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Share Name Share Symbol Market Type Share ISIN Share Description
Gear4music (holdings) Plc LSE:G4M London Ordinary Share GB00BW9PJQ87 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 890.00 870.00 910.00 915.00 890.00 890.00 10,195 08:00:25
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 120.3 3.1 12.4 71.8 186

Gear4music (holdings) Share Discussion Threads

Showing 2826 to 2849 of 2950 messages
Chat Pages: 118  117  116  115  114  113  112  111  110  109  108  107  Older
DateSubjectAuthorDiscuss
27/2/2021
13:24
Great Bull/Bear summary Hawfinch. I also agree with your view "online sales are currently ~28% of total retail sales.....I do not reckon it will revert back to 2019 levels. There’s clearly an upward trend. I see online sales in future being close to 40 or 50% in the next 5 – 10 years." I see that increase, combined with the new second hand platform that Hastings refers to in #2852, as being the key components in the future increase in both sales and income over the next 2 or 3 years.
masurenguy
27/2/2021
11:19
Excellent summary Hawfinch which correctly looks at both the bull and bear case. I would just like to add in on the bull case, that at present the Progressive numbers for full year 2022 assume gross margin will drop back to circa 26%. When I last spoke with the CEO who is known as being cautious as opposed to overplaying things, he stressed strong confidence of the improved level of margins being maintained. Further down the line we will also have the second hand platform contributing, which should also enjoy strong margins more in line with their own brands, so plenty of scope going forward. Also, well worth just taking a look at Singer’s closing comments from the note of last week , which sees current fair value at £11.00p and that is based on the existing out of date 2022 forecasts, which will be revisited and I expect upgraded. "1X ev/sales or 9x Mar 21 EV/EBITDA valuation looks undemanding. Fair value at the peer group average would be c £11.00p based on unchanged FY 22 estimates. Note that EBITDA margin a key valuation driver is more than double that of the peer group average".
hastings
27/2/2021
10:19
That’s a very good assessment and summary of the situation, Hawfinch. Thank you for posting it.
aimingupward2
27/2/2021
10:01
@Glavey, all businesses have up & downs. No doubt that G4M has benefited from the pandemic. Given that, I can understand progressive’s forecasts in a lower turnover and EBITDA expectations for FY22+. I can see both the bear and the bull case. Bear case being: lockdown has spurred e-commerce purchasing which many believe is unsustainable at the current levels going forward, thus you should see a natural reversion to pre-lockdown levels or slightly better. In addition to that, from a macro perspective: furlough must end, which will ultimately lead to job losses, higher unemployment, resulting to less disposable income which in turn means less musical equipment purchases (if it does come to that – who knows). Coupled with the fact that Mr. Sunak will have to increase taxes to pay off some of the debt incurred which again, would most likely lead to an amazon tax (in my opinion). G4M would have to pass down the cost to the consumer, making their products more expensive. Finally, Brexit. If you go onto twitter, you’ll see a lot more people complaining to G4M about their delivery times. There are some tweets where consumers highlight that delivery times are taking up to 2 months long for their products to reach them. Now, when things open back up, why would someone wait that long when they can go to a retailer & purchase it (if its available) and for a cheaper price (if the amazon tax does hit). Again, I’m assuming that the item is available at a brick-and-mortar musical store and it’s cheaper. Also I’m assuming the delivery times continue to be a problem. Bull case: Average order frequency will increase with G4M, regardless if lock-down has ended. Many customers will purchase from them again due to the relative convenience, easiness and number of products G4M offers. Also, what’s stopping G4M from becoming the Asos or BOO for musical equipment/instruments? Their conversion rate is already better than Asos & BOOs. In addition, the blueprint for G4M is there. 40% of Asos’ revenues come from its own products & not its third-party suppliers (and this is increasing). G4M, I believe are doing the same thing. I think you will soon start to see G4M creating more of their own products and cutting down on third party suppliers. Finally, in regards to online sales. In the UK, online sales are currently ~28% of total retail sales (that’s not including specific product categories such as music, which I believe is slightly higher ~30%.) I do believe this trend will see a drop, but I do not reckon it will revert back to 2019 levels. There’s clearly an upward trend. I see online sales in future being close to 40 or 50% in the next 5 – 10 years. & As you’ve highlighted, Glavey “there's been some consolidation over time”. My guess is, we will see more consolidation as G4M start to expand (M&A activity etc). As long as ROIC remains higher than cost of debt. Also, bear in mind this is just the UK. Now, if we look at Europe (in 2019) many countries are behind in online sales as a % of retail sales (France & Germany being the obvious). I reckon it’s only a matter of time that before they catch up to UK or even overtake in that matter. Remember, EU represents a £4bn market. I see both cases, but I feel the bull case is stronger. Hence why I am long. Online Data: https://www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drsi https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:E-sales_broken_down_by_web_sales_and_EDI-type_sales,_2019_(%25_enterprises).png#filehistory
hawfinch
27/2/2021
08:06
CT, Let's just consider G4M and not debate Amazon. The music business (general title) has it's ups and downs. G4M has benefited from the pandemic. People have been making impulse purchases. Particularly, I'd guess, in support of their virtual lifestyles. Competition has been suspended. That's unusual. It may not remain the case. G4M is just a reseller of product and I feel is deserving of a rating which reflects that. Future expansion is uncertain, although I feel the average customer is not particularly discerning nowadays which is quite suitable for an on-line operation happy to operate sale or return. Another client segment is reliant upon supplier credit which requires client income to support it, so may be affected by unemployment. There is a need for other outlets who can offer a similar kind of service (perhaps more 'hands on') and those who offer different kind of service. These businesses already exist and have done for years, although there's been some consolidation over time. G4M is unlikely to be able to service this more discerning client segment well as far as I can see. So I just see them a box shifter selling mostly lower price point product, grabbing a little extra revenue by overpriced 'add-on' sales. Maybe that relies on a certain amount of buyer laziness, naivety or perhaps even stupidity. Plenty of that around in recent times so a plus for G4M. Going forward it seems many of us have a pandemic to pay for. Who knows, that may sharpen people's minds. Significant growth is already priced in, at least in the eye of beholders. Will that prove justified? Maybe short term. Medium term?
glavey
26/2/2021
20:56
I am guessing G4M will comfortably beat the new forecasts even though there is only one month left of the current FY
shanklin
26/2/2021
19:53
That’s an interesting and encouraging write up that you posted, hastings, so that you for that. It’s a well balanced assessment, and positive over all. Plenty to look forward to for those with reasonable patience. I shall be very interested to learn what Singers have to say after the annual results are published.
aimingupward2
26/2/2021
16:17
cooltools - 2843: Glavey - how do you see G4M as overvalued? Contrarian/negative views most welcome - we need to keep our feet on the ground! I wouldn't hold your breath waiting for an informed answer ! I always welcome contrarian views but from credible posters who can make an intelligent case. However, you won't get that from Glavey - just enigmatic statements like "You are mistaken there" which, when challenged for some substantiation, just provoke troll-style evasive responses alleging "abrasiveness" rather than providing any clear or logical explanations! In contrast, Hastings always provides an intelligent commentary, supported by facts and broker forecasts as in the sample below, that provide food for thought whether you agree with his conclusions or not. "The shares now sit on a PER of 15 given the upgraded EPS figure from broker N+1 Singer of 51.5p. The company now expects that EBITDA will be no less than £18.2m, up from the last raised guidance of £16.7m, leading to a profit and EPS upgrade of some 15%. Singer now expects adjusted pre-tax profits of £13.1m on revenue at £157m as the progress across the business has continued to build momentum, with notable progress in Europe. Progressive does have some more recent forecasts pencilled in anticipating EBITDA at £11.6m, adjusted pre-tax profit of £6.7m and EPS of 26.4p. That would see the stock on a more punchy rating with a PER of 30 at the current price, which is more in line with peers and where it is fair to say that would suggest the shares are now priced fairly. These numbers could well prove very much on the light side and with margins now up at 29% plus, then risk on the forecast numbers appears to be skewed to the upside for me. "
masurenguy
26/2/2021
16:07
Thank you Hastings
epicsurf
26/2/2021
15:49
Regardless of who thinks we are overvalued or not, I thought I'd add a few words, being a fan and all that!Https://martinflitton1.wixsite.com/privatepunter/post/g4m-turning-up-the-volume-26-02-21
hastings
26/2/2021
12:47
Glavey - how do you see G4M as overvalued? Contrarian/negative views most welcome - we need to keep our feet on the ground! Personally, I see Amazon and eBay as more similar to each other than G4M. Amazon does not curate - all info is entered by sellers and reviewers. G4M curates, that is, it creates the pages for the products it's selling (Amazon is almost entirely automated). Just compare the listings for electric guitars - hTTps://www.gear4music.com/Guitars.html with Amazon's - hTTps://www.amazon.co.uk/s?k=electric+guitar - a world of difference, G4M is helpful and guides you though choices, Amazon just displays stuff (mostly sold by third parties through their "marketplace" and "fulfilled by Amazon"). Prices are similar but I suspect G4M has better margins as the cost of getting eyeballs on Amazon to third party sellers is significant (note the "sponsored" - i.e. paid for listings) plus Amazon's cut for selling on behalf of the third party. G4M buys direct from manufacturers, so skips the intermediate third-party seller level. Therefore G4M can price match where competition exists. There are competitors to G4M working in a similar way (UK and Europe), but G4M really know their stuff (LTH since 138p in 2016).
cooltools
26/2/2021
10:59
Incredible how is this not trading at all time highs and down today. CBX and Kanabo up a zillion %. When did astronomical Growth and 4 trading ahead Updates be so derided. Maybe if this had 0% revenues and 0% sales might be better received.
az4hr
26/2/2021
06:32
HF, In practice G4M is pretty much a pure play on-line retailer. (Amazon is another matter.) S3, [2823] Quite possibly. The pandemic has had many variable effects. I accept I did not forecast a pandemic. Nevertheless I still see G4M as overvalued although I do recognise the new normal may be different to the old normal.
glavey
25/2/2021
11:42
Forecasts are far too low. The high street shops are destroyed, sales of kit for live music will recover and school music budgets will be increased as music teachers have had the best results in maintaining contact with the less motivated pupils.
saracen3
25/2/2021
11:15
FWIW Progressive's forward £151m revenue, £11.6m Adj EBITDA which they haven't moved since they were forecasting £145m for this year (now £157m) looks a bit low ball to me. H2 FY20 G4M did £5.8m Adj EBITDA off £71m revenue. On this basis 151/142*5.8*2 is £12.4m and assumes marketing costs going back to normal from day 1 of the new financial year, no gross margin improvements from the 26.6% seen H2 FY20 (vs 28.6% now and that 26.6% was already up from 25.2% H1 FY20 so the trend was already there) and no additional buying from the extra £12m revenue achieved since Progressive first forecast £151m for FY22 (i.e. no people coming back for periphery items etc). So despite all this we get 28.3p eps. Then it gets interesting - each 1% on gross margin I calc adds c12% on this eps, and they have gearing of 1.8x between FY22 and FY23 so each 1% revenue increase adds 1.8% to eps. Even all this is still assuming marketing costs go back to normal. BOO trades on a forward of 30 and ASOS 39. Even if it was rated like BOO which seems to be being perceived as a bit of a high risk co gives £8.50 here, pe 35 would take to £9.90 and all this is off very conservative assumptions.
alphabeta4
25/2/2021
10:34
The story here just keeps getting better. Happy to hold
rathlindri
25/2/2021
08:53
Saracen are you in BOTB with me as well ? Anyways strange when people talk about market bubble and yet this are on a PE 15 with a Growth rate through the roof. Scary though how the eps for next year are forecast to be halved? Is that realistic ?
az4hr
25/2/2021
08:46
The new platform to create a market for second hand instruments and equipment is forecast to double sales and profits in 2-3 years time.
saracen3
25/2/2021
08:34
Good write up by Paul Scott on stockopedia this morning. I agree with his view that this share should be at least 1000p!!
johndoe23
25/2/2021
08:30
saracen3 - I thought you were being overly optimistic recently when you suggested an eps of over 50p, but it now seems pretty certain that you are right. Well done you. I hope you’re right, too, about 100p in two years time.
aimingupward2
25/2/2021
08:24
Peel Hunt has £10 target
saracen3
25/2/2021
08:06
I see Progressive Research are going for EPS of 50.9p, 26.4p and 31.9p for 21, 22 and 23. Hopefully rather conservative for the latter two years
shanklin
25/2/2021
08:01
Thank you hastings
shanklin
25/2/2021
07:54
Singer upgrades EPS to 51.5p!
hastings
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