Chapel Down Share Discussion Threads

[vano5] 28/1/2024 21:53

CD moved to AIM to access financing for the winery via an equity raise....simple.
The loan facility was never going to be enough.
Rob Smith seems to admit to an equity raise in an IC interview on Friday.
Why has it taken so long for the CD board to publicly admit this??

[ayl30] 26/1/2024 06:45

I concur on both points

[vano5] 25/1/2024 23:02

Fraser's increase in shares was a result of options kicking-in due to the move to AIM. Savvy ex-CEO!!!

[nov31] 25/1/2024 12:20

As far as I can remember the CEO has publicly declared that they don't need to raise any equity to meet current growth and increased acreage plans - they are funding it from current operating cashflow - but do check, DYOR just in case i've missed some impt detail. This is a quality share, quality product and management and I expect CDGP to be taken out in a few years time, by either one of the existing Champagne houses or someone like DGE

[kaos3] 24/1/2024 21:06

Go on. superb imho

[mortal1ty] 24/1/2024 21:01

As per the AIM entry statement:

"The Company owns, leases and sources from 1,023 acres of vineyards in South East England, of which 750 acres are fully productive, making it the largest wine producer in the UK".

So those 750 acres are fully productive?! This would make sense as 3800 tons implies 5 tons and acre which is standard.

Anyways... 2023 they make 18m gbp in sales. So on those 750 fully productive acres... that is 25k per acre.

So those 1000 fully productive acres would make 25m gbp in sales. A lot less than my original estimates.

So 4x fully mature sales. Maybe 20x fully mature EBITDA. Not sure how you can argue this is good value.

P.s. all I do is growth investing. I'm used to paying high ratings. I think this is on the same EV to sales as Google lol.

[castleford tiger] 24/1/2024 18:29

I think you are talking yourself out of an investment.
Try HSP yielding 9% or LGEN no worries here

[castleford tiger] 24/1/2024 18:26

Last year we produced 3811 tonnes from a very immature load of vines.
That’s from 750 acres

[mortal1ty] 24/1/2024 17:00

The other small issue is the fact this business has run out of cash and needs to rely on debt.

Which is fine given the quality asset backing... but still, most companies like this don't like running into debt.

So I suspect a placing is coming. Which also makes the move to the AIM market make sense. They want to tap a wider funding base.

I bet new investors will want a discount though.

[mortal1ty] 24/1/2024 16:56

Okay, so doing a bit more research.

On average an acre produces c. 4 tons of grapes per year.

1000 acres, if fully mature today would produce about 4000 tons of grapes.

If you assume 1 ton = 1000 bottles (which is optimistic), you get about 4 million bottles.

This equates to c. £35-£40m in sales. Assuming a mature 25% EBITDA margin, this would be £10m EBITDA, or 10x EBITDA valuation. This is probably fair value. That is what high quality businesses trade on.

So the shares are already trading as if all the current 1000 acres are mature today. Even though the business has 5-7 years minimum until this is the case?

So I concede it isn't as expensive as I thought, but it is still expensive. If I want a 10% return a year minimum, then the shares should be c. £62m valuation today.

I appreciate brand value etc. I like the brand, it is why I looked at it. However, there are lots of niche sparkling wine competitors coming up. Some even say the market is going into massive oversupply as all these planted vines come onboard. I live just next to a pretty successful one myself, Harrow and Hope, and the amount of bottles they churn out from a pretty small plot is very high.

[fevertreeman] 24/1/2024 11:30

Michael Spencer is the man to watch..when he offloads, till to sell

[castleford tiger] 24/1/2024 10:45

Mortality.

The assets in the business are at historic costs and worth much more.
Almost 1000 acres of fully planted vines even on some leased land continues to increase in value as the vines mature.

With a operation like this the costs all come up front.
The leases./the land/planting and the vines.
The infrastructure costs of being able to handle ever increasing amounts of grapes and storage for finished product.

All this has to be in place before you see any return.

The brand has a value.
Entry to the UK market with all this would be a snip at 100m for a larger producer.

You are of course entitled to your opinion and i have read what you say.

For you its not a valid investment meanwhile for me it is.

I started buying at 20p and i want to increase my position.
I have started because sub 60 looks an excellent entry point.

Good luck

tiger

[mortal1ty] 24/1/2024 09:27

'costs of planting' - these costs are capitalised on the balance sheet.

The business has £32.4m of assets (land, building, vineyards and stocks).

Still doesn't get you anywhere near the £100m valuation.

Sorry however you look at it... assets / growth / profits, the business doesn't justify its market-cap.

Fact remains... 1.25m EBITDA, and 8.4m net sales in the HY -> £50m market-cap would be generous. That would also give it a deserved (modest) premium above its reported book value.

This is why the shares are falling. Now its in a bigger market, more scrutiny on what the business is actually worth.

[castleford tiger] 23/1/2024 22:09

The costs in planting and the future potential .100p plus this year

[mortal1ty] 23/1/2024 20:27

This on almost 100x pe???? Wtf...

[mortal1ty] 23/1/2024 20:21

Why is this worth 5x sales? Serious question. I mean that sort of valuation is a tech type valuation? Its a growing business but its a competitive market. 2x sales seems right to me.

[rmc100] 23/1/2024 19:58

Good trading report. Onwards and upwards through 2024.

[castleford tiger] 28/12/2023 10:37

I think there will be consolidation as the smaller players find out the big producers can out market them.

tiger

[ayl30] 28/12/2023 07:25

British sparkling winemakers raise a glass to new bottle ruleshttps://www.thetimes.co.uk/article/6f942a49-910e-4e87-8e7c-9233e010ab2e?shareToken=10e5f30dd690d2e3975be7309dd5e6a6

[bigbigdave] 27/12/2023 08:11

Farmers sell up to English winemakers amid soaring costs
Strained supermarket relations and record grape harvests drive switch to booming sector

[dicktrade] 17/12/2023 11:55

Although these MOS tips always an immediate
positive effect on the share price usually from punters/traders this will bring CDGP into the wheelhouse of a lot more serious investors and may well bring a more long term , sustained rise.

[chutes01] 17/12/2023 11:42

back over 80p, a great product, Carter doing well.
Previous directors did a lot of hard work.

[poulter] 17/12/2023 11:12

Opens up tomorrow mid 70's and a nice run up to Christmas wish I had bought in the mid 30 range still quite happy to hold.