Card Factory Share Discussion Threads

[woodhawk] 24/9/2019 12:33

Is the holdup that failure Woodford still selling?

[cflather2000] 24/9/2019 10:28

I think the tie up with Aldi looks exciting

[woodhawk] 24/9/2019 09:48

Took a swift profit this a.m. and back in again now. Looks well undervalued and ex Divi in just over a month.

[garycook] 24/9/2019 09:34

Woody,Agree.Look forward to a higher share price in due course. Sep 24 Card Factory Plc UBS Buy 164.35 220.00 - Reiterates

[woodhawk] 24/9/2019 09:27

Over 8% yield not too shabby, especially in these days of pathetic and still declining interest rates!

[luderitz] 24/9/2019 08:45

The last bit I like.

[fizzypop] 21/9/2019 18:53

Interim results due Tues 24 Sep

[luderitz] 05/9/2019 21:44

Well I hope you’re right and that share price does rise.

[garycook] 05/9/2019 16:25

Looks like the overhang as been unloaded.Must be Woodford with 3 Million shares sold at 155p ? Now moving up.

[wiseman1967] 19/8/2019 11:28

I suspect you may be right. It is not an easy accounting standard to understand.

[scobak] 18/8/2019 21:56

Can't wait to see the accounts next time when new accounting standards re leases kicks in. price likely to plummet even though the accounting standard is non cash changing.

[wiseman1967] 16/8/2019 23:45

It is USD vs GBP which relates to non card products eg balloons, cuddly toys and gifts

[fenners66] 16/8/2019 23:22

I would have to read again the accounts to see where and why that currency effect comes in.
Is it £/$ or £/€ that is affecting it ?
I thought it was $ because they were buying from China.
But you say they have own press, so is it € buying card or pulp from Europe ?

[wiseman1967] 16/8/2019 12:25

Simba. The reason that I am more relaxed than you about the balance sheet is that it records historical costs of assets. Charterhouse paid £350m for CF nine years ago when the profits were about £50m. Four years later the business was listed with an Enterprise Value of £970m, today the EV is £680m (comprising £510m of market cap (340m shares x £1.50) and £170m of debt). If someone bought the whole company today at £1.50 a share, the goodwill figure would actually go up to around £630m as the other net assets (ex goodwill) are only c£50m. I agree with you that if profits are falling then your need to be concerned. This company has a twenty year track record of profit growth, interrupted recently by a small fall - which I believe is mainly attributable to the weakness of the pound (and I believe this will reverse). There is a good deal of headroom between the EV of £680m and the goodwill of £300m - that is why I am relaxed. If you took the view that the pound will continue to fall and that profits will continue to decline, then you would rightly want to sell. I take a different view, which is why I am a buyer at this price. That is what makes markets. I disagree that you could replicate CF for £350m. WH Smith developed a budget card retail concept which they called Card Market about four years ago - essentially a rip off of CF. They expanded it to around 50 stores but failed to make it work and quietly withdrew last year - google it. The WHS ceo Stephen Clarke is a highly regarded experienced retailer (I have met him), and WHS has even more stores than CF. If they couldn't replicate CF, I don't know who can.

[simba_] 16/8/2019 11:49

With respect, I disagree. For me goodwill is a problem when its propping up the asset side of the balance sheet and debt is a huge chunk of how the assets were funded.Its not a healthy balance sheet, especially given the sector. Sure the names you mentioned previously are exceptions (huge tech companies). Keep in mind this is a card shop. Could I start up card factory 2 for less than 350m?. I believe so..Also, an ebitda figure on its own tells me little. The rate of change is more important. I've not looked and it might be growing but if its falling, that's a concern given the BS issue I have. Also what is the EV/Ebitda multiple and how does that compare to similar retailers. Thats what I would want to know, rather than just being impressed by an ebitda figure.

[wiseman1967] 16/8/2019 11:07

I also didn't say balance sheets are irrelevant. I said balance sheets are more important for property companies than asset light companies which tend to be valued on a multiple of profits.

[wiseman1967] 16/8/2019 11:06

Simba. You can't simply look at the absolute figure of goodwill to decide whether it needs to be impaired. It is goodwill relative to the profits of the business. £300m of goodwill relative to £90m of ebitda is fine. In the case of getting personal the goodwill was too high relative to the earnings and so was written down. I believe the goodwill on GP was £14m and profits in the 2018 accounts were in the order of £2m but have fallen since given this business (GP) has falling sales.

[simba_] 16/8/2019 10:34

Exactly fenners. I also questioned the goodwill but wiseman says balance sheets are irrelevant. Then went on to say that problem here is that investors don't undetstand. .+300m is a ridiculous amount of goodwill for a birthday card shop. Didnt they also just take an 11m impairment hit relating to the gift business (can't remember what its called).

[wiseman1967] 16/8/2019 08:46

1novice and Smokybenchod. I would like to say that your scaremongering baseless opinions will be missed here, but they won't. Go find another profitable growing company to attack, but don't be surprised when someone else points out your ignorance there. You can't expect to make crass comments like this business is headed for a CVA and not have them challenged. I would welcome a discussion of why you think that but every time I ask you to justify the comment you fail to. Good riddance.

[smokybenchod] 15/8/2019 17:38

1novice, I posted the exact point as you regarding declining share price and profits with increasing stores and was ridiculed on this board by another poster. It is a shame as this was once an interesting discussion forum although seems to have been overtaken by emotional, rude, blinkered investors that cannot have a bad word said about CARD, no matter how valid the points. For that reason I’m going to avoid this board going forward.

[1novice] 15/8/2019 17:20

Sorry wiseman, I didn't realise yours was the only opinion that is right and everyone else is wrong and therefore "incompetent/idiot/ or worse.
I made a lot of money on these, when they peaked.
But if you think that doubling their store numbers since floating while the share price slides and like for like sales stagnates is good then you deserve to get stung.
I genuinely hope you lose big on these for your arrogance and rudeness to others

[fenners66] 15/8/2019 16:34

So it seems PI bought a business, fine, more than net assets so goodwill added to the acquiring company's balance sheet.
Generates some cash and pays down some of the borrowings used to buy it.
I guess they also structured it so they lent the money to their entity which acquired CF and then charged interest on that loan.
After that they borrowed more cash and repaid the PI loans ?
Then floated their ownership on the stock market and got their cash back and some profit.

Of course PI usually knows the right time to part with a business - look at DEBS for example.

What the stock market is left with (bizarrely ?) is a business with few assets, loaded with debt and goodwill in itself.

The goodwill was purchased but not by the current owners.. so to speak.

Funny how you cannot have the goodwill of a business you have built from scratch only the one you purchased.So even if its overpaid for the goodwill can remain on the balance sheet until some auditor gains the balls to challenge the valuation.

[wiseman1967] 15/8/2019 15:41

Hi Fenners66. According to Wikipedia, the business was acquired by private equity in 2010 for £350m. The goodwill is the difference between the price paid and the net assets at the time. The CF accounts suggest £314m relates to CF and £14m to Getting Personal. Under accounting standards this no longer needs to be amortised as long as it is subject to regular impairment testing (note 11 of the financial statements). If the buyer had paid £450m the goodwill would have been £100m higher. It is not an asset like tangible assets but not something to get concerned over in my view.The business describes itself as vertically integrated in its accounts in the first ten pages. They print their own cards (they bought a printing facility called Printcraft in 2009 - it currently prints 200m cards pa and has a capacity of 400m). I suspect the purchases from China are the non card ones (eg balloons).Page 10 outlines the business model and so its barriers to entry - generally because of scale: a design team that redesigns 4,000 cards each year, print facility printing 200m cards each year, warehouse space of 360,000 square feet and 975 high street stores. Not easy to replicate that.

[fenners66] 15/8/2019 14:06

£328m of goodwill in the last accounts RNS - does not say where it came from.

Previously you mentioned this being a vertically integrated business and with barriers to entry.

I thought they bought in the cards from China and therefore are not vertically integrated - they may design them but I don't believe that constitutes barriers.