Gear4music (holdings) Share Discussion Threads

[hawfinch] 23/4/2021 12:41

I understand that, but this should be trading well above 200 MC given its financials. There's only a handful of stocks out there right now that are producing a positive bottom line...

[epicsurf] 23/4/2021 10:21

Excellent post and comments much appreciated, good start to the day
as well

[hastings] 22/4/2021 17:55

Hi all47 everything I publish is accessed by the link here https://martinflitton1.wixsite.com/privatepunter

[ali47fish] 22/4/2021 17:51

where does fitton publish his updates -i used to acess his blog but now the site seems not to show them?

[saracen3] 22/4/2021 17:24

Large merlot for me tonight also

[largemerlot] 22/4/2021 17:03

Excellent stuff - thanks to Hastings and Saracen3

[saracen3] 22/4/2021 16:59

Thanks Hastings. Hoping to speak to the company tomorrow.

[saracen3] 22/4/2021 16:30

Hasting`s comments.

G4M IS A BIG HIT - 22/04/21
There has been a pre-close update from G4M this morning, that paves the way for the delivery of what will be superb full year 2021 numbers.


In the announcement, the company has once more indicated a beat on broker forecasts, that were in themselves upgraded on a number of occasions throughout last year.


Now, the online provider of musical instruments anticipates full year revenues to come out at £157.5m representing a 31% increase on last year. Additionally, EBITDA is to be no less than £19m which is a 6% beat on broker Singer’s forecast of just two months back.


Net cash is also expected to register higher, with the same broker now looking for a £2.4m position which is expected to move further northwards in the new financial year to £5.1m.


With Singer now pencilling in EPS of 54.6p for the year to be reported, then even allowing for a rise to £8.50p today, the shares trade on a very attractive PER of just 15.


Of course, it is evident that some investors are looking at the expectations for the coming year and indeed the following full year 2023, which shows at present, the shares trading on a more punchy rating.


However, from a personal perspective as a holder, I believe the expectations are set very conservatively, whilst whatever the delivery of those transpires, I am looking beyond the near term with undoubted excellent growth prospects on the horizon.

To glean a little more as to the last year and the way forward, I again caught up with CEO and founder Andrew Wass, who incidentally retains a very considerable holding in the business.


Wass, as ever, with feet firmly on the ground said “The year has been good for us, lots of progress, but some lessons were learnt pretty quickly too, as there were some operational challenges along the way”.


Speaking of specific issues Wass says, in particular there was the homing in on how to use the various levers in order to get the business in a great place, which has proven successful, with strong margin improvement a major part of that.


With 2021 now in the past the CEO is keen to look to the future, where he says that they are really keen to talk about the next phase and beyond Covid.


As part of that moving ahead process however, investors will no doubt be wondering whether the marked and notable improvement in margins can continue on the recent upward trajectory.
“I don’t think we will quite repeat what we have done in the past year” says Wass, “but I do think we will retain a lot of the improvements that have been made, so we may not get to where we have got, but I think you will see very good progress”.

At this stage of the year and with Covid still causing disruption it is perhaps understandable that Brokers at present, are deciding not to revisit the 2022 numbers, but that will no doubt happen in due course.


What does appear clear is that changes were already taking place to the positive for G4M before Covid hit, so the market dynamics remain positive for both the medium and longer term plans.


Touching on the coming year and beyond the CEO adds, “its great that we have been so cash generative and alongside that we also have the new banking facility and that will help the next stage of growth.
Regarding the facility that we’ve now got, we won’t be using a large amount of that, but it gives us options and flexibility and will make a really big difference. We have never really been in that situation before and I do think that is going to help us in the next year”.


Although organic growth remains an absolute key aspect within the operation, Wass says that the main focus of the facility is to provide support for acquisitions and the company has already recently acquired a brand that was previously owned by Marshalls.


Although this was a small purchase that did not warrant a release, the CEO says that it was nevertheless a good buy with a rich heritage.
“That is something we could do more of” he adds, “so if we could buy some legacy brands that actually have a really good history but have perhaps not done so well of late, we can then do something with them”.


In terms of acquiring another player, Wass says that they are less interested in that route and the plan is to incorporate any further brand purchases into their own, which provides for improved margins.

It appears a clearly defined vision and roadmap for G4M and Wass says that he sees that direction of also being a good route of building on the margins achieved over the last year.
“We would much rather go that way than perhaps purchasing another retailer that may be struggling, as that can bring its own integration challenges.“


Here, the CEO reiterates that they do not want to get distracted from organic growth and within that context he points to investment in their own digital presence along with next years move into the previously mentioned second hand offering.


Being an increasingly global operator with a major presence in Europe we also touch upon the post Brexit issues, particularly around logistics and red tape. “It was always going to be a bit of an unknown, but we had lots of mitigation systems in place that have worked very well. But, you can’t get away from the fact that sending goods across borders is more difficult than it was and while it has worked ok, it could be better, which is why we have referenced on building on our existing European infrastructure“;.


Wass also says that they have so much more information in place now, that with their digital investment they can scale up quickly with the pay back on that being a fast one.


Although a predominantly UK/European operator G4M does have sales in ROW territory’s but Wass says that it is a smaller part of their operation due to complexity of transporting goods of size.


That said, he adds that G4M does enjoy sales right across the globe at the smaller size product end of the market.


Interestingly, the US is mentioned too, with the CEO saying “eventually we would love to look at the States, but that is a few years off yet”.


Looking at the start to the current year, it appears to have commenced well and Wass says that as part of that they have already seen evidence of recovery for products related to events that last year took a hard hit.
“Speakers and the PA market, yes, we are seeing much more interest and activity with that, which is what we expected and have been planning for, although we feel there will be a gradual improvement in that as we move forward ”.


Although G4M is set to deliver bumper numbers for the year just gone, it is clear that Wass and his team have no intention of getting stuck in the groove.


Rather, there is clear evidence that a combination of scaling up on the back of extensive digital enhancement driving organic growth, along with shrewd strategic acquisitions, should keep it well tuned into ongoing and longer term revenue growth and improving sustainable cash generation.


Given the ongoing prospects at G4M, the shares are well worthy of my continuing holding for the longer term, which should, all being well, provide for further and potentially significant upside.








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[hastings] 22/4/2021 16:12

Write up for interest https://martinflitton1.wixsite.com/privatepunter/post/g4m-is-a-big-hit-22-04-21

[saracen3] 22/4/2021 16:05

Smart money has pushed the shares up nearly 8% today with £1.3m value traded.

[aimingupward2] 22/4/2021 15:46

Hastings, did you get to chat with the CEO today and did anything interesting arise from that which you are able to pass on?

[hawfinch] 22/4/2021 14:10

@Gleach25

o absolutely, but id imagine smart money is holding back from purchasing more given the uncertainty. Price encompasses expectation and I think institutions are not fully convinced yet.

[aimingupward2] 22/4/2021 13:27

It rises a lot between updates, though - look at the last 12 months.

If. as seems likely, eps come in at 50p or more, the shares are on a very modest P/E ratio of approx 16 and we can expect share price growth of around 50% over the next 12 months towards the £12-13 price targets. The share price is not going to stagnate.

[ali47fish] 22/4/2021 13:07

investors here must have noticed that at each update for several years the share price rises 5 or 6 pc and in the next few days that rise seems to peter out and no substantial rise occurs until the follwing update -can anybody explain why?

[saracen3] 22/4/2021 12:38

WalletInvestor 12 month target 1318p

[saracen3] 22/4/2021 12:27

Remember the shares are very tightly held by management and Institutions. Holders know the story well and will be delighted with today`s figures and conference calls in which the co is more likely to be upbeat than the analysts. Any profit taking will be absorbed and new buyers will struggle to pick up stock in any size.

[aimingupward2] 22/4/2021 12:17

It was worth pointing out, firtashia, thank you, that G4M derives half it's sales from Europe and the rest of the world where the impact of Covid is very far from over - and may not be for a good while yet.

[firtashia] 22/4/2021 11:55

Agree gleach23, the UK may(fingers crossed) be starting to come out of the other side with respect to covid, but the same cannot be said for most of the rest of the world, from where, according to today's figures, G4M derives half its sales. For that reason we might also be able to gauge whether or not any eventual return to normality in the ROW is likely to have an effect on ROW sales by reference to UK revenue guidance figures issued over the forthcoming months.

[shanklin] 22/4/2021 11:42

That's certainly true in much of Continental Europe given their preference to die from Covid (a not insignificant risk) as opposed to from the vaccine (highly unlikely).

[gleach23] 22/4/2021 11:38

Hawfinch

"Think market wants to see how well g4m can perform when operating in a 'covid-free' environment..."

Whenever that is? Could be a little while longer yet - ie G4M might benefit for longer than everyone currently seems to assume

[aimingupward2] 22/4/2021 10:39

Let’s hope N+1 Singer’s ‘fair value’ rating of £11-14 has some influence before that then.

[hawfinch] 22/4/2021 08:50

Fear this stock wont hit 10+ unless we get a positive trading update in July/Aug. I hope im wrong.

Think market wants to see how well g4m can perform when operating in a 'covid-free' environment...

[saracen3] 22/4/2021 08:29

The Co likes to under promise and over deliver. Expect final results to actually be even better.