Sanderson Design Share Discussion Threads

[supernumerary] 10/8/2023 13:57

Comment by Octopus Investment's Chris McVey:

[supernumerary] 10/8/2023 08:40

The chat yesterday about designs going out of fashion seemed a bit odd to me - William Morris has been in fashion for 150 years or more! - but this does look like more of a threat. Imagine 'print me a 10m of wallpaper in the style of William Morris using red, orange, green and black'... SDG and ilk will certainly need to adapt to this technology one way or another.



Is AI a threat to the world of fabric design?

[salver2] 09/8/2023 23:08

Interesting and par for the course- it’s really indicative of the lack of interest in small cap. Shares and that they are difficult to buy or sell - I was thinking of doing the same although I’ve got so many !- reckon they’ll buy back around 1 million shares in a month or so - eventually the price should rise!!

[essentialinvestor] 09/8/2023 22:07

CFX sound perpetually cautious, then again they buy back huge amounts of
their own shares!!.


Salvar, I managed to add a grand total of 400 today in CFX and that moved the offer,
oh my. Tried for more but quoted 7.50 for larger amounts.

[disc0dave45] 09/8/2023 20:45

I’m not sure what the earnings estimates for Colefax this year coming - have they published them ( they are usually on the somewhat conservative side)??Stocko has consensus eps for FY24 of 65p (hence my earlier post that it's currently on a forward PE of 10.7).Appreciate you factor in cash for PE.

[disc0dave45] 09/8/2023 20:35

Licensing only grew £0.4m in H1, its predominantly accelerated income which does not represent any actual sales of the products. Go back to 2019 when licensing income was virtually wiped out due to one massive agreement with H&M not extending. It's not their core business although at the moment it looks to be!. Your call if you want to invest in a business that fundamentally isn't growing and is solely reliant on certain agreements that may or may not continue long term, are not transparent, are lumpy and cyclical. Based on this for me it is now high risk.Be glad to hear your views on which licensing agreements are contributing the most and what are the terms because at the moment that's what you are invested in with respect to future growth if any.

[salver2] 09/8/2023 19:25

As far as relative values go it’s a tricky one and I would agree with you Disco that Colefax performance is probably superior since Covid which is probably more to do with the majority of their business is in USA - Colefax market cap approx 52 m is about 20 million cash so a valuation of 32 million for a buisness that can throw off 5 or 6 million after tax profit is silly low - Sdg market cap is about 27 percent cash v CFx about 40 percent so pes are somewhat misleading- I’m not sure what the earnings estimates for Colefax this year coming - have they published them ( they are usually on the somewhat conservative side)??

[skanjete2] 09/8/2023 19:17

I can't understand why someone would consider their main asset as their main risk...

What if the UK recovers somewhat, the US keeps growing, the licences keep growing (they are growing at the moment, not crashing) and the manufacturing investments start to produce some income?

[disc0dave45] 09/8/2023 18:32

Going on FY24 Rev forecasts and number of employees, CFX Rev per employee is equivalent to £300k, for SDG its £183k. whether the difference is down to manufacturing in-house or not is unknown but guess it probably is.The forward PE for CFX is a lot higher at 10.7x and for SDG it's 7.8x. Whilst SDG looks better value I'd caveat that by saying what I keep saying - revenue is flat / declining and licensing income could crash in a year or so. Plus it's never really had a high rating (other than due to tailwinds associated with Covid).CFX looks like it's income is well above pre covid now whereas SDG's isn't, far from it.

[barnesian] 09/8/2023 16:21

If SDG stopped printing its own papers it would have to pay someone else to print them. This might cost more even though they'd employ fewer people. Outsourcing sometimes makes sense. Sometimes it doesn't. No doubt the management have considered it.

[essentialinvestor] 09/8/2023 14:17

Right, thanks Salver, so that's highlights the point I'm attempting to make -
perhaps a sharper focus on what SDG do is needed and some of the current business
model ditched.

[salver2] 09/8/2023 14:11

Colefax employs around 350 people-significantly less considering not dissimilar turnover -you could say about 220 less adjusting for ten percent less turnover-Sanderson around 600 -I’m expecting another share buyback maybe in September for Colefax

[trt] 09/8/2023 14:03

Really cheap topped up again today. Dividend payout 12/08 always gets me a nice trip to New Zealand.

[essentialinvestor] 09/8/2023 13:57

salver, without checking I can't remember roughly how many people CFX
employ, but would guess it's significantly less than SDG.

[salver2] 09/8/2023 13:28

Hardly at 6.5 times earnings plus cash -it shows both are very lowly valued-how much less do you want!

[pugugly] 09/8/2023 13:24

salver2 - That indicates that SDG is possibly over-priced at the moment given the current dependence on licence fees.

[essentialinvestor] 09/8/2023 12:51

fully agree and hold.

[salver2] 09/8/2023 12:41

Historic earnings of nearly 90 p a share put Colefax on a pe of 5 plus its 19.5 million cash which seems insane for a high quality business

[salver2] 09/8/2023 12:36

Actually Colefaxs results are out today and they are not too bad worth having a look at them in respect of Sanderson

[pugugly] 09/8/2023 12:08

ALS> A far clearer risk identification than mine.

[arthur_lame_stocks] 09/8/2023 12:04

That's one thing that would concern me if I was a shareholder. Most of the profit seems to come from licensing the design archive, but fashion is very fickle so will these companies still want to license the designs in a few years?

[pugugly] 09/8/2023 11:58

Disc0:- Excellent - Most useful. If problems renewing/extending then what would be the revenue implications? On the up-side if licensees find licence very profitable then might be able to renewed at higher fees.

[disc0dave45] 09/8/2023 11:49

Just been looking at their license agreements and expiry dates:Next: Clark & Clark expires 2027/28.Next: Morris & Co expires 2025Wiiliam Sonoma: expires 2025Bedeck: expires 2025/26National Trust: expires 2025Sangetsu: expires 2025 (little updates on this agreement)Wedgwood: expires 2024/25?Sainsbury's: Signed March 2023 but duration not given, just mentions multi year, so assume minimum expires 2025.Disney: Signed August 2022 but no duration given.Ruggable: Signed late 2022 but no duration given.The majority expire in a couple of years. They aren't too transparent in terms of details around the agreements and it would be useful to know which collaboration generates the most income. They state that the majority of their agreements receive accelerated income yet the Next (Clark & Clark) agreement had £2.6m of accelerated income but their Finals FY01/23 only gave £2.4m including £1.4m from Bedeck - so not too certain how they are booking this income, which is a guaranteed minimum but guess only the actual sales income in excess of this will then be included in the following FY numbers.EI - Capex, guess they need to reduce operational costs to maintain margins and keep pace with technology (digital printing etc). Personally I don't think about 4% of their income as Capex spend is too excessive and also guess the majority of their assets are due for upgrading given how long they've been in business and no doubt sweated their assets.

[salver2] 09/8/2023 09:15

I wouldn’t disagree with that but if you go to Sanderson careers page there seems to be a lot of unfilled jobs which may conversely mean the opposite

[essentialinvestor] 09/8/2023 08:56

Salvar, they need to take additional costs out of the business is my take.