Pz Cussons Share Discussion Threads

[justiceforthemany] 14/3/2024 20:31

wunderbar you've done your homework but I'm afraid that's not how markets work. There's very little logic or rationale involved. Just look at some US stocks, trading at crazy valuations on pure hype. Crypto same.
Momentum is everything and this could easily hit 50p or less.
(I am a holder)
Email the CEO and investor relations.
His situation is untenable.
Another 50% devaluation in the Naira since results is why the share price is where it is.

[bedford1976] 14/3/2024 12:52

I don't think they need to raise equity the last results showed £100m headroom on their borrowing facility.

Dividends would just be cancelled before that happened and like others have said £55m operating profit is showing the business in fundamentally solid

[fevertreeman] 14/3/2024 10:55

Perhaps we should demand at the AGM that to align management with shareholders that Myer's £1.5m be paid partly in Naira into a Lagos bank a/c...that will wipe the smug smile off his face ...Any one else up for that?

[essentialinvestor] 14/3/2024 10:51

Possible equity raise on the way..?.

It's a question, Not a statement, before anyone shouts.

[giltedge1] 14/3/2024 10:48

Sure there is a good business waiting to be released. But Jonathan sat in his bunker collecting £1.5m while company collapsing around him. Nigerian cash was kept on BS at a ridiculous exchange rate, so investors were mislead in reading a good gearing position but reality different. 20 years profits sitting in Nigeria surely were opportunities to convert over the years, Shell manages. Also could have expanded into Malaysia same language as Indonesia people their shower many times a day also China ideal for Sanctuary. ULVR moved in 90,s now one of their biggest divisions. Problem is now strapped for cash as reaching covenants on debt, So uninvestable.

[wunderbar] 13/3/2024 22:30

Having first bought into PZC only a month ago at 100p, I felt compelled to top-up at 90p today [intraday low 88.45p]. Whilst I anticipated short term volatility it’s still disappointing to see share price down 11% since start of March, more so given it was holding steady at 100p for three consecutive weeks following February’s profit warning. As things stand, YTD share price is down 39%.

The last time share price was this low was almost 21 years ago [Sep 2003]. Today’s market cap is a meagre £388m. With such a lowly valuation I cannot believe nobody is running the rule over this company right now. Be it Private Equity or a much larger competitor, either could easily afford to buy this out at double today’s price and not blink an eyelid. My ideal scenario [for a quick exit, double my money] is PZC to be taken out c.200p a share.

I think Cussons is a quality company with quality brands but going through a rough patch at moment, mainly attributable to the Nigerian naira devaluation, and to a lesser extent the cost of living crisis. Having said that, it is evidently clear management have made big mistakes, and now face enormous pressure to address/fix these issues.

Ultimately, the buck stops with CEO Jonathan Myers, and right now I’m sure many shareholders are baying for his blood given the decimated share price. When he took over on 1 May 2020, it was c.186p, today it’s 90p, which means he has presided over a 50% collapse, or put another way, almost £400m has been wiped off the company’s market cap during his reign. And to rub extra salt in the wound, the upcoming Interim dividend has been cut by 44%. Right now, he’s walking a tightrope, and if there’s no material improvement in next 12 months then [figuratively speaking] he’ll likely end up wearing that rope around his neck.

The company is now forecasting full-year adjusted operating profit to be in the range of £55-60m for the 12 months to 31 May 2024. Provided the Nigerian naira doesn’t collapse again in next couple months then current price is ridiculously cheap, making PZC a stonking buy below 100p. As Del Boy would say, you know it makes sense [cue second profit warning].

On 8 March, Barclays downgraded shares of PZ Cussons to 'equalweight' from 'overweight' and slashed the price target to 111p from 205p, citing "too much" Nigerian exposure. I personally think 111p is too conservative, alluding to little progress over next 12 months. I can’t argue the Nigerian comment though, it’s abundantly clear there’s too much reliance on this economy, and given that the naira devaluation has spectacularly blown-up in management’s faces perhaps they should consider reducing exposure here and instead look to increase market share elsewhere. At present I believe Nigeria accounts for c.35% of revenues. Perhaps it would be prudent to cut this to 25-30%.

Having said all this, I'm delighted the share price has plummeted to these levels [apologies to longstanding shareholders]. The fallout from Nigeria’s currency collapse has created a fantastic opportunity for new investors to scoop up shares in PZC at rock-bottom prices. We've all been here before, had a stock which has nosedived, lost a fortune/sat on huge paper losses, only to see new investors move in at lowly prices and reap the rewards of a successful recovery play. As they say, one man's pain is another man's gain.

To close off, I’ve not bought into PZC for dividend income. My sole aim is to double my money in the next 2-4 years, perhaps a lot sooner with the aid of a predator snapping up the company. I don't see my price target of 200p as being overly ambitious.

[bedford1976] 13/3/2024 17:53

I have really followed the Naira so hopefully this might help. Until the currency was devalued there was a huge build up of Forex by firms such as PZ but also some really big airlines. Ti get things moving the Govt devalued the Naira.PZ have repatriated some of the cash but to be honest they never really had £200m in the bank as they had no means to convert the cash other than the black market.
Apparently Forex is now improving and this allows firms like PZ and the airlines to run a decent business in Nigeria. They are looking 5 - 10 years ahead and see the positives of a functioning Forex market. Afraid to say us guys (today) take a haircut on the balance sheet cash, but like I say they never really had the ability to extract their Nigerian cash until now.

We are still looking to make 50-55 million operating profit this year. We have strong brands in an attractive market so happy to hold.

[gateside] 13/3/2024 16:47

Has Jonathan Myers dipped his hand in his pocket and bought any PZC shares at this bargain price?

[justiceforthemany] 13/3/2024 13:51

[e-mail]

He has a lot to answer for.
He 'welcomed' the depreciation remember?

[bedford1976] 12/3/2024 21:28

Goldman Sachs are now forecasting the Naira will appreciate significantly against the dollar over the next 12 months.
PZ has free cash flow of £20m in the latest interims and working on cash repatriation.
I expect PZ to return to good health in 12 - 18 months.

[justiceforthemany] 12/3/2024 20:05

Who's emailed the company and IR?

[sludgesurfer] 12/3/2024 19:38

Such a massive failure to manage business risk leads me to agree in this instance.

[justiceforthemany] 12/3/2024 17:10

All about the Naira and yes some forced index selling. The Naira is down 100% vs GBP over 12 months!
Needs to be taken back private.
CEO deserves to be sacked also.

[gateside] 12/3/2024 14:59

Looks like it will be demoted from the FTSE250

[giltedge1] 12/3/2024 14:33

What a disaster to turn a blue chip, no 1 or 2 brands in many countries, company into a basket case is not easy well dome mgt. I flagged up many mgt errors prior to nigerian currency plunge, swap to ulvr when £2 my recommendation back then.

[unastubbs] 09/3/2024 14:24

Do Lindsell Train still have their stake?

[dudishes] 09/3/2024 14:11

Tks Waldron,

No posn just now, watch list only.

[bedford1976] 08/3/2024 16:18

Barclays have set a new price target of £1.11. In the long run the firm should do well, one to buy and forget.

[wall street trader] 08/3/2024 12:58

Thought this was a safe bet long term - I'm in around a pound but this is a disappointing start

[giltedge1] 05/3/2024 11:47

Nice to see Jonathan earns £1.57m more than dividend soon.

[scepticalinvestor] 04/3/2024 17:14

Uninvestible at the moment. And the Nairu continues to fall off a cliff. Extremely incompetent of the BoD not to insist on moving cash offshore

[essentialinvestor] 04/3/2024 16:09

* to extricate the business from Nigeria would take time, even if they had made a firm decision.

[justiceforthemany] 04/3/2024 15:46

I did say it was foolish to remain in basket case Nigeria.
Still holding.

[sludgesurfer] 04/3/2024 12:46

Sad times when such a previously solid and conservatively run company has allowed itself to essentially become a proxy play on the Naira.