Week 8 of The Voyager RNS Log: Week Commencing 27/08/2017
Monday 28/08/2017: London Markets closed for Bank Holiday but children playing with fireworks in Korea proved a market distraction.
Tuesday 29/08/2017: IG Design: IGR: Market Cap £242m: RNS Trading Update for 1st Qtr of financial year.
IG Design Group plc, one of the world's leading designers, innovators and manufacturers of celebration, gifting, stationery and creative play products, is pleased to provide an update on the first quarter's trading period ending 30 June 2017.
-- First quarter trading is in line with management expectations with a strong pipeline built in all regions
-- Tangible benefits from recent initiatives include:
-- the unification of the Group's three UK businesses under a single leadership team;
-- the synergies resulting from our acquisition of Lang in the USA; and
-- the National all store "roll out" of our single greeting card range with Australia's largest discounter
Group sales during the first quarter, combined with overall customer order levels already received for the balance of the year, give the Directors confidence in the outcome for the full financial year.
Sales volume growth together with product mix is continuing to enhance margins across our broadening customer base. The region has achieved noteworthy momentum in the Creative Play categories.
The investment in state-of-the-art gift wrap converting facilities continues to deliver production efficiencies.
The region is also benefiting from further significant synergies from the Lang acquisition, in line with management's plans.
As previously announced, having unified our three UK based businesses under one leadership team we have enhanced our ability to deliver a coordinated offering of product and service solutions to our broad base of customers, whilst retaining product and commercial expertise. Following the reorganisation, the region is trading in line with expectations with synergy benefits flowing though.
Our investment in the manufacturing of not-for-sale-consumables is fully on schedule and on budget. Our order book for these new products is building strongly and our initial shipments are scheduled to take place in the second half of the year.
The region is on course to achieve record sales and production levels across the Group's core gift packaging product categories. The Group's second efficient and environmentally friendly printing press is on schedule and on budget to be installed in time for our main production in FY19.
Additionally, sales of both stationery and gift products are encouraging especially to our existing base of Europe's strongest and growing multiple retail customers.
The region has seen particularly strong growth in the higher margin independent store sector.
Having won a major new contract for the supply of every day greetings cards with Australia's largest discounter, we are benefitting from the economies of scale that this opportunity presents, particularly leveraging our logistical capability and scale.
Paul Fineman, Group CEO, commented:
"We are pleased with the progress made in the first quarter, particularly with regard to the various incremental growth initiatives highlighted at the Group's results.
Alongside this, our order book is yet again at record levels with strong momentum fueled by excellent product innovation and ever closer relationships across our broad customer base.
Organic growth opportunities exist in all regions, and our strong balance sheet is also providing the flexibility to continue to evaluate M&A opportunities."
As mentioned in an earlier blog article, I had previously done fairly well in IGR holding over the 2004/05 period and thankfully dodged the bullet that was to come along in 2007/08 when IGR or International Greetings as it was once called, got badly beaten-up during the financial crisis as their share price collapsed by over 95%. However, these days the company seems to be in safe hands with Mr Fineman in the driving seat. I have to admit that after the previous massive declining in the share price of IGR, I was a touch slow in buying the shares again having been very tempted in April 2015 after a great TU when the share price was 112p but I finally bought at 180p some months later after another fine TU; sometimes you do kick yourself don’t you! Since that time I have made further top ups as the good news “ahead of current market expectations” continued to flow.
Learning Point From My Experience That I Am Happy To Share
A learning point that has served me well over the years: If you find a share that looks very attractive, the numbers appear solid and the RNS good news continues to back your initial interest, don’t think you have missed the boat just because the SP has gone up by x% whilst you dithered. Provided the price is not silly, you often get other chances to buy but remember that sometimes you simply have to stump up the cash for quality!
My View: I really do like IGR and it’s what I consider to be a very well managed AIM company. I rather trust the CEO, Paul Fineman who was appointed as Group MD in January 2008 and a year later became the company's CEO. Today's trading update reads well and suggests the company is both continuing to grow and is in fine form.
Wednesday 30/08/2017: WH Smith: SMWH: Market Cap: £2045m RNS Pre Close Trading Update:
PRE CLOSE TRADING UPDATE
Prior to entering its close period ahead of reporting its preliminary results for the twelve months ending 31 August 2017 on 12 October 2017, WH Smith PLC announces the following pre-close update.
Our Travel business continues to deliver a strong performance with good sales across all of our channels and our new store opening programme both in the UK and internationally is in line with our plan. We have now opened our first three stores in Italy - in Rome's Fiumicino and Ciampino airports, and one in Turin airport. We continue to see further opportunities in the international news, books and convenience travel market.
Our High Street business continues to perform in line with expectations. Cost savings and margin improvements have been delivered in line with our profit focused strategy.
WH Smith PLC expects the outcome for the year to 31 August 2017 to be in line with expectations.
It’s actually quite beneficial for me writing these notes as it pushes me to be a touch more analytical with my trading history. In the case of beautiful boring WH Smith, I bought the 1st tranche of the current holding in October 2014 and made a more significant purchase a few months after the Brexit vote when the shares had been a touch overly clobbered. What I like about SMWH in addition to the published numbers, is the way they have grown their travel side of the business. I always drop in at an airport or service station and happily observe the footfall; nice!
My View: I love them, they are a big market cap company and one that has continued to deliver over recent years. In addition, they offer a modest but handy dividend that is in common with my investment approach, I reinvest in the stock hopefully compounding my return. It's good to have a number of truly boring stocks in the portfolio and you don't really get much more boring than WH Smith.
Thursday 31/08/2017 & Friday 01/09/2017 no significant RNS for portfolio shares
Fourth Week of New section: Glad I’m Not There (a sort of reverse take on the old Judith Chalmers holiday programme briefly mentioning a dog of the week that thankfully I don’t own).The Real Good Food company has been at its tricks again this week (I did comment on this company a couple of weeks back). On 29/08/2017 they issued their 2nd profits warning within four weeks. Now the optimists among us may claim that we should be thankful for a few weeks of stability but to my mind, they remain totally uninvestable due to lack of management credibility; thankfully I never got near to them. Maybe for the punter, this will be the time to buy as I assume they have done a kitchen sink job and all the bad news is out there; so who knows they may improve from here. However, I don’t personally care much for punting.
On 30/08/2017 we had an awful RNS from HSS stating that a profit of £2.2m in H1 last year would compare to a massive loss this year at H1 of £14.2m. Now if that is not bad enough let's throw in the absolutely massive debt that the company has been saddled with since IPO. The net debt stands at over £200m and totally dwarfs any claimed profit: simply an almost uninvestable situation even before Wednesday's profits warning. Like other investors who write a diary or form of Internet blog, I do not offer advice but in the case of IPO’s I often suggest that people take great care when a company is floated or refloated and laden with debt by the charitable sharks who previously owned the entire business. I am afraid that HSS was simply an accident waiting to happen and now the share price is about 20% of it’s flotation price. If things go well for a business stacked up with IPO legacy debt then ok, you just might get by in the good times but simply why take the risk as massive debt may simply prove to be unsustainable for the survival of the business.
Turning to next week, the portfolio has results from IQE on Tuesday 05/09/2017, SOM on Wednesday 06/09/2017 & SFR holds their AGM on Wednesday 06/09/2017 and it is their usual practice to give the market a trading update at their AGM.
Tomorrow it’s off to the fair city of Lincoln for the Hatters next confrontation within football basement planet of giants; oh why does the LTFC manager buy a lorry load of dwarfs for the midfield; just can’t work that one out; this is L2, the world of giants for heaven's sake! Anyway the plan is to arrive early, breakfast in Patisserie Valerie, well why not as I hold the shares, followed by the sights of Lincoln and finally a pre-match beer. Oh yes, and the game, how could I possibly forget that?
Have a great weekend & as ever, happy investing.