Kingfisher Share Discussion Threads

[m_kerr] 01/9/2021 21:49

i've done some digging into the property estate of screwfix, and i think they enjoy broadly similar profits to howdens, but screwfix does so on about 1/3 to 1/2 of the rental cost. this obviously means their return on capital is likely to be much, much higher than howdens. howdens enjoys a premium valuation. what price for a high growth, high return business (that's benefitting from digital) like screwfix then? my guess is that in a bull market for construction and materials, in the region of £5bn + minimum. to put it starkly it generates profits in the same ballpark to b&q on about 2% of the selling space, i.e. profit per square foot 50x higher.

reminder that enterprise value excluding leases for kingfisher is currently £6.4bn, including property of £2.6bn.

[m_kerr] 27/8/2021 21:39

yeah, and it's one of the few retail businesses that got stronger during this pandemic. it's likely going forwards with work from home that this will lead to permanently higher spending in the home and garden sector.

[sun1950] 25/8/2021 12:29

Just been to my local B & Q and staff say how busy they are must be good for turnover and profit

[m_kerr] 15/8/2021 18:20

screw fix could easily IPO and be worth many billions, perhaps as much as howdens, who have a current enterprise value of £5.75bn and operating profit of £330m, so equating to 17.5 times EBIT.

consider that wickes trades at 7-8 times earnings (which are about £81m), not including lease liabilities on top of about £800m. assuming screw fix generates profit of about £350m, b&q could be making about £300m at the moment, therefore equating to a market cap of £2.1-£2.4bn NOT including a lot of the lease liabilities, which would then be parked with a separate B&Q.

so for everything, property (£2.7bn), successful polish and romanian business (about £150m retail profit), b&Q (worth about £2.1-2.4bn), screw fix (potentially worth £5bn+, good high return business with growth, which the public markets like), french business (generating about £180m retail profit) and the turkish joint venture, you're paying about £6.8bn for assets worth around £11bn or more.

this strikes me as the sort of business private equity would salivate over. huge net cash, pension in surplus, multiple avenues to generate value easily (IPOs or asset sales), £2.7bn of property to borrow against, and in general the DIY sector is much more profitable and subject to less competition than supermarkets, which has seen private equity activity. and finally, their rents should fall over time in the UK, whereas the DIY sector is relatively well insulated against online competition, which should be good news for margins.

[sun1950] 15/7/2021 13:33

Could make 33eps this year which means they are trading on 11 times earnings low by any account could be low enough for a bid

[cw2000] 15/7/2021 10:03

Nice update last night

[essentialinvestor] 23/3/2021 15:12

Still huge work to do in France, the rest looks better.

[dekle] 16/3/2021 10:04

Every time I have been to B&Q lately the queues at the checkout have been very long. The whole store has been busy. So I bought into KGF @271p. Looking like a good decision.

[useless invester] 23/2/2021 14:06

Well I've topped up today, hopefully will start going up now as we head towards results day

[essentialinvestor] 23/2/2021 10:25

Some Hedge Funds may be short as there is a perception that Kingfisher's
Covid-19 aided trading performance is unsustainable.


Indeed current FY22 consensus is for (an approx) 15% EPS Fall from the bumper FY21
they will report next month.

Even allowing for a 2022 expected decline, KGF sells on very approx 11 X forward,
with profit growth forecast to resume in FY 2023.

Now a lot can change before then, however if we assume those number are in the
right ballpark, 11 X does not look particularly demanding?.

[casholaa] 22/2/2021 22:22

Yeah, look at what happened to Homebase. I've got a long position on this, now that the share price retraced enough. My target is 290 +/- 2p

[essentialinvestor] 22/2/2021 14:38

Sitting duck for a private equity bid ...?

[essentialinvestor] 09/2/2021 14:03

France lockdown looming?.

[casholaa] 25/1/2021 22:40

I do have my doubt (singular). You could say that I helped this along with all the diy I did during Lockdown 1 and the sequel, Lockdown 2, but I don't know whether it can maintain it's momentum as we come out of Lockdown 3. I think that it is well placed if it has a warehouse in the EU to supply the UK, but I can't find any info on this. The divi looks okay and it appears cash-rich with good profits, especially this past year, but that was I suspect in part to a captive, bored, opportunistic or energetic customer. I don't think there is actually anything I don't like about kgf, it's the circumstances in the wider economy/society and the knock-on effect that I question.

[essentialinvestor] 23/1/2021 16:22

Cas, I like KGF fwiw and hold a small amount.

If you have a view would be interested to hear,
particularly if it's bearish as prefer to consider different perspectives.

[casholaa] 22/1/2021 21:04

Anybody have a view on kgf?

[thewheeliedealer] 20/1/2021 21:14

Hi all,

My mate Peter @Conkers3 and myself did a ‘Twin Petes Investing’ Podcast recently and part of our discussion includes KGF which I think C3 holds. This is an unusual episode because for the first time we had a Special Guest on the show and the response has been hugely favourable (here’s a clue: he’s not the usual ‘Guru’ that all Podcasts have).

And as always we chatted about loads of other Stocks and Ideas for research and a fair bit of educational stuff with regards to Investing and Portfolio Management.

Anyway, if you use Youtube, Apple, Audioboom, Overcast or Spotify you can find it under the 'Conkers Corner' Channel (you want Podcast TPI 40) and you can find it on Soundcloud at the link below.

I hope you enjoy it and find it useful, we try to keep them light and they are totally unscripted, not like all the stuffy financial fodder you are probably more used to !!

Happy New Lockdown !! WD
@wheeliedealer

[essentialinvestor] 18/1/2021 14:42

Bought a small amount.

[essentialinvestor] 15/1/2021 11:17

Around £2.65 may be an interesting entry point?.

[netcurtains] 14/1/2021 13:21

!FOLLOWFEED

[essentialinvestor] 29/12/2020 16:40

Widening lockdowns likely to weigh on Screwfix as trademan domestic work
is deferred due to social distancing.

Is the extra spending on DIY, Home sustainable?.

Good decision with the Russian exit, still a major challenge in France.

Go back 6 or 7 years and France was the strongest part of the entire group,
hard to believe now.

[peddlers] 09/12/2020 15:24

Volvo - Are you still on board ?

[peddlers] 09/12/2020 10:12

Definitely one for the Christmas rally

[peddlers] 09/12/2020 09:18

Looks like it could be turning now.