Games Workshop Share Discussion Threads

[walbrock82] 10/1/2018 10:49

After crunching some numbers, I made some forecast for 2018 regarding sales and pre-tax profits.

So, for 2018:

Sales: £235m vs. forecast £195m.
Pre-tax profit: £104.6m vs. a forecast of £65m.

This means after tax, it makes a net profit of £82m or fwd-PER of 9.63.

Here is the table showing my calculations:

I guess this could be a short-term (the next three months) buying opportunity.

Unless brokers revise their sales and profit forecast for 2019 and 2020, I'm the shares will continue to trade under pressure.

Current 2019's forecast for sales and pre-tax profit is £185m and £55m, respectively. which is projected to fall to £185m. Also. pre-tax profit to fall to £55m.

[shanklin] 10/1/2018 10:25

That's way past my bedtime. See you tomorrow :-)

[nod] 10/1/2018 10:12

Hi Martin,I'm not angry, but I am very tired after a long day. Tired emoji.It's 11:10pm for me so I'm done.

[shanklin] 10/1/2018 09:55

Hi Nod

You seem angry.

As you and I know, and he states, Adam is not a new customer. So, no I do not consider him to be representative of millions of new "GAW" customers. That would be ridiculous.

However, given your posts 1896 and 1897, including "Adam does a good job with his Tabletop Minions videos.", I had perhaps mistakenly formed the conclusion that you felt his views had some merit.

Additionally, whilst your post talks about GAW's website providing a vehicle for 20% of GAW's sales, the video makes no comment on the use of GAW's website to sell product online. It is all about the extent to which, in his opinion, customer interaction has improved under the current CE, which seems very likely IMHO to be contributing to the improvements we have seen in GAW's financial performance.

To date, I have found it than straightforward to work out the composition (e.g. by geography, new vs established players) or drivers (e.g. better of social media) for all the additional sales being achieved. Or how this will feed into the future years, and indeed H2 of the current year, for which broker estimates seem to be conservative. I would certainly like to have a better understanding of this.

But its not something which is being greatly discussed here beyond your comments that historically sales cycles on new products have extended to as much as four years, so that next year's reduction in forecast profits may be overly conservative.

Cheers, Martin

[nod] 10/1/2018 09:29

Fred, over past cycles when the shares have been rising strongly I've seen setbacks of 15% to 20%. January seems to be a common time for this, perhaps because in thinner markets and with retail anxiety, shorters can shake trees more easily. I started to write this a few weeks ago but deleted it, deciding I didn't want to put a dampner on holidays or encourage anyone to sell. Traders are already aware of this January effect.

In all cases when the company sales are strong the share price has rebounded from these setbacks quickly, as we did in early December.

A dividend announcement will help. The fundamentals are excellent.

[flatoutfred] 10/1/2018 09:12

I'm getting the jitters NOD, whats happening bud ?

[shanklin] 10/1/2018 08:00

nod

As per the link provided by martinthebrave in post 1893:



it sounds like GAW were truly appalling at customer engagement for many years and have belatedly upped their game in the last year or so.

It is for this reason that I did not sell any shares earlier in the week, taking the view that broker estimates going forward so not reflect the potential benefits of this relatively recent improvement.

Hope I am proved right.

Cheers, Martin

[nod] 09/1/2018 21:32

Ten years ago GAW invested another GBP 2 million in its global web store.
Before this investment Direct sales (web and mail order) were already 10% of total revenues.
Today, Mail Order is around 20% of revenues. As we all know, online evolves quickly and GAW will have to keep updating and investing.

It has done this for a long time and its online channel s keeping up, paying off and growing as it is for most businesses that sell products.

Our business is a contact hobby utilising a network of 450 own stores and around 4,000 independent (Trade) outlets.

I don't think Peel Hunt are correct on their point that GAW "belatedly embraced online".
GAW has had a capable online presence for a very long time - at least 15 years, maybe 20 years. I can't remember all the dates.

[xjhoward] 09/1/2018 18:02

Why is Games Workshop doing so well?
Analysts at Peel Hunt credit the revamp of its social media use:

"Games Workshop has belatedly embraced online and social media, which has had a major impact on the hobby and the company’s relationship with hobbyists.

"There has been a move to greater engagement and enjoyment as well as much improved product marketing.

"The numbers are impressive with 2.5 million users and 16.3 million views of the online content in the period.

"The company recently introduced its own videos rather than relying on hobbyists to develop and post material.

"These videos now reach 100,000 people per day and directly drive revenues. This is only the start and greater customer engagement should drive greater awareness of the hobby and grow the Warhammer globally.

[mammyoko] 09/1/2018 17:18

£GAW current period trading comment - "Our sales for the month of December have also shown good growth trends". 2017 comparatives are strong for Dec 2016 per last year's update on 17/1/17 - "Games Workshop is pleased to announce a significant increase in sales and profits for the period from 28 November 2016 to 15 January 2017". H2 FY17 sales were £87.2m so the current consensus of £86.7m for H2 FY18 looks conservative as the the new 40,000 launch was in H1 FY18.

[someuwin] 09/1/2018 16:10

Bought back the ones I sold yesterday.

[cockerhoop] 09/1/2018 16:02

Some AoS content to be added

[martinthebrave] 09/1/2018 15:47

Out of courtesy I am just letting you guys know that I decided to take profits yesterday 2627p. Great Company & better than decent results were never in doubt. What prompted my sale was the Broker consensus for 2019 for PBT of £55m -v- £65m for this year. They may well outperform this but in the mean time I could see the share price dipping. I had held for a year since 845p and wanted to leave on a high! I wish you all well. Martin

[allstar4eva] 09/1/2018 13:59

Traders out - Investors in!

[robinnicolson] 09/1/2018 13:28

IC:

"Shares in Games Workshop (GAW) continue to run away with themselves. Up 211 per cent since we advised buying the stock last February, the model maker continues to go from strength to strength. First half sales rose by a whopping 54 per cent, while operating profits rose 180 per cent to £38.8m. This leaves the group clearly on track to deliver against full year profit estimates of £65m. Growth is across all channels and regions, particularly online and in the trade division, and bosses are considering another £7m in investment to expand capacity. We remain buyers."

[robinnicolson] 09/1/2018 12:39

Peel Hunt analyst Charles Paul said: “It is encouraging that the growth has been seen in all regions and all channels, with online and trade growth particularly strong.

The company is stepping up investment in the business by around £7m in order to expand capacity. Nonetheless, there will still be significant excess capital to return to shareholders."

[interceptor2] 09/1/2018 11:46

To underline your point on margins Nod, worth highlighting that the net margin reported today was 28.8% versus 15.4% for H1 2016, Full year margins were 19.3%.

Market can't decide how to react to today's results, but I was happy to add after the pullback.

We had a trading update just one week after the interim results, wouldn't be surprised to see this again with an update on trading over the Christmas period, last year they also announced a special 30p dividend. Cash generation was very strong so perhaps another dividend could be on the way?

[nod] 09/1/2018 11:22

I've mentioned over the past year about the near one million investment in the web store, not just the user interface but also the warehouse and computer systems.The fruits of this can be seen in the profit from web sales (Mail Order). We don't share the profit with Trade, so Mail Order is a very profitable channel. Profit from Mail Order went up 103%Trade revenues are more than double Mail Order revenue but profit from Trade is now actually less than Mail Order. There is huge potential to grow Mail Order sales and improve profit margins even further.

[nod] 09/1/2018 11:00

Simso, the brokers make no sense to me. Brokers, analysts and press don't seem to understand GAW or its customers. The number of times GAW is compared with high street retailers is an example.

[simso] 09/1/2018 10:33

Nod, thanks, and agree with you 100%. The Brokers Forecast for FY19 is also assuming a "one off" nature to this first half performance, with only 136p forecast compared to 161p this year.

[nod] 09/1/2018 10:17

Simso, because this product is both a hobby and very expensive, customers spread their purchases over years not six months. It's the hobby aspect that makes a difference. It's the price that makes it a luxury.

[simso] 09/1/2018 10:06

According to Stocko the FY18 Brokers Consensus is 161p, so having delivered 97p at the interim stage, the Forecast implied for H2 is only 64p. That is more than 35% lower than H1..and as DiscoDave says, the 5 year average weighting is that H2 EPS is 45% higher than H1.
The Brokers Forecast is assuming that the launch of Warhammer at the start of H1 this year caused a big spike in sales which will be calming down by H2. While there may be something in this, I cannot believe it will fall away to that extent, and in fact the implied 2nd half Forecast of 64p is barely any higher than the 61p achieved in 2nd half last year. More substantial Upgrades and Dividends look a racing certainty to me.

[useless23] 09/1/2018 08:25

How was your steak at the weekend?

[cockerhoop] 09/1/2018 08:21

Good chance of Peel Hunt upgrading now December has passed with decent growth. share price could well take the cue from any upgrade.