Gear4music (holdings) Share Discussion Threads

[nobilis] 17/11/2020 07:41

might warn if vaccine comes out and growth slows as everyone goes partying
im expecting a director dump this week

[hastings] 17/11/2020 07:38

EPS upgraded to 33.7p and that may prove on the conservative side!

[saurish] 17/11/2020 07:36

Excellent set of results from #G4M. What stands out is, 1. A further upgrade from the recent Oct update,2. Prepared for Brexit,3. Higher margins achieved can be maintained in med term and 4. the significant cust growth to benefit in med to long term (not only a covid play)

[hastings] 17/11/2020 07:14

Yes, absolutely excellent and November is continuing to be very strong.

[saracen3] 17/11/2020 07:12

WOW 70p eps possible PE of 20 = £14

[davro] 17/11/2020 07:10

Excellent results, this company really is on a roll, looking set for an excellent Christmas period...

[masurenguy] 17/11/2020 07:09

Interim results for the six months ended 30 September 2020

Material improvement in H1 profits, strong trading continues leading to further upgrade

Gear4music (Holdings) plc, today announces its unaudited financial results for the six months ended 30 September 2020 ("the Period").

· Revenue increased by £20.8m (42%) to £70.2m; Gross profit increased by £7.6m (61%) to £20.1m

· Operating profit increased by £6.2m, EBITDA up by £6.5m (325%) from £2.0m to £8.5m

· 403,000 new customers purchased during the Period, being a 52% increase on H1 FY20

· Very strong trading patterns have continued into November

Commenting on the results, Andrew Wass, Chief Executive Officer said: "The material improvement in profitability we announce today reflects the excellent commercial and operational progress we have made during the last two years. COVID restrictions across Europe continue to accelerate our rate of sales growth, which alongside our previously stated strategies of improving gross margins and increasing operational efficiency, has resulted in record profitability during the six-month period.

We expect the significant growth in new customers achieved during the Period will benefit the Group in both the medium and longer term, as more people appreciate the benefits that playing and creating music can bring. Alongside the challenges of COVID, Brexit will also bring new challenges to our industry, and we expect this combination of events will drive further consolidation within our market. Whilst it is difficult to predict every outcome of Brexit, after several years of planning we are well prepared for the required operational changes, with our European hubs and local courier networks underpinning our revised distribution strategy.

I am pleased to report that trading into November continues to be very strong, and we are well positioned for what we expect to be a busy peak trading period ahead of us. We therefore expect that results for the financial year will now be ahead of the recently upgraded consensus market expectations. The Board remains focussed on prioritising profitable growth and continues to look forward with confidence over the medium term."

Gear4music will issue a trading statement on 21 January 2021.

[rizler] 16/11/2020 14:19

Surprised there's not much more buying. Each to their own I suppose. Happy with my position here. Especially going into Christmas period

[rathlindri] 16/11/2020 13:25

rizler, yes, results in the morning

[rizler] 16/11/2020 13:16

Results tomorrow right?

[saracen3] 16/11/2020 10:16

My target is £10 after the Xmas trading statement in mid January. Expecting at least 750p by end of week after interims and presentations. Also expecting analyst upgrades.

[davro] 12/11/2020 21:48

Yes Aim, 50p eps is possible this financial year. I’ve noticed that broker upgrades with G4M have been done very gradually so even if Tuesday delivers 20p+ eps we may not see broker forecasts revise all the way in one go. Momentum is pointing towards a strong Christmas period (and lockdown certainly not hurting!) which if confirmed by a strong trading update in January should see the broker forecasts finally catch up.
Agree with large that the growth more than justifies a 20+ multiple, very exciting times to be a shareholder.

[largemerlot] 12/11/2020 21:13

Given the growth potential I’d put it on a 20+ multiple and at least 3x sales.
On that basis get your own calculators out - it’s not going down!!

[aimingupward2] 12/11/2020 20:49

So, davro, you are effectively saying at least 50p eps for this financial year ending next March. Even if your 24p for H1 is overly optimistic, but with H2 being the stronger half year, 50p seems possible. Then say 55-60p for next year, puts the shares on a forward p/e of around 12 which is, surely, very very attractive. If this is anything like right, the share price is likely to respond strongly once Tuesday's figures are out.

Scale back to a rather more likely 40p this year and 45 next and the fpe is still only just above 15, which is still very modest.

[davro] 12/11/2020 17:16

Just taking a look at what to expect from next weeks interim results... obviously the trading update will be closely scrutinised but think the full year analyst earnings expectations are going to need a large upward revision.

Looking back at last years H1 results I have assumed distribution costs increase in line with sales, marketing costs reduce slightly to £3.5m vs £3.9m last year given the company has commented that marketing spend was less than expected, labour costs increase 10% vs last year and other costs increase in line with sales. These assumptions would produce a ebitda of £8.5m. Using last years depreciation & amortisation and finance expense figures and a tax rate of 19% gives net income of £5m and earnings per share of 24p for H1. Given analyst expectations for the full year average 25p and the company traditionally makes most profit in H2, the revisions are likely to have to be significant to retain any credibility. Despite ytd gains this still feels very cheap given the growth that is being experienced. Fingers crossed for more good news next week...

[saracen3] 12/11/2020 12:25

And Institutional presentations and broker calls.

[largemerlot] 12/11/2020 12:07

Interim results definitely 17th November
👍

[cooltools] 12/11/2020 11:40

Topped up at 702p in advance of interims (usually around 17th Nov) - hoping lockdown has encouraged more to pick up an instrument.

[cooltools] 12/11/2020 11:36

renzo - don't forget their huge sales into education, and first instruments where price is the key factor. Agree, once the bug's bitten, and you master your instrument, you want the best money can buy and a decent brand name too.

I see they put their branding onto e.g. entry level electric guitars (on case and tuning head - not overdone). You wouldn't want to be seen in a band with that, but if your mates are learning on one you might be tempted to do the same.

Example:

[renzokukenreddragon] 12/11/2020 09:17

Not a particularly technical view, but as an intermediate learner on two instruments...I think music is like many hobbies. Many people give it a go, but not 100% keep it for life. Sales post-pandemic overall should still be up in my view, because if X% of new starters carry on a year after they've started, they'll probably keep going a decent number of years. For me, that magic one year mark is coming around pretty quickly (March-ish 2021 for the early adopters). Even if sales can't be sustained at silly rates, the long term sales should still be up from the increased mass of musicians - especially at the lower end (grade/experience wise, myself included).Post pandemic I will be keen to see how G4M manage the transition of these newbie customers from high margin own brand products to brand-name intermediate and advanced products (assuming most beginners don't plump for a £1000 piano at the outset, but maybe I'm wrong). For what it's worth, the weekly (or more) emails I get from them give me confidence they'll manage this well.I suppose some investors will want G4M to try and muscle out all brand name products over time and get intermediate and advanced musicians on to own-brand high margin kit to boost profits. I respectfully suggest that you've misunderstood the customer base if you would insist on this at an AGM - it might work for ancillary kit (cables? Boxes nobody sees?), but emotion is a big part of music and I can't see anybody wanting to show off their ownership of a GEAR4MUSIC branded instrument over a Roland, a Yamaha, a Fender...I'm in for the long haul. Music is a hobby for life, not just for Covid. Plenty of room to increase market share.

[niggle] 12/11/2020 09:01

Any predictions post pandemic? I mean will it fall off a Cliff next Spring? Slim profits on lower sales etc?

[aimingupward2] 10/11/2020 08:17

Not to me it doesn’t. I don’t think cinemas will be attracting big audiences back for quite some while. G4M, on the other hand, could hardly be better placed with a 4 week lockdown just ahead of the Christmas period.

[nobilis] 10/11/2020 07:55

Looks like it may be time to switch to CINE

[largemerlot] 09/11/2020 17:39

Unique opportunity this - a clear topping up opportunity

[rathlindri] 09/11/2020 15:05

Hold on tight, these will bounce back