With Mark continuing his honeymoon and Leo his holiday this week, SCL was limited to Leo posting his thoughts in the early mornings in the #general channel on discord. Although these were quite detailed, time constraints today mean that only a very brief summary can be posted.
Large Caps Live Monday 26th July
With much of the last 18 months like living in an Orwellian dream / stupor, Wayne discussed Gin, or more particularly Tonic, with a look at FeverTree’s numbers, before discussion moved onto harder stuff like Coke. With much consumption now at home in front of the telescreen, supermarkets were also discussed, including M&S / Ocado.
Small Caps Live (substitute)
Cranswick (CWK.L) - a meat “manufacturer”, not to be confused with the old Crawshaw butcher business. It doesn't look a very interesting business - long-term declining market, high valuation, mid cap - but it is interesting for read across to Wynnstay (WYN.L).
Ryanair - Ryanair figures for 3 months to end-June don't look good. No valid comparables are provided in the statment, but here’s a summary of passengers (millions):
2019 2021
Jul 15 9
Aug 15 10
Sep 14 11*
* My estimate
This despite:
The Covid-19 crisis has triggered the collapse of many European airlines including Flybe, Norwegian, Germanwings, Level and Stobart and led to substantial capacity cuts at many others including Alitalia, TAP, LOT, SAS, etc.
So still lots more people spending money in the UK over the summer than in the past.
This I find incredible: €1.2bn 5-year unsecured bond issued in May at record low 0.875% coupon.
Mpac (MPAC.L) - Announces a contract for assembly equipment for a small-scale lithium battery production line. Awarded to a subsidiary that had already been working with the technology provider. Although no initial revenue, I was disappointed by the share price reaction.
Avation (AVAP.L) - Further writedowns, but seems to be stabilising.
Reach (RCH.L) - Sceptical about investment in journalism. I feel this should still be valued on the basis that their revenues will evaporate over a period of 5-10 years and is therefore overvalued.
Games Workshop (GAW.L) - Adjusting broker forecasts to be more realistic, I see 425p EPS in 2022 and 506p in 2023, and a possible valuation of 20x 425p. So, too expensive.
Vertu (VTU.L) - Problems at Motorpoint getting used car stock have not yet affected Vertu who guide H1 massively ahead, but assume H2 will fall off dramatically. Given asset backing this looks crazily cheap to me.
Marston’s (MARS.L) / Mitchells & Butlers (MAB.L) / Shepherd Neame (SHEP) - Tell a consistent story of LFL sales below 2019 levels even after full-reopening and despite claims of “pent up demand”. Opinion: Legacy pub companies will die out without ongoing government support.
CMC Markets (CMC.L) - In line statement will reassure some, but disappoint others.
Creightons (CRL.L) - Acquisition. Although expensive, the logic is was made clear in the previous day’s presentation (covered in our #live-events channel)
Staffline (STAF.L) - Strong update, including strong cashflow, leads to a 32% EPS upgrade for the current year, on what appear to be conservative assumptions. In my opinion this they have a strong business model with a unique market position and this is far far too cheap for a recovering company.