Finsbury Food Share Discussion Threads

[edale] 11/5/2012 09:48

Thanks Aleman, I used to take both Shares Mag and IC but tend now to rely on online info as all I seemed to be reading was what I had picked up online the previous week. I have a small holding of FIF and will continue to hold, unless the economy really does tank it should prove a good medium to long term investment.

[aleman] 11/5/2012 09:29

Nothing new. Pretty much said growth has returned and debt continues to be paid down despite commodities, weak consumer markets, etc. so the recovery story continues, making them look a buy given the low p/e. It was a market sweep to find 10 downtrodden stocks with recovery potential, with each share given a couple of paragraphs in something like a 4 page report.

Shares mag doesn't seem to have any clout these days. It used to be great around 2004/5 when it specialised in writing up small-caps. Now it wastes a lot of space on trading and forex and speculates before results rather than covering the numbers of overlooked companies after them. It's a shadow of its former self.

[edale] 10/5/2012 22:49

Aleman, was there anything new in the Shares Mag article or just a repeat of what what we already know ?

[aleman] 10/5/2012 16:58

Looks like the buy tip in Shares magazine hasn't had a great deal of effect today!

[boffster] 08/5/2012 21:53

Nice to see us buck the market today

[spaceparallax] 08/5/2012 14:05

sp looking up this morning

[markt] 08/5/2012 13:26

clearly +ve and -ve things in the analysis from SOBIC inv. club.

including

"The below chart shows how debt has been decreasing steadily since 2009. This is positive however debt needs to decrease further for shareholders to be completely confident about the solvency of the firm."

"Finsbury Foods currently uses Invoice Discounting to improve their liquidity, this is not cost effective."

"The Acid Test and Current ratios are significantly below what is expected for a liquid company. This is a particular worry as it suggest Finsbury Foods will struggle to pay future commitments. However the graph below shows that liquidity is slowly improving."

"The Acid Test and Current ratios are significantly below what is expected for a liquid company."------OUCH !!

I post on this thread since it would get deleted on the long's thread !

[aleman] 07/5/2012 22:51

I just stumbled on the SOBIC report and posted it. They're only students and 1% turnover growth was, as I understand it, the result of a backwards-working exercise to find out what could justify the current price rather than a forecast to determine where it might be in future. It was obviously going to give different results from PG's higher growth forecasts. I think it is interesting to compare assumptions but I posted it as much for the general background notes as much as anything. It's always interesting to see what somebody else considers to be the strengths and weaknesses.

"The purpose of the model, in this context, is to show the assumptions required to result in a fair valuation of Finsbury Food."

(Market cap was just over £14m at the time.)

[jpjp100] 07/5/2012 19:25

I wasn't especially impressed by Sobic's analysis in all honesty.

[bonio10000] 05/5/2012 01:36

£1 it is then.

;-)

[markt] 03/5/2012 16:41

Aleman
You posted asking if FIF use coal, oil or gas...and quoted the Brent oil price.

Coal I think ;-) je je !

---
(you're joking surely ?)

[markt] 03/5/2012 16:39

"Boffster 12 Apr'12 - 15:55 - 636 of 672

Just seen an interesting couple of lines in the interims: -

On 21 February 2012 the Group entered into two forward dated swaps:
£3.0m for four years from 25 May 2013 at 1.65%
£6.0m for three years from 2 June 2014 at 1.89%

Looks cheap!"

BTW
imo this is NOT the effective interest rate on a loan.
it relates to the interest rate for the swap part.....
there is a loan interest rate as well

[markt] 03/5/2012 16:38

Boffster
"The egg price spike is purely a short term problem due to EU legislation on battery hens"

only partly true imo.
EU legislation reduces the number of hens per m2..by quite large %..hence reducing production per m2 per month....hence making chickens and eggs more expensive from existing farms/factories.
if wholesale buyers will buy in from outside Europe or encourage producers to make more factories I don't know.

With less hens per m2 ....imo egg prices will be higher than they were...and stay higher.
------

And whatever its raw material costs....FIF will be competing with other UK factories for most of its sales buying materials from same sources..so FIF gets no advantage vs other UK producers in the same sector....and the supermarkets will be nailing down the FIF profit margin as much as they can.

[markt] 03/5/2012 16:15

"typical selectivity displayed by shorters "

I'm not short of FIF shares....not a wise share to short imo.
and indirectly I do own some FIF shares.

I think that some of the longs are blind (or have been) to some of the -ve factors for FIF. There are +ve factors as well.

[markt] 03/5/2012 16:12

"Aleman 19 Apr'12 - 13:00 - 84 of 86

Care to put some numbers on how the strong £ squeezes FIF, bearing in mind it buys some of its commodities, like sugar, priced in Euros so they will now be less in £s (until the contracts expire)?"

BTW ...did you answer a previous question as to whether your initials are F.L. ?
(optional reply)

-----

Numbers on effect of strong pound.
very simple....

most of FIF costs are in pounds....
if it exports to Euroland.....its exports become more expensive if the pound rises vs the Euro (which looks like a 99% g'teed bet at the moment, if UKland starts copying Euroland rush to the plug hole (!!) then it may change a bit)

FIF's labour cost is around 50M. 1/4 of sales. large part of costs. In pounds.
growth in sales has come from Eurozone, esp. I understand France.

(if buy materials in Eurozone, ship to UK factories and then ship finished products/cakes back....it gets harder to do if UK becomes more expensive vs Euroland....profit gets hit till at some time it may not be profitable)

Euro conversion. If buy raw materials in euros, transport, work on those materials, and transport back and then sell again in Euroland.....easy to see that costs get worse if pound becomes stronger......the sugar or flour bought in Euros processed in a UK factory and then shipped back, effectively costs more if pound is more expensive, the cost does not cancel just because it goes back to where it came from. (labour part will increase and packaging (gonna be Uk sourced to minimize transport costs of low cost items) etc)
---

Forward buying can not avoid the problem. FIF can only forward buy for X weeks/months of materials. If FIF forward bought currency for too many weeks/months/years the interest costs on the forward buy would hit/wipe out profits; and if currency moves the other way then your products would be uncompetitive with anyone else that has not forward bought or their forward buy runs out before yours.
----

If buy sugar in Euros...and sell products in the UK then strong pound helps reduce your costs....BUT....your competitors operating in the UK will be doing the same and both will be competing on price to the wholesaler (supermarkets, and they seem to like to nail margins to be as small as possible)...so imo you make no big gain if can buy cheaper sugar due to a stronger pound.

(if you can buy all your raw materials in Euros using strong pound then you could argue that your selling prices will be lower and hence you may sell more...which would help operation of machines and profits....but I think you will always be competing with other UK factories also buying materials where they are cheapest).....If Euro zone becomes cheaper due to falling Euro...then competition from there for sales in the UK perhaps becomes a bigger risk.


like the tide, can not hold it back forever

[aleman] 03/5/2012 12:17

Not recently. I'd consider few more at this price. Maybe in a couple of weeks.

[boffster] 03/5/2012 12:12

Have you bought any more lately aleman?

[aleman] 03/5/2012 12:10

There were 594k options at 14p at the finals, exercisable between March 2012 and March 2019. Recent weakness is probably down to some option holders selling at the first chance. Selling half to pay for the rest to hold would be common for those that wanted to stay aboatd.

[boffster] 03/5/2012 11:02

Looking back at the results it appears its part of an employee incentive plan awarded years ago. There's about 12m options outstanding at various prices and exercise dates.

[bonio10000] 03/5/2012 10:43

Exercise price of 14p?

So they really set a high perfromance target then for that one.

[boffster] 03/5/2012 10:05

Clearly the options exerciser was not keen on holding the stock; they were sold yesterdsy.