The Character Share Discussion Threads

[pireric] 14/5/2024 16:44

Looks like that overhang is now cleared. There was another 27k of stock bought back at 299p today, but it's the other trades that look like the clearing
- 50k shares at 287p
- 66k shares at 291p
- 40k shares at 291.5p

Eric

[pireric] 13/5/2024 12:29

There is still somewhat of an overhang to clear as you can buy for example 20k at 292p at present. The share buybacks will help with clearing that over time as they still have £600k in the current programme, and significant potential additional buyback power under authority from the AGM. The finals suggested they are pleased to buy back when there is stock available. Feels a little similar to the overhang recently at ANP, which then cleared and allowed the fundamentals to shine through to the share price

Eric

[dan_the_epic] 13/5/2024 10:28

Paul Scott positive on CCT on hid latest podcast

[dan_the_epic] 11/5/2024 14:39

I am piecing together why they are maybe feeling much happier about life now in the outlook. Me thinks the recent Doctor Who ranges will have been selling well too which are coming out from April onwards so this half. There are also the Goo Jit Zu Minions range. Simbrix looks like a winner in the future

[dan_the_epic] 11/5/2024 12:23

This is the road back to 40-50p of EPS, I adjusted past eps for 25% tax and the fewer shares. Allenby [AL] 2024 estimates are too low, I think upgrades on the next update and more buybacks over the coming months if I am right as management know the stock is too cheap. Look at the NARRATIVE. The tone change in the half year on the outlook is chalk and cheese from January and very positive. Me thinks they have great orders lined up as they ship for Christmas over the next few months.



They have bought back about £65m shares over their lifetime which is crazy given EV today is £39m and maybe £20m if they were to sale and leaseback on the freeholds

[dan_the_epic] 11/5/2024 07:51

PROXY A/SPROXY A/S
957 followers957 followers
2d • Edited • 2 days ago
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🌟 IT DOESN’T GET BIGGER THAN THIS! 🌟 hashtag#Topps hashtag#PremierLeague

We are absolutely thrilled to share the BIG news. Starting in 2025, the Premier League will be a part of Topps' incredible licensing portfolio.

This lineup now includes:

⚽ Premier League
⚽ Champions League
⚽ UEFA EUROS (Men and Women Tournaments)
⚽ Europa League
⚽ Conference League
🏎️ Formula 1

🚀 This expansion provides us with a unique opportunity to elevate the collectible cards and stickers category to new heights in the Nordics. We are incredibly thrilled and eager about this fantastic new venture!



This will also be a huge distribution opportunity for Character later this year as they are hand in hand with Moose Toys on the Goo Jit Zu side and PROXY have already called out this announcement





PROXY A/SPROXY A/S
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1mo • 1 month ago
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Topps distribution rights for Finland go to Proxy!

We are thrilled to announce a significant milestone for Proxy and the Nordic region! 🚀 Starting from the 2024/2025 Champions League season, Proxy has secured the distribution rights for Finland, in addition to Denmark, Norway and Sweden for Topps products. This includes the much-loved Match Attax Champions League cards, stickers, advent calendars, and Formula 1 items.

[dan_the_epic] 10/5/2024 16:35

An extra £68k of stock bought back today. They should throw another £1m into the buyback kitty once this one runs through

Sunny weekend everyone

[dan_the_epic] 10/5/2024 13:32

This is a nice insight -

This is a ROIC and cash machine. My favourite part of this video showed that between 2006 and 2022 there was a 63% reduction in shares in issue because of buybacks and they did total buybacks of £63m. That is well MORE than the entire company valuation today. Super cheap. They too said the 3 freeholds market value is substantially higher than the book value of £10m. When they sold Vernon Works in 2021 they got £3.5m in cash when it had a £1.4m NBV so a 2.4X factor. You could have almost £30m in value here just in freeholds and net cash so you could be paying only £22m for £130m of revenue, and averaging out through cycles £7-8m of net income.... An M&A player could probably get £2-4m out of operating cost as well....

[dan_the_epic] 10/5/2024 10:25

Be more simple

6.5x 2022 pe with 20% of the company valuation in cash so 5.2x recovered earnings

[pireric] 10/5/2024 08:28

Last one for now, but if you run some maths:

- I have GMs for the full year at 26.9%, compared to Allenby at 26.2%. First half GMs were up 30bps, so down 50bps for the full year looks very conservative, although FOB is lower margin

-Selling and distribution GMs have historically been ~2/3rds to 3/4s incurred in 1H. I'm assuming conservatively it's a bit closer to 50/50 seasonality this year

- On these numbers, I'm getting £8.3m of EBIT for FY24, compared to Allenby at £6.7m

- And I'm getting EPS of 32.5p compared to Allenby at 26.1p

Which If I'm right would spell 25% of EPS upgrades over the course of the next few months and would support a materially higher share price than here for sure. The stock is still broadly bumping along its low end of recent history. I think it's interesting management were happy to guide up expectations at the half year stage and were happy to run buybacks.

Well off the radar of most small cap investors and sentiment on the company would still be negative. This makes it a nice contrarian setup.

360 to 380p by year end is my estimate, which with an 8p dividend, would be a 76 to 96p return or 26 to 33% return.

Eric

[dan_the_epic] 10/5/2024 07:47

excellent post. PMR raise their price target from 460p to 506p for 73% upside

[dan_the_epic] 10/5/2024 06:57

this will be incredibly popular

[pireric] 09/5/2024 21:23

Some of my initial thoughts for CCT
- Market cap £55.2m
- Latest reported net cash £12.9m -> EV of £42.3m. Also £3m of investment property on the books, and freeholds (in use)

I've long viewed CCT as more of a trading share than one to own long-term, despite the attractive dividend yield at these levels. And that is very evidence in the share price chart - lots of deep troughs and peaks periodically.

Pretty obvious why; there are fluctuations around the toy industry in terms of what is in or out of fashion. But this has long been a great share to own when you're just coming of the bottom of one of those down years. I think that is where we currently are

I think it's worth looking back at the last 8 years to get a better feel for what you get for the ~£42m EV:

2014: £98m revenue, 27p EPS
2015: £99m revenue, 37p EPS
2016: £121m revenue, 48p EPS
2017: £115m revenue, 50p EPS
2018: £106m revenue, 44p EPS
2019: £120m revenue, 43p EPS
2020: £109m revenue, 18p EPS - COVID
2021: £140m revenue, 40p EPS
2022: £176m revenue, 45p EPS
2023: £123m revenue, 20p EPS - Weak demand / COL squeeze

The 2024 estimates from Allenby which are visible here

are for 2024: £130m revenue, 26p EPS

Ultimately either a revenue recovery here is key towards re-entering the 40p range or a cost slim-down. The cost slim-down one is easier to deliver I suspect with more certainty, as they have been very good at managing smaller revenue swings in the past and minimising the EPS impact. That is why the first half results this year are so meaningful; they are showing really good steps around cost management. Looking at the first half cost base and thinking about the second half, it looks very possible to me that you come out closer to 30-32p of EPS for 2024, particularly with the buybacks which are being conducted, which would be nice upside from current estimates.

I would be surprised if when 2025 estimates are launched by the brokers, they aren't pointing to 35-37p+ of EPS for that year on the assumption that industry-level demand headwinds move back towards normality. Bear in mind we have a materially lower share count post the buybacks vs. prior years so like for like EPS versus many of the years in the time series is actually >5% higher.

In any case, the earnings power of CCT seems to be closer to 40p than 26p currently forecast for this year, and that's even when higher management remuneration have been baked into those prior years.

The EBITDA forecast on the 26p forecasts I estimate for 2024 minus ROU depreciation is £9.6m so this is trading on about 4.4x EV/EBITDA, which seems very undemanding as this is entering back into an earnings upcycle, hopefully. Hasbro and Mattel are on 9-12x. Proxy should also benefit from Euro 2024/Topps cards.

On the core business, we'll see if the efforts to focus more on international markets pays off: "Whilst the UK and Irish domestic markets will always remain critical to Character, the Board recognises that opportunities for significant sales and profit growth lie in further developing the Group's international markets. We are focussing on this area of our business and we are pleased to report at this early stage that, following the recent previews and presentations of our 2024 ranges and new additions at the Global Toy Fair in Los Angeles to our retail and international distribution customers, our 2024 product offering has been very well received. Therefore, with International sales forecast to grow in the second half of the current financial year, this bodes well for the Group's strategic focus in this area."

My inclination is to see fair value here is closer to 400p than 293p, which with a 6%+ dividend yield would be a very good return off these levels. When the MDs want to hang up their boots, I can see this being snapped up by a player in the industry, at a materially higher multiple, with the benefit that the directors from a shareholding perspective are well aligned.

Eric

[pireric] 09/5/2024 17:53

I've bought in today as a trading stake as the case for a trade from here looks compelling to me. I'll post my thoughts later this evening

Eric

[dan_the_epic] 09/5/2024 09:14

Allenby forecasts are still too low

CCT 8.7p EPS in first half vs 0.5p last year

Full year estimate is 26.1p vs 20p last year

So they expect less EPS in the second half despite LOWER costs, and MORE revenue than last year.

This will do 30p+ of EPS this year

Buy.

[dan_the_epic] 09/5/2024 08:07

We have a business with £39m of net assets valued by the market at £57m, so £18m above book value, and if you take 2024 and 2021, 2022, 2023 and average it out, has averaged £6.8 million of net income over the past 4 years

Stupendous value for those who can see the wood for the trees.

Takeout value must be miles north of here

[dan_the_epic] 09/5/2024 07:39

Allenby Research up their forecast to 26.1p for EPS this year still a long way up to the 40p and over days of recent years and if that happens then this will be a 500p stock again

CCT should keep doing buybacks at these levels

[dan_the_epic] 09/5/2024 07:30

Long term chart looks excellent here now and this is back on the recovery curve. If this gets back to 40p of EPS with that balance sheet then this is going much higher

[74tom] 09/5/2024 07:29

And yes, just checked the last 6 half year periods & average distribution costs vs sales were 5%, H123 was 10%, so H123 had one off COSTS.

[74tom] 09/5/2024 07:22

"The Group reported profit before tax and highlighted items of £2.1m (HY 2023: £0.5m; FY 2023: £5.2m), the increase in profit being mainly due to reduced selling and distribution costs. This primarily related to the logistics costs associated with the Group's Scandinavian business being lower, as inventory was significantly reduced from last year, and increased influencer sales in our UK domestic market producing a lower advertising to sales ratio."

Doesn't look one off to me...

[arthur_lame_stocks] 09/5/2024 06:18

I've only had a cursory look at the results but it looks like they might be making a decent recovery. Most of it seems to be from a lowering of distribution costs though. Has anyone got any idea why this might be?

[linton5] 01/5/2024 10:27

Very static share price not many shares available,results next week regarding last update I’m expecting cct to read we’ll share buybacks going on but can’t get stock

[arthur_lame_stocks] 14/4/2024 05:41

Hi Pireric

I've just checked my figures after your post and I think I may have made a mistake about last year. Having looked again fcf appears to track much closer to reported net profit each year which is reassuring and what I'd expect anyway.

That said I've decided to stick with my investment for now, last year appears to have been particularly poor for well known reasons and generally they seem to be capable of making a net profit of around £10m a year so cheap if you believe they are going to recover.

[pireric] 12/4/2024 19:27

ALS - how did you get to £8m of FCF?

Eric