Gear4music (holdings) Share Discussion Threads

[king 786] 04/1/2019 12:28

pre- you never know

[pre] 04/1/2019 12:24

further to fall?

[staverly] 04/1/2019 11:52

Bearing in mind G4M had EV of £25m at IPO, reflecting £3m cash & 800k BS debt at the time, given the unspectacular operating performance since, don't see why the equity value of the business is worth materially more today than the 139p originally offered. Just an opinion.
No position - DYOR

[toffeeman] 04/1/2019 11:43

I took my hit at 491 having bought at 797 - it hurt at the time but I need to use this example to discipline my trades going forward (LTG being one I should have applied the same approach but didn't!)

[babbler] 04/1/2019 11:39

Took a hit. Got it wrong... Gl.

[phowdo] 04/1/2019 11:37

Looks like the new appointed broker is forward selling a placing. Lots of stock available.

[blueball] 04/1/2019 11:28

My target is 200p fair value.

[pireric] 04/1/2019 11:24

"Both statements by pireric. Does he know what he's talking about?"

I'm making two separate points
1) Despite being down 45-50%, this is not cheap, on revised 30x next year's earnings at the time
2) Their price target is nonsense. To get anywhere near 500p you have to assume a huge operating margin inflection, very high growth over the next 5-10 years or the methodology is based off a EV/sales metric

I can't comment on #2 as I don't know their exact methodology, but I bet it's very flaky, as evidenced in the exact halving of the target price.

[babbler] 04/1/2019 11:23

Seems stuck...

[babbler] 04/1/2019 11:18

Did wonder but didbt want to say anything...Buys as sells as csn buy at 254

[saracen3] 04/1/2019 11:09

one year problem and Peel Hunt downgrades for next 3 years. Wonder if the analyst is sulking with a new joint broker appointed.

[ohdearohdearohdear] 04/1/2019 11:04

"My screen shows Peel Hunt now have a 9p EPS estimate for FY21, which is basically 2020, putting this on about 30x next year's earnings.
That's still very vulnerable IMO."

"Babbler, if there is one thing I will say, completely ignore Peel's price targets. It's meaningless and derived through nonsense methodology."

Both statements by pireric. Does he know what he's talking about?

[king 786] 04/1/2019 10:50

most BUY'S are showing in sell column. hopefully should see
a retrace later imo

[upsillon] 04/1/2019 10:32

Writing was on the wall at 658.

[babbler] 04/1/2019 10:25

Hope it recovers for you. Been in that position. Not nice.

[staverly] 04/1/2019 10:25

srichardson8: don't forget the £10m of interest bearing debt, which now appears quite a millstone given the business's borderline capability to historically generate any FCF .

[pireric] 04/1/2019 10:24

Looks like Panmure Gordon was replaced srichardson

[srichardson8] 04/1/2019 10:20

the market cap is currently just over £50mn. I am a pretty annoyed holder but this does feel, at a price to sales of modest proportions, too cheap even with the margin problem- and margins are fine at the best of times. However, it looks odds on that they need to invest a bunch more in warehousing and inventory so will probably need to raise money. Thus another broker on the roster as well. As the value of my holding is now down (gulp) 65% it is pretty inconsequential to the portfolio in toto so I feel free to make these comments. I just hope - but not terribly expectantly - that if they do decide to raise money trough equity issuance that poor mugs like myself get a chance to get a slug and see if there is ever going to be light at the other end of the tunnel.

[babbler] 04/1/2019 10:16

Agreed. Guess you may be right as still dropping might have got a little burned but will see.... Just didn't think slight drop in EBITDA was worth 50 percent off mcap considering other growth in the company.

[pireric] 04/1/2019 10:13

Babbler, if there is one thing I will say, completely ignore Peel's price targets. Both the 1000p old one and the 500p new one. It's meaningless and derived through nonsense methodology. The market is telling you that with it down at 250..

[staverly] 04/1/2019 10:09

Quick skim of most recent primary financial statements after this morning's RNS suggest equity fund raise as slam-dunk this spring.

[babbler] 04/1/2019 10:09

Didnt peel have 1000p target?

[pireric] 04/1/2019 10:07

Concern around the gross margin Babbler. It was down significantly in H1, and they were expecting a rebound in H2, but sounds like still subdued. Fundamentally, I don't think the market should have ever been paying >25x earnings (let alone >30x or >50x it was at) for a low operating margin business like G4M. Same perhaps applies to Asos, Boohoo etc but they have gross margins more than double what G4M has and their margins are fairly stable/increasing.

[babbler] 04/1/2019 10:03

Thanks. Good to take into consideration... It has lost half the mcap though for a slight decrease in ebitaThe Group has recorded overall sales growth of 41% for the Period, driven by significant customer demand, delivering strong growth both in the UK as well as Europe and the Rest of the World. Further sales growth in excess of expectations was constrained by our York distribution centre, which reached maximum capacity during the peak trading period between Black Friday and Christmas. Whilst there was an improvement in margins in the Period compared to H1 FY19, these capacity constraints prevented further sales growth compensating for the lower gross margins and, as a result, the Board now expects FY19 EBITDA to be slightly below FY18 levels.