Character Share Discussion Threads

[sev22] 13/9/2019 09:29

Allenby Capital, issued in the last hour:

The Character Group plc (CCT.L, 370p, £75.7m)
Pre-close update
Pre-close: Scandinavia disappoints
Disappointing pre-close update for the year ended 31 August with PBT performance expected to be below the lower end of market expectations (ACLe: £124.6m in revenue and £13.5m adj. PBT). The main cause of the miss relates to the failure of the Scandinavian retail market to fully recover from the liquidation in January of Top Toy, historically the largest customer of OVG-Proxy where CCT has a 75% stake. This will result in Proxy making a loss for FY19. CCT has also suffered from the weakening of sterling against the dollar that has impacted gross margins in H2 and this is likely to continue in FY20. On the plus side, the current Peppa Pig licence has been extended by Entertainment One for a further six months to June 2021. Forecasts FY19 and FY20 reduced and we now expect adj. PBT to be essentially flat over the forecast period. We move our fair value to 430p/share (550p/share), equivalent to a 10x PER for FY19 and FY20. Management has committed to the final dividend suggesting an 7.6% FY19 yield. (David Johnson)

[glavey] 13/9/2019 08:41

That's twice then. May I suggest:

[rcturner2] 13/9/2019 07:59

down 30% at open?

[elmfield] 13/9/2019 07:53

Think I would stay clear.

[ny boy] 13/9/2019 07:47

Support 200p, not followed before but may take a long term stake, if I can get in around that level, over the short term

Friday 13th, not a great day to publish results!

[5chipper] 13/9/2019 07:30

Chance to buy this morning perhaps

[runthejoules] 13/9/2019 07:17

Shame about the undisclosed cashflow restriction due to Scandinavian problems but good news about the Peppa extension and overall an impression of competent management given. I will hold onto my stock here.

[gdjs100] 13/9/2019 05:33

Their holding was previously undisclosed, so they must have been less than 3%.

[thirty fifty twenty] 12/9/2019 23:47

thanks Orange foe the research. I agree Forager Capital is good to have on the share register. The slight negative is that we don't know what their holding was before. For instance they might have held 4.8% and thus it makes sense that they average down at the current price (in for a penny , in for a pound!) I have done the same myself. I have taken an aggressive downside to the loss of Peppa Pig and there is indeed ascenario where the price can still fall significantly from here, but there are some other scenarios with upside - I trust the management and ultimately that is worth a lot. it has become riskier than I'd originally hoped though.

All IMHO, DYOR + BoL
CCT is in my top5 holds

[orange1] 12/9/2019 21:52

Forager Capital based in Birmingham Alabama now have a 5.4% stake. This is how they operate and the return they are looking for:

"We are fundamental value investors applying boots-on-the-ground research methods to the microcap equity universe. We gain an information-based competitive advantage through research intensive due diligence and personal connections with management teams in companies that are overlooked by the market and have virtually no analyst coverage. ​

​While most investors automatically avoid microcaps, we focus on the large subset of them with long histories, high returns on capital, and capable management teams. Our typical investment is in a business with potential sources of free cash flow growth that the market hasn’t discovered. We invest when our base case expectation is to double your money in three to five years and downside protection exists to shield us from mistakes."

[h1a3] 11/9/2019 19:20

Is there a trading statement due tomorrow?
Hopefully it is CCT who are buying the huge trades.
The price certainly needs some support.

[deanowls] 11/9/2019 17:00

Maybe we will know more tomorrow.

[deanowls] 11/9/2019 17:00

Maybe we will know more tomorrow.

[kennzo2020] 11/9/2019 11:15

Relatively new to investing I do have some shares in CCT, at a price of £4.27, therefore reflecting a current loss of around 18%.Ordinarily I have a firm rule of selling shares that hit the 10-15% loss mark. In the process I try to learn lessons from these mistakes and apply to future investments.So what's stopping me this time?- strong fundamentals.My question is not whether or not I should sell the shares (I've already decided what to do there). However I'm interested to hear from others if they feel there are ever times that are right to break your pre-determined rules.Thank you

[sketchley] 10/9/2019 14:48

By Characters standards some huge trades have just gone through !

[deanowls] 05/9/2019 10:25

The fact they have a contract and Hasbro said in the takeover docs that they will realize savings by 2021 (think it was this date) suggests they will. They also haven’t taken over yet.

[glavey] 05/9/2019 07:09

tkamp,
"Of course Hasbro will 'work with CCT' (whatever that even means) for the next two years, simply because CCT has the license."

And supposing they don't?

[h1a3] 04/9/2019 21:24

Does anyone know when a trading statement is expected?

[capercaillie] 04/9/2019 18:16

hxxp://www.thecharacter.com/Content/Images/uploaded/PDF/The%20Character%20Group%20plc%20-%20Trading%20update%20-%20RNS%2014%209%2016.pdf

Apologies of this has been covered in previous posts but Character have had licences with Hasbro on another product.

[mcartdon] 04/9/2019 11:49

The takeover isn't complete the share price of e 1 remains high hasboros has fallen
no one can know what is happening in three months,
good short term results and cash in hand, and a great team is a plus they were doing well.
25m peppa t/o was company sourced and
a good working relationship with Hasbro who will want them to cooperate and may well wish to continue a good overall relationship as most people do.
perhaps in a week we will get some update and more of a clue how future co-operation could grow into something else.
they lived through similar licence losses and grew out of it.
patience.

[tkamp] 04/9/2019 11:12

@Zipstuck

keep in mind that E1 sales are (almost) entirely UK-based and CCT's UK margins are higher than their international margins. So just based on that information it's likely (although indeed not 100% certain) that E1 margins at above group-average.

[pireric] 04/9/2019 11:02

Presume also that E1 might also have an early break clause such that if they pay CCT $Xm, then the contract is terminated earlier.