Choicesuk Share Discussion Threads

[cockneyrebel] 03/4/2007 07:41

well if anyone can fathom that lot out you're better than me. 28 weeks, 36 weeks, periods that don't tie up with period end dates.

Can't be that hard to publish 26 week results can it?

CR

[jtcod] 31/3/2007 16:24

No one is claiming that the figures for CHUK will be blinding Stegrego. They won't be. The difference here is that Woolies are valued on a forward P/E of 24 and HMV are on a forward PE of 12.

Teather & Greenwood the house broker is forecasting 11.7p for next year, a forward PE of 4. CHUK is a pure 'Value investment' imo.

On top of that, the company hinted that they were considering offloading the Retail division (in the trading update earlier this year.) If so, that would leave the 2 'non-retail' divisions 'Choices Local' (The distribution business servicing 10,000 outlets) & Choices Direct' (The internet business). Both are growing strongly. CHUK would effectively become a distribution business overnight and I believe the market would have to re-rate the share.

Obviously the sale may not happen but even if it doesn't, I feel they are still significantly undervalued by the market. Unlike Woolies and HMV, CHUK have already completed their rationalisation, saving overheads of £3.5m pa.

All IMHO and DYOR
JT

[stegrego] 30/3/2007 22:12

Be interesting to see whos right about the results

Personally i have some doubts about this one - surely it will fall foul of the same problems that Woolies and HMV are having?

Its web offerings fall some way short of the likes of Play, CD-Wow and Amazon in terms of price and product selection.

It has a Choices branch that i drive past most days (at a variety of times) and ive yet to see more than 1 or 2 people in the shop - most times it appears to be empty.

Look forward to the 3rd with interest

[jtcod] 30/3/2007 20:28

Alex
I think HMV will make a serious move to compete with 'Game' this year. Giving over a larger slice of the store in order to brand a 'Game store' within the store. Perhaps as much as 40-50 % of floor space could be devoted to it imo.

With their vastly suprior distribution scale, it's a no-brainer imo. Games are the most resiliant margin product in entertainment nowadays and HMV are desperate to increase profit per square foot. I would be absolutely staggered if they miss this opportunity in what is the most prolific games sales window for at least 6 years.

GMG are on a forward PE of 23.6 for 7/2007. That's high for any retailer imo. share price may rise still in the short term but it may start going wrong toward eoy imo.
JT

[goonertone] 30/3/2007 17:51

vidacos and Nortrust are two of PG's nominee accounts. I'll check on Monday.

[chairman2] 30/3/2007 17:37

thanks Maladex

[madalex] 30/3/2007 17:24

Dont hold any CHUK but have a look at this link :-



And with the new Xbox 360 Elite being released, I think 2007 will probably be the best year ever for console gaming.

Have a look at GAME (GMG), the share price has risen 50+% in the past 4 months. Not sure if its increase in profits, or the anticipation of this year with PS3 finally being released.

[chairman2] 29/3/2007 23:31

who has the best way to catch the wave in the games market?

suggest some shares to buy?

[jtcod] 29/3/2007 22:11

steve
Sola, GNG and CHNS yes but I worry far more about my oil stocks than CHUK. There is zero pricing power for oil companies. Oil could drop 20 % in a week. Now that is a real concern to me. I'm pretty comfortable with CHUK at the moment.

[steve133] 29/3/2007 22:00

Chairman2 - 29 Mar'07 - 18:12 - 339 of 340

If it were me, I'd bring in a major "Rap" figure like J-Z to advise:
£200 k would get his name


lmao funny maybe amu could draft in p diddy and snoop dog hold a rap concert in the super markets to push the products.watching on the sidelines but you must sleep better holding the likes of sola gng dgo chns etc jt?

[jtcod] 29/3/2007 21:39

Yes mm.

Bought YTE at 55p April 2003. Asset value was 174p as I recall & that was 'after' writedowns. Big chunk of it was freehold property I think.

Chairman
I can see where you are coming from and it may be worthwhile for the online business but I think a lot of money can still be made doing the boring distribution stuff without massive marketing investment.

IMO we may well see a re-rating if they announce a retail offload on Tuesday. That would leave earnings visibility on the remainder and a growing company on a forward P/E of just 3.7 (excluding retail) based upon my own projections for the current year.

After that, perhaps one buyout or a high profile new contract would probably do the rest imo.

That link from GT today sounded reasonably upbeat to me as I said earlier. PS3 sales may be a good shot in the arm for retail also. Making it easier to move the retail side on (if that is the plan):


It's been a long road for some of the shareholders but I think CHUK are now ready to start moving forward.

[chairman2] 29/3/2007 18:12

If this company changed its name and updated its presentation of
its business model I suspect the City would rate it differently.

Lets say they decide to call it "Entertainment medias" - NM for
short - to ride up on the back of the general view that "Video"
is a dead word but that consumer entertainment is still a major
boom - just look at the SONY Playstation 3 stories today. Thats where
the "buzz" is - maybe the money too. But I dont care - just change
the dreadfully old-fashioned appearance and this might start motoring.

If it were me, I'd bring in a major "Rap" figure like J-Z to advise:
£200 k would get his name, half a days consultancy and a complete
re-branding, repositioning and modern marketing would be underway.
An offer of 250 p a share from WARNER in 17 months time and we can
all retire to the Bahamas with our PS3's!!!

There - I may know nothing about the business

But I know how to make you smile!

[michaelmouse] 29/3/2007 17:17

No I'm still here as well. Not much to say though really. Still well below NAV and has a historic p/e which is ridiculously low.

No guarantees but these type of shares have done well for me over a significant period of time.

Most up to date would be Atrium Underwriting (AUW). When first purchased at about £2.15 (it was paying a 5% dividend) and the p/e was about 4. However, the experts were telling us that each year the Hurricanes were going to get worse and worse due to climate change etc. etc. share price fell to £1.75ish (6% dividend). Worth purchasing again?

Today's results tell a story.

Big Food Group was one of the biggest no hopers I purchased. Shares fell to about 25p but subsequently recovered to about £1.80 at one point.

Anyway I preaching to the converted no doubt. We know that they don't always recover but the ones that do more than make up for the ones that don't.

JTCod - I seem to recall that Yates was also one of yours. Snap.

Cheers.
Michael.

[jtcod] 29/3/2007 15:33

Didn't mean to exclude you Chairman. And then there were 4.;-

[chairman2] 29/3/2007 13:50

bound to be a dew lurkers like me as well
(with nothing to say but watching nonetheless)

[jtcod] 29/3/2007 13:30

Cheers for the news link GT, I hadn't seen that. I rather get the impression that the story was generated by our PR people. Either we have a new pr company or we have given the old one a kick up the pants imo. Sounds pretty upbeat to me anyway.

Woolies was interesting, I agree. Confirms distribution is continuing to perform in a tough market place. It seems to me that Woolies would be in trouble without it.

BTW are we down to just Me, you and that perrenial bundle of fun sporticus, these days?

No offence intended sporticus.;-)

[goonertone] 29/3/2007 00:36

I have today had an e-mail from John Sealey and I can confirm that the share register has now been updated and now shows 87.27% held by major shareholders. Add JTC and you have near on 90% and therefore a 10% free float or put another way £850,000.



They have also recently revamped the website and it know has a strategic update on it which I haven't seen elsewhere.

Also I noticed this regarding their online sales which would appear that they are still investing to improve their online offering and not sitting back with what they have already.



Finally Woolies had their results out today(edit - make that yesterday) which again would have been a disaster if it were not for their distribution business. I will say this again and again the money in the retail media arena is to be made in distribution. The high st retail side can be made profitable but it is not easy and not getting any easier. Compare Game to HMV.

The woolies results also had a nice summary regarding pricing and outlook for CD's, DVD's and games but you can check that out yourselves, i',m not going to do all your work for you.

GT

[jtcod] 23/3/2007 19:19

It's a relevant question Arthur. Some leases were sold at a profit last year though.

The stores have been upgraded recently and so has the EPOS system so there is bound to be a fair bit of depreciation anyway. At least they are in a fit state to market themselves. There is no way of knowing for sure but yes I would agree a large part of the balance sheet is tied up with the shops. Last valuation showed £1.5m bricks & mortar asset/s btw.

We shall have to wait till the announcement to know the full situ.

[arthur_lame_stocks] 23/3/2007 17:02

True, but most of their fixed assets are fixtures and fittings, probably relating to the store network, what do you think they´re actually worth in a market sale which seems likely if they´re closing down stores?

Offloading the stores is going to hit turnover pretty hard too. I don´t think you´re going to get any joy out of this one this year, but obviously I could be wrong.

[jtcod] 23/3/2007 16:49

And total assets are 91p

With £134m turnover, someone is buying their goods Arthur.

It's obviously not everyone's cup of tea as an investment but it is mine.

[arthur_lame_stocks] 23/3/2007 16:38

Net current assets are only 1.5m or about 8p a share.

I´m not convinced about this one, they´re a small player in a very dificult market, their internet offering really isn´t all that good, they aren´t particularly competitive on price and they don´t offer a very big range.

[jtcod] 23/3/2007 14:35

The balance sheet reminds me a little of Yates bars in early 2003. They showed 165p per share value but I picked them up for 55-60p. Very tough market. Oversupplied and the usual price wars. Took about a year but it was bought off the market for 155p in the end.

Not saying that will happen here but I do think there is good value once the retail is sorted. Direct business and the 10,000 shop distribution business are both growing and as I have said above, I think they would make EPS 13p this year with the retail stripped out.

As long as debt is still under control and falling, there is a future for this business imo.

[promethean] 23/3/2007 14:07

Many thanks JT for you response...

Was just able to take another look at the balance sheet from last year...and thought of a different way to look at the equation...

If one offsets the creditors against tangible assets and debtors, then effectively by buying shares in Choices UK, you are approximately buying £17+m worth of stock... for under £9m (mCap) with all the sales channels thrown in for the bargain...

If i was in a playground and someone offered me a DVD worth over £17 for under £9, i wouldn't hesitate would i?

I apologise for the gross oversimplification, but is it really as simple as that? I keep thinking i must be missing something.

[jtcod] 23/3/2007 13:51

prom
On page 21 of the last annual report and accounts there is a segmental analysis. See web site link above.

It does not stipulate between stores and direct unfortunately and since then Approx. £20m pa has been added by Andromeda on the distribution side (particularly in games) and there has been a significant drop in Retail sales due to store closings, reduced rental business etc. This is clearly a distribution business with retail on the side.

IMO we will hear the managements plans to divest of the retail with the prelims. I think they have just been shaping them up to offload but I'm guessing on that score. All we have is the last statement:

"Management is considering a strategic plan to ensure the Retail division,
ChoicesUK stores, will not detract from the value and success of other Company
activities."

I have no links regarding Longevity of DVD. 'Goonertone' may have. I do know that industry margins for 'games' are holding up better than DVD (next best) and CD's (worst). The Andromeda purchase has benefitted the group in driving the games side of the business.