Centralnic Share Discussion Threads

[jeanesy] 29/11/2022 16:15

after those massive director buys i didn't expect these to fall again !

[hydrus] 29/11/2022 14:32

Businesses are valued on their future discounted free cash flow. FCF at CNIC has increased significantly year after year so much so that they have managed to reduce debt from 2.2 EBITDA to 1.2 EBITDA despite multiple acquisitions.Brokers estimate net cash flow generated from operating activities for this year of c. $71m. What is that kind of cashflow worth?CNIC is a fast growing cash cow and will IMO be recognised as such in due course but I have no idea when that re-rating will occur.

[king suarez] 29/11/2022 14:29

"So despite the claims of thumping great profits the negative equity figure has gone up by $23.4 million."

Is this not due to the reversal of the foreign exchange translation reserve due to the change in reporting currency from EUR and USD and exiting the associated hedge positions for the loans?

"Yes they can but who is going to pay $319 million for them?"

It's a software business? The intangibles represent the value of all the businesses acquired, their licenses, software, contracts etc? There are no significant non-fixed assets because it is a tech business, without expensive plant and equipment, warehouses, premises, machinery etc?

"The reason CNIC have such impressive cash flows is because they adjust the figures.........IMO."

Not really? The operating cash flow has only minor adjustments to account for non-recurring acquisition costs etc?

[dave2608] 29/11/2022 13:23

Yes they can but who is going to pay $319 million for them?

[azaman] 29/11/2022 13:19

Couldn't intangible assets be sold for cash?

[dave2608] 29/11/2022 13:17

If you do the same calculation for year ending 2021 the negative equity figure is $120 million. So despite the claims of thumping great profits the nagative equity figure has gone up by $23.4 million. I'm sorry but to me it doesn't stack up.

[dave2608] 29/11/2022 13:00

Azaman

Think of it like owning a home and you have negative equity. If you look at the balance sheet ending Sept 22, you'd been mistaken for thinking the equity was $157.5 million but strip out the intangibles and you have negative equity of $143.4 million.

[dave2608] 29/11/2022 12:43

Azaman the creditors cannot be paid off as strip out the intangibles, the NAV of this company is deep in minus territory. There's $314.1 million of intangibles sitting on the balance sheet. Up $59.9 million in 9 months.

[tradertrev] 29/11/2022 12:25

That is a liquidation value, not a going concern value, so personally I can't see the relevance here.

[azaman] 29/11/2022 12:22

Please look at my analysis and comment.
If it does not make sense, please correct it but stick to the theme (
ie. fair value calculation for share)

Assumption
===========


The company ceases to trade and will be shut down.
1. Collect all money from debtors £d
2. Withdraw all cash from the bank £m
3. Pay all creditors -£c
4. Pay off the outstanding loan -£l

Share price calculation
========================

( £d + £m - ( £c + £l) ) / No of shares = £share_worth

As long as the current share price > £share_worth, we should be happy.

[dave2608] 29/11/2022 12:13

I'm beginning to detect cognitive dissonance.

[tradertrev] 29/11/2022 12:01

So on this basis of imbalance between trade debtors and trade creditors, dodgy companies like Sainsbury, Tesco and all other businesses that have the good fortune to operate with a negative working capital model are bust then?
Hoping for some better quality input on this board please.

[dave2608] 29/11/2022 11:46

The reason CNIC have such impressive cash flows is because they adjust the figures.........IMO.

[dave2608] 29/11/2022 11:04

The cash might be showing now but once payables and receievables have been reconciled it won't be.

[dave2608] 29/11/2022 11:01

Net debt appears lower than it actually is because the cash figure is inflated owing to the decrepancy between payables and receivables.

[rivaldo] 29/11/2022 10:47

Net debt is only $63m, and leverage has almost halved since the last year end to only 1.2x.

Pure trade debtors are actually usually higher than pure trade creditors. The additional "other payables" always include a large amount of customer payments on account, plus a large figure for accruals (debtors include a lower figure for prepayments).

The reason CNIC have such impressive cash flows is because a good proportion of their income is paid annually in advance. And that's why they've been able to refinance their (fast-falling) borrowings on so much better terms.

CNIC are an acquisitive, fast-growing company with 116% cash conversion at the last count, so I assume will always carry an element of borrowings (which is part of the point of being a responsible but growing public company).

[dave2608] 29/11/2022 09:51

Check the balance sheet ending Sept 2022. Cash and bank balances $83.8 million. Trade and other receivables $93.4 million. However Trade and other payables $159 million. When this all plays out what effect will it have on cash and bank balances?

Not forgetting this firm has borrowings of $141 million. Still think it's cheap?

[hydrus] 29/11/2022 09:37

LOLOk I give up - serious discussions only for me on here from now on.

[dave2608] 29/11/2022 09:35

Exactly, the unadjusted cash flow figure is the one you should be looking at.

[hydrus] 29/11/2022 09:32

They have made acquisitions. The unadjusted cash flow figure is the one you should review. Clue's in the name.

[dave2608] 29/11/2022 09:27

The EBITDA figure is adjusted too. In fact everything appears to be adjusted.

[hydrus] 29/11/2022 09:23

Yes adjusted cash flow at 105% of EBITDA.Unadjusted was 94.2% of EBITDA.So what's the point you are trying to make?

[dave2608] 29/11/2022 09:06

Adjusted cash generation.

[hydrus] 29/11/2022 09:03

Backed up by cash generation..........

[dave2608] 29/11/2022 08:54

Erm.......it's adjusted eps, not actual eps.