Tandem Share Discussion Threads

[castleford tiger] 29/6/2023 21:45

I agree it’s going to be tough but operational gearing means this can be making 50p eps within 2 years.
Possibly quicker with the right deals.
The business is in a good place to pick up new accounts .
We have no rent to pay and very little energy costs. No old stock and margins are increasing as costs come down.
Looks like the broker sees higher revenue as well.
Very much weighted to the upside if things settle in general.

[eezymunny] 29/6/2023 21:36

Indeed CT. It´s always worth exploring the bull and bear cases though. Most posts are just rampy bull rubbish.

TND may well come good from here, but I reckon a couple of hard years in store at best...

[boystown] 29/6/2023 21:26

Re-tipped by Simon Thompson who finishes with:

"The board is maintaining full-year guidance in line with house broker Cenkos Securities’ forecasts, which point to revenue rising from £26.7mn to £30mn and adjusted operating profit increasing from £1.3mn to £1.6mn. True, underlying pre-tax profit is likely to be flat at £1.2mn, reflecting a higher interest charge and a doubling of net debt to £3.4mn, as expected, implying a comfortable 13 per cent gearing level.

"Priced on 11.5 times likely bottom-of-the-cycle earnings per share (EPS) estimates of 17.2p, rated 59 per cent below book value of 490p and offering a 5 per cent dividend yield, Tandem’s shares rate a recovery buy."

[castleford tiger] 29/6/2023 18:31

Eezy
I am sure if I could be bothered I could find historic posts that you have made that are now wrong!!

The point about the building I don’t get. We can grow to 100 m from that site and I think we will.

[eezymunny] 29/6/2023 17:12

"Castleford Tiger - 16 Feb 2021 - 18:52:07 - 4486 of 5661 Tandem Thread with Charts - TND
No not quite

Year 1 the money is spent and its year 2 the extra profit flows through.
That could continue into year 3 and add another 20p


The 20p extra eps will come as a result......... of the 7/10 million investment.

However I have assumed we get to 5m profit and eps of 100p to get my £10.00 target.

I am assuming in year 2/3 the bicycle market business slows but by then the investment and cost savings will maintain us at 100p eps

Depending on the increases in D2C sales we may well go past 100 but its too far out to be sure."


Beware the permabulls!

[eezymunny] 29/6/2023 17:09

13.7 in freehold property for a company that does 27m turnover. New w/h a vanity project?

"This will come good" is laughably unbalanced CT IMVHO.

[castleford tiger] 29/6/2023 17:07

i should also say that i expect sales to go up this year circa 10%
with a small increase in profits.

Mainly because orders are now 2nd half as i discuss.

tiger

[castleford tiger] 29/6/2023 16:45

That might the case on a new investment ort a trading position but building a long position is not easy.
Just as its not right to sell at 1/2 net worth that would be crazy.

This will come good.

[eezymunny] 29/6/2023 15:16

CT - we´ll have to see how much difference the FOB to direct change has really made!

Nobody disputes that things are tough but a 26% H1 sales decline will need a lot of re-couping in H2 to be able to say they´re "doing rather well". Just IMVHO!

Good luck. I prefer shares that are doing well currently, not ones that may or not recover in H2 etc!

[castleford tiger] 29/6/2023 14:03

Eezy and RC turner

2 of the biggest bike dealers have gone under this year and others will follow.
You may conclude from reading the statement that bike sales are down.
Well they are not. Adding electric to traditional means sales are actually up.
Likewise if you look at the headline reduction in sales you arrive at your conclusion. Again the reason is a switch from FOB sales booked when shipped to more direct deliveries from Tandem in the U.K.
So the numbers will be pushed more into the second half.
The share price is as a result of the current market conditions and at less than half NAV (after deducting intangibles )
Serious investors were at the AGM have you seen them reducing?
My comments this morning before leaving are justified as it’s tough out there.
Profit target for the year has been maintained so even a chunky 5.2% yield will be covered.
The groundwork is almost finished with the new warehouse up and running( we did a tour )
Efficient handling now will help reduce costs and we voted to allow the company to buy its shares back.
Of course there are economic headwinds of which Tandem can do nothing but as soon as the situation starts to move back towards normal tandem will rapidly move forward.
Iam a long term investor here and I am happy with the team and the way the business is coping in difficult times.
Tiger

[cwa1] 29/6/2023 09:43

A snippet from this morning's Cenkos note:-

 Valuation & rating – Whilst profitability remains subdued, given the weak macro environment, we believe Tandem is well positioned to benefit from an eventual normalisation in trading conditions. The business is asset backed (owning the freehold to its warehouse and distribution facility in Birmingham), and currently trades on a P/TNAV of just 0.6x, which we consider to be far too cheap given the company’s positive long-term growth prospects (particularly in e-mobility). We reaffirm our Buy rating.

[rcturner2] 29/6/2023 09:42

Boystown, he isn't taking a long term view that would be something like "times are tough at the moment but there is value here for the long term".

He said "the company is doing rather well in difficult markets". Mental.

[davidosh] 29/6/2023 09:09

the Board remain confident in the Group's ability to continue building and gaining market share. We remain committed to evolving our strategies, nurturing customer relationships, and leveraging our growing brand presence to drive further growth and success in the market, and we therefore maintain our view of achieving market expectations of our performance for the full year.


It would really help shareholders and potential investors to see detailed information showing the 'market expectations' in the same RNS announcement as not all investors will have easy access to the broker research and there is potential for this to have changed during the period in question.

[boystown] 29/6/2023 08:44

Or maybe he takes a long-term view and has bought more sub 190p. I got some at 187p earlier FWIW

[rcturner2] 29/6/2023 08:29

CT is in too deep and has lost all objectivity.

Has been like that for a while.

[eezymunny] 29/6/2023 07:18

"I think overall the company is doing rather well in difficult markets".

Hard to reconcile that with "our sales have experienced a 26% decrease compared to the prior year".

May well be loss-making at that level of sales.

[our haven] 29/6/2023 07:04

And after we slow considerations, I see that is what has happened

[our haven] 29/6/2023 07:03

CT, I do fear that despite the current low share price, the market will continue to devalue the share after today's statement.Very happy to be proved wrong.

[castleford tiger] 29/6/2023 06:37

I think overall the company is doing rather well in difficult markets.
A 5% yield helps until we get some traction in the shares which remain undervalued.
Tiger

[darrin1471] 27/6/2023 13:44

1tx. The F2C case I was referring to was not a major brand but a brand at the level of Tandem's brands and lower.

A purely fictional example using Tandem:
Tandem buys bikes from multiple Chinese factories. Those factories not only supply Tandem but also multiple similar companies to Tandem in US, Europe etc.
Bike costs 100 to manufacture. Factory sells to Tandem for 110. Tandem sells to Halfords for 150. Halfords sells to customer for 300. Or Tandem sells direct to consumer via their own website or Amazon for 250.
Factory is approached by company "XX" which provides all the services to sell directly on Amazon and other marketplaces across the word. Software, shipping, warehousing and returns etc.
Factory sells essentially the same bike sold by Halfords and Tandem on Amazon and marketplaces worldwide for 200. All they do is change the colour and decals.
By going F2C the factory is increasing their profits by 300-500%.
As the Tandem bike is a collection of non patented parts, there is little Tandem can do as the service company XX is offering the same service to all bike factories.
The Tandem example is fictional.

The case I heard of is not fictional. They had a UK own brand which was also sold internationally to a lesser extent. They competed against other UK and European companies selling similar but essentially the same product. On a month long buying trip (the 1st post covid) to China the company discovered one of their factories had set up an off site F2C selling on Amazon and marketplaces worldwide. Further digging showed most of his suppliers were doing the same thing. One factory had more staff off site employed running the F2C than were in the original factory.
Consequently the owner is fighting to save his business and he has heard of competitors sitting on huge overstocks as their prices have been undercut on marketplaces. The F2C was well hidden from the UK importers during covid and he does not think his competition are aware of what is happening.

F2C may be the future and change the retail supply chain forever.

Losers: importers, retailers and landlords.
Winners: the consumer, company XX and marketplaces.

[1tx] 27/6/2023 10:04

I am not aware of any UK brand that meets that profile.Sadly there are few major UK brands.There is of course a trend to direct selling to customers cutting out retailers....including by Tandem.

[castleford tiger] 20/6/2023 16:36

no darrin not heard that one.

anyone for the AGM next week?

Tiger

[darrin1471] 20/6/2023 12:40

tiger. Have you heard anything about Factories in China cutting out importers and going straight to online marketplaces like Amazon. F2C.
I heard of a case recently where a company built up a UK brand over many years, importing a range of goods from multiple Chinese factories. The factories supplied multiple companies similar products worldwide with slightly different colours and packaging. The factories had set up an off factory site business to avoid detection by the UK wholesaler. They were suppling marketplaces direct and under cutting the wholesaler and retailers with essentially the same product. The factory was discounting against UK retail prices but making a huge margin which covered marketplace fees and costs. The whole set up appeared well organised with a new business offering a whole package to the factory including software, importing and warehousing.

[darrin1471] 20/6/2023 11:53

I think that UK consumer will surprise to the upside during the summer. The lower energy cap will add a further boast.
£ strength vs $ compared to 09/2022 should work though to shop prices in H2 through to 2024
Imported prices should fall but importers are likely to try and boost or rebuild margins before passing on all the reductions.
Fixed mortgage headwinds will build as more mortgages come up for renewal. Disposable income squeeze will move from poorest in society to young families who have the biggest loan to value mortgages.

Current warm/hot weather is good for retail but heatwave weather like we had last year is bad

[darrin1471] 20/6/2023 11:25

NEXT's Unscheduled Trading Update was not just simply weather.

"Trading in the last seven weeks has been materially better than the guidance we issued in May"
"Full price sales in the first seven weeks of the second quarter were up +9.3% versus last year. This compares to our guidance of -5%."
Reasons for the over-performance
1. Weather
2. " In an inflationary environment, annual salary increases deliver a significant uplift in real household income at the time they are awarded. For example, during April annual inflation was running at 8.7% and monthly inflation was 1.2%; if an individual received a pay rise of 5.0%, then their real income would have risen by 3.8% in that month. We do not think it is a coincidence that sales stepped forward so markedly at a time of year when many organisations make their annual pay awards."

OUTLOOK
"If recent pay rises and the sudden change in weather have indeed contributed to the current over-performance, then it is reasonable to expect that the effect will diminish over time because ongoing inflation will slowly erode the positive effect of annual pay increases. This is why we are not anticipating the current performance to continue at the same level going forward"