Victoria Investors - VCP

Victoria Investors - VCP

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Victoria Plc VCP London Ordinary Share GB00BZC0LC10 ORD 5P
  Price Change Price Change % Stock Price Last Trade
-6.00 -0.68% 882.00 16:35:06
Open Price Low Price High Price Close Price Previous Close
885.00 880.00 885.00 882.00 888.00
more quote information »
Industry Sector

Top Investor Posts

longterm56: His sale of half of his holding was to fund his tax bill. This will be at income tax rates not capital gains tax so will have cost him 47% being income tax at 45% plus national insurance at 2% - so he has only sold enough to cover his tax bill. The lack of a dividend has been well publicised by the company and so should not be a surprise to any investor. the easy solution is to sell a few shares to give yourself an "income" and that will only be taxed at 20% max unlike income tax
castleford tiger: Investors champion have never got the story here. They have debt because of the quality business that they bought! The shares will break £5.00 very soon in my opinion tiger
1nf3rn0: They've always been clear in annual reports that they view dividend payments as bad value to shareholders as they believe that they can generate better returns by redeploying the cash into the business.Personally I think a small dividend, even 1% would be better, as they'd still get to recycle the majority of their free cash flow whilst attracting new institutional/private investors who require some amount of income.
sharemonkeymagic: I'm sure the results will be good as that much can't have changed since the AGM statement just over 2 months ago. So what can be sending the price down like this? My guess is it's to do with Invesco selling some of their large stake in the company. They sold about 1% of the company and maybe the markets know that they want to offload some more so it's sent the price down. I think that could have started the price going down and some investors took that there might be rumours of the results might be bad so sold, which sent the price lower. The company is re-financed with cash in the bank and profits building. Maybe Mr Wilding is happy for the shares to continue to slide so that he can buy some of the shares back cheaply after the results are out. It would be a good sign to the markets if he did. Not sure if we are the bottom yet but i'm expecting a bounce after the results if not before.
gengulphus: bouleversee, Wouldn't have minded a bit of that myself. Were we given the chance? Mine are on a platform now (iWeb) and I didn't hear anything from them about it. Sort of - we were told about it by RNS: Those interested could have taken up the "FOR FURTHER INFORMATION CONTACT:" invitation at its end. I suspect they would have been faced with (a) a requirement to qualify as a professional investor of some type, since a much more admin-heavy process involving prospectuses filled with risk warnings, etc, is generally required to legally issue securities to ordinary retail investors; (b) quite possibly a substantial minimum investment amount, meaning substantial for an institution and thus a good deal more than substantial for almost all retail investors. If those suspicions are correct, the answer is effectively no for the practical purposes of almost all individual investors - but in principle a sufficiently determined, sufficiently rich individual investor could have taken part. Gengulphus
rotrader: I hope Philippe’s confidence is correct. This was from the last trading update - Group Chief Executive, Philippe Hamers commented, "Over the last five years Victoria has steadily built what I believe to be one of the finest management teams in the industry and the value of this is demonstrated by the speed of execution and successful delivery of our productivity and margin improvement plan. Shareholders can be confident margins are steadily improving alongside continued market share growth." Stevejamessmith , correct by the looks of it, VCP investor web site is a bit vague - Date of Preliminary Results The Board of Victoria expect to announce the Group's preliminary results for the year ended 30 March 2019 in July 2019.
gengulphus: Canonyau, how was the TU a profit warning? Looked good to me I'd have thought it pretty obvious from the first few sentences of the trading update how one might consider it a profit warning: "In the Group's interim results released in November, Victoria advised it was taking advantage of difficult market conditions to actively pursue market share. The Board recognises this approach, which impacted earnings this year, has unsettled some shareholders but it believes it to be in the best long-term interests of the Group and its shareholders." The mention of "difficult market conditions" and the reassurance about "best long-term interests" (my bold) bear all the hallmarks of a board telling its shareholders to expect disappointing results in the short term, i.e. a profit warning. And the start of the following paragraph reinforces that with: "This growth has, as expected, come at a short-term cost with the introduction of lower margin, volume products. The Group has also temporarily absorbed, rather than passed on, substantial increases in underlay raw material prices in recent months and some large one-off costs associated with the consolidation of the Group's UK logistics operations ..." One really doesn't need to make a logical leap to see that greater short-term costs that are being absorbed rather than passed on makes it highly likely that in the short term, profits will be less than what investors might reasonably have been expecting! By the way, I do realise that in a bit I haven't quoted, they say profits are expected to be up on 2018 - but they might very reasonably have been expected to be up by more. Specifically, the 2019 final results would have been expected to be up on 2018 by including about 8 months of contributions from Cerámica Saloni when 2018 had none, by having a full year of contributions from both Keraben and Ceramiche Serra when 2018 only had about 4 months of them, and by organic growth within the company's other businesses. That's about 2/3rds of a year of contributions from those three acquisitions. The announcements of those acquisitions said they had EDITDAs of £13.9m, £32.7m and £9.4m in their last full years before acquisition (2017 for Cerámica Saloni, 2016 for the other two). Two thirds of their sum is £37.3m, and one might reasonably have expected some organic growth as well: a trading statement saying that EBITDA is expected to be up by only £30.3m-£32.3m looks decidedly less than impressive in that context! So basically, I'd say the trading update is a profit warning, with a pretty clear message about profits being less than previously expected in the next set of results or two, but it is also an announcement of investment by the company that will hopefully lead to profits being well up in the longer term. The difficult question is not whether it's a profit warning, but what one is to make of that combination of short-term profit warning and longer-term investment in the businesses. Taking smaller profits in the short term to grow a company longer-term certainly can be a good bargain, but equally it can go wrong due to the investment being misconceived, or (worse) due to the directors being too keen to put on a brave face for the shareholders... Not saying either of those is the case, but I am saying that any prudent shareholder should ask themselves whether it is! And to anticipate a possible query about what my own answer is to that question, sorry, I don't yet have it. Gengulphus
gengulphus: bouleversee, What's the significance of the two auction extensions? What they mean is just that a stockmarket 'auction' (*) had trouble settling on a price that looked 'firm' and was given first an extra 5 minutes to do so, then another 5 minutes beyond that. As regards significance, I think they say that there's noticeably more disagreement in the market about the share's value than usual (which is pretty obvious anyway in this case) and when an opening or intraday auction is extended, that normal trading will restart a few minutes later than would normally be the case (this doesn't apply to closing auctions, as their extensions are into periods when normal trading wouldn't happen anyway). That's it as far as most private investors are concerned, who cannot take part in auctions; the relatively few investors with 'Direct Market Access' may well be able to take part, but I'm not one of them and have no experience of using DMA. So I'll have to leave them to know what significance it has to them! That's the informal, non-technical explanation (or at least the best one I can manage!). Something more precise about details such as what triggers such extensions can probably be found somewhere on the LSE website - certainly I read one there several years ago (though I've no memory of exactly where on the site, and even if I did, the site has probably been reorganised at least once since!). What I took away from that read though was basically the above, plus the information that the most an auction can be extended by is two 5-minute price-monitoring extensions and one 2-minute extension of another type (don't remember its exact name), plus a view that the remaining detail was far too insignificant to me to be worth burdening my memory with! (*) Which will have been the completely standard opening one given the time of your post - the equally standard closing one at the end of the day was also extended twice, but that happened later. Gengulphus
gengulphus: By all accounts they would have to pay the highest price within the last 12 months since the threshold was reached. No, an offeror doesn't have to pay the highest market price within the last 12 months. If they did, it wouldn't be very hard for anyone to exploit such a rule to mount a pretty good defence against a company being taken over, especially for companies with fairly illiquidly traded shares... The rule is actually that the offeror has to offer the highest price the offeror themselves (or any member of their 'concert party', if applicable) paid for the shares in the last 12 months. What anyone else paid is ignored by it. So that's not going to happen? No - you might be able to exclude the possibility of some particular investors making offers that way, but not the possibility of an offer being made. Gengulphus
40harry: Warning signs: When a company's strategy is to "create wealth for its shareholders by constantly increasing earnings per share via acquisitions and sustainable organic growth" this is a massive warning in my view as EPS says nothing about how well management are performing, particularly when the capital base of the company has been constantly increasing (to fund acquisitions). The equivalent is me saying: i've done a great job earning twice as much interest in my savings account, when all i have done is doubled my deposits. Valuation cannot be justified by revenue growth In my view, investors' fixation on EPS growth has driven the shares significantly further ahead of their intrinsic value, such that the company is now being value like a growth stock (high 20's P/E). However, the reality is far different, with LFL (organic) constant currency revenue growth of just 6% in FY17. Let's assume that this is close to the 'market' growth rate for the industry. Trading on 4x premium to peers, why? But maybe the carpet industry trades at high multiples? If that was the case, how come Victoria is trading at 4x its competitors (average P/PBT multiple of 7.2x for FY17 acquisitions) when their growth rates are probably similar and actually the acquired business in FY17 actually had a superior ROCE than Victoria (which should deserve a premium valuation). Why would all these business owners sell as such a significant discount to their businesses' intrinsic value? It doesn't make sense.... Valuation gap must come down to cost cutting post acquisition Given that Victoria is blend of acquired businesses, which together, don't have better growth prospects or ROCE characteristics, I don't think it's unreasonable to say that £1 of profit generated by Victoria should be worth a similar amount to £1 of profit generated by a competitor i.e. the profit multiple should be the same. If you buy this argument, then the rational investor in Victoria must be indifferent between investing in Victoria at 28x earnings and investing at 7x earnings in a competitor. The rational investor can only say this if Victoria's management can quadruple an acquired business' profit margin, such that £1 can be turned into £4. Does this happen or could this happen? Well, the acquired businesses in FY19 had (on average) a PBT margin of 18%, versus Victoria at 9%. I think that the answer is quite obviously, no. Wrap up Earnings growth is an illusion and does not reflect how well management are performing. It is ROCE that it a better reflection and to this end, Victoria earns about a 10% return on capital - about 50% short of what most 'quality' orientated investors would view as a 'good' company. Where is Victoria heading? Victoria's valuation cannot be maintained by its very pedestrian rate of growth. As such, expect management to make more and more (in my view, disparate) acquisitions (the cheaper the better(?)). This will build on the company's already significant debt. LT debt is already £125m or 6x FY17's FCF, so don't expect this to be repaid, meaning insolvency is the logical outcome when refinancing isn't an available option. D-day is October-2020, with an option to extended for another year.
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