak. It is all about expanding the distribution of what works. It makes so much sense. Ambala have the product/quality and CB have the distribution. |
It mentions they "own" 19 stores but their FY23 balance sheet only has tangible assets at £2.3m, and they have operating leases of over £730k.So seems like they lease their 19 stores and what's the term? |
Great way to leverage the Cake Box franchisees by offering a bolt on Ambala option as part of their license. Many ways to spin this deal. I've got confidence that CB can work their magic on the new brand. Demographics are also at play here. A deal that literally will pay dividends. |
Do think Ambala is a good fit I'm just not too certain the transition will be that smooth or believe Ambala's FY24 significant underperformance can be fully attributed to the unfortunate passing of the founder.Whilst there will undoubtedly be cost saving synergies once bedded in but IMO tgat won't be achieved at nil cost.The placing dilution could simply wipe out any potential eps benefit from the acquisition, going on Ambalas previous numbers FY22 pat margin was only just over 1%, FY23 was 9% (from memory), so quite volatile. |
Haven't seen any broker upgrades as yet? Stocko still has 13.8p for next year |
Ambala mithai/sweets is super popular, very high quality and people will pay over the odds for it. Boxes sold at every celebration, weddings, religious festivals.
Money spinner. |
What absolute rubbish. You don't take over a heritage brand and the production facility at a substantial purchase cost only to crash it with changes to recipes or ingredients. Savings will come from increased buying power, marketing economies and product exposure |
The odds of Ambala's recipes staying the same for long after the takeover are zero. At the moment they make delicious sweets out of real (expensive) ingredients. Cakebox are a chemical company and I doubt if they'll resist the temptation to lower production costs and quality. |
Honestly don't see why anyone has an issue with the takeover given both sides benefit. Recipes stay the same but the distribution expands. Anyone that has a problem with it has just done no research. Great deal for both, very happy. |
In regards to above post about Amabala - it is not changing - same recipes, same taste, just available in more places across the UK. Amabala takeover is a good deal and great synergy - cross selling of cakes and sweets in respective stores will add value |
JDPot kettle black:"A long list of ADVFN posters that think they know best, and are the Don Juan's of investing" |
Can buy 20k at 178.2 fall not done yet |
Didn't I say 180p?! |
River Capital up to 8.3%
They really like the company. |
Waiting for a buyer and believing a PE of 20x is justified is what's really comical :) |
Really don't get all this interest and arguing over poor old Cake Box/Ambala!
Only holding as part of a DIVERSIFIED portfolio!
FFS you people should be looking at the big blue chips and some of the big Tech and chip stocks that are reasonably priced now.
Comical 😄 |
JakFair points.If you look at their historic returns they've been quite variable and don't buy the unfortunate passing of the founder as being the reason for any under performance.I'm hoping they have deducted the outstanding £1.5m loan to the founder (at zero interest rate!) off the value of the freehold property they bought from him (which he was receiving £100k pa lease).At first I thought it was a very good fit and looked promising but having looked deeper I'm not too sure, it's a massive undertaking and they could have over stretched their resources. Perhaps the next update on progress will provide more confidence in how their forecasts will look. |
JakIt's been averaging around 190p, at 15x forward earnings as you say TP 207p, so circa 9% upside......not meeting my return criteria I'm afraid.Now if the acquisition does enhance eps by 20% then I'd definitely be interested but that's a big if IMO.As for their net cash, think the fact they did a placing for working capital requirements sort of flags where their net cash position will be post the acquisition. Not too certain div yield will be maintained either, all IMO. |
disc0dave46,
* I've taken an estimate for the cash at about now, versus you're taking the interim figure, which is a seasonal low.
* the presentation to investors included a bridge of "cost normalisation" (the business has underperformed recently due to the death of the founder) from the £1.7m EBITDA that you have to an "illustrative" £2.8m. Efficiency gains of £1m over and above this were highlighted.
JakNife |
JakLast known cash position for CBOX was £5.6m not £9m.EBITDA FY26 could be circa £7.5mWith the acquisition loan £15m net bank debt will be £9.4m.Ambala EBITDA £1.7m, CBOX FY26 EBITDA could be £7.5m, leverages 1.1x EBITDA.Plus they've said any additional costs from cash, so leverage could be a lot higher than 1.1x. Time will tell.There's no forecasts for Ambala FU26 EBITDA hence I've used the last 12 months (which was down on FY23).There may well be cost saving synergies but £1m could soon disappear with other unforeseen costs, it's a significant acquisition (30% of current m cap) which won't be an easy transition IMO. |
A long list of ADVFN posters that think they know best, and are the Don Juan's of investing |
I wouldn't buy a share at 195p with fair value around 207p. Throw in a risky acquisition that doesn't look overly cheap to me.Anyway... |
 1. Actual EPS for the year to 31 Mar 2024 was 11.65p
2. Forecast EPS for the current year ending 31 Mar 2025 is 12.1p
3. Forecast EPS for the current year ending 31 Mar 2026 is 13.8p and the deal today is described as :
"The Acquisition is expected to be immediately earnings enhancing following the integration of Ambala into the Group."
So 186p / 12.1 = a current year fwd PE of 15.4X
And 2026 should be a minimum of 186 / 13.8p = 13.5x
So which EPS do you want to apply the 15x to? If 2026 then target price = 207
and in the meantime an annual dividend of about 9.7p means you get paid 4.7% whilst the business grows top line at c. 17.5% per annum
Re leverage.
Cash was about £9m before the deal, they raised £7m and have taken gross debt of £15m. So they'll still have £9m of cash after the acquisition, ie net debt will be £6m. (Which just so happens to be the value of the freehold property that they've bought.)
Whilst EBITDA for the existing CBOX business should be about £8.5m and Abala is expected to contribute around about £2.8m to EBITDA.
so leverage will be [£6m / ( £8.5m + £2.8m )] = 0.53x
Which is hardly demanding.
It looks a sensible proposal. N'est-ce pas, mon ami?
JakNife |
Never be on a PE of 20, only in a bull market. 15 tops |
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