Uncle_Doug
09 Oct 2019
Is it all it is cracked up to be? @NewBill1703 How are your recommendations from October 2017 doing two years on? Just to remind you they were IMB, ITV, MKS, WPP, WTB, RMG, CPI, BT, VOD
NewBill1703
05 Oct 2019
Is it all it is cracked up to be? Gamesinvestor1: I’m not convinved this company is actually growing other than at the expense of extraneous finances. I’m also not sure it deserves a P/E of 21 when it is set to grow between 5 and 7%? Most of the growth seems to have come from price increases, not volume, is that sustainable? The stock price has recentlly fallen from 53XX to 4781 as I type. Does it have further to fall – would a P/E below 15 be more appropriate? All valid questions, Games. Based purely on growth, whether recent or prospective, I agree - hard to argue for anything more than 15x, maybe even a bit less. You can then make a case for a decent premium justified by the “quality†of that growth (sustainability, long term track record, relative predictability, etc) - but can you make a case for anything more than the long-term mean of around 18x? Not easily. And for the £ shares, don’t forget the considerable boost from currency to reported profits and cash flows. Good company, of course… but as we know, good companies are not necessarily good investments!
Gamesinvestor1
04 Oct 2019
Is it all it is cracked up to be? Revenue in 2014 = Euro48.4Bn ;Rev in 2018 = Euro50.982 ------> Growth 5.3% (1.3% annualised). OK This is difficult because business units have been added and some sold off so not like for like – but it is still a business, right, so it needs to grow? Profit after Tax (forget EBITDA which is bullshit) in 2014 = Euro5.15Bn; and in 2018=Euro9.808BN ----> Growth 90% – pretty good yes? So this would have implied that they sold off less profitable units and added better ones and/or improved organic margins - a bit of both maybe? Borrowings in 2014=Euro7.186Bn and in 2018=Euro21.65Bn -------> 3X or 201.3% growth – more than double the profit growth and dwarfs the revenue growth. Net cash applied to finances : In 2014=Euro5.19Bn and in 2018=Euro11.548BN ---------> 2.22X or 122% growth in commitments Net Gearing:- In 2014=231% and in 2018=379% I’m not convinved this company is actually growing other than at the expense of extraneous finances. I’m also not sure it deserves a P/E of 21 when it is set to grow between 5 and 7%? Most of the growth seems to have come from price increases, not volume, is that sustainable? The stock price has recentlly fallen from 53XX to 4781 as I type. Does it have further to fall – would a P/E below 15 be more appropriate? OK these are simplistic figures in themselves, but the yawning gap between the growth in debt and cash compared to revenue and profit is there for all to see. Games
Gamesinvestor1
04 Aug 2019
Trading update Well you know what they say ITDYA, when there is blood on the streets…
In_the_dark_yet_again
04 Aug 2019
Trading update RB must be even better value now at £61.5! I am sorely tempted, very itchy trigger finger but thankfully it’s Sunday so can’t do anything until tomorrow. Cold light of day and all that… This Brexit thing weighs so heavy everywhere. Whether any/enough Tory MPs will actually do the right thing rather than just talk it/threaten in and vote no confidence when Boris really does try to push through a ‘no deal’ exit, I don’t know - the Torys would get decimated in a general election in the immediate future so how many of them would actually vote for a serious risk of themselves losing their very lucrative jobs I don’t know. I can’t see a clear Labour majority but can see the LibDems and Mr Farage’s nutters doing well. Upshot - minority Labour government supported by LibDem, the price of the deal being a new referendum at the minimum. But what do I know? I am tempted but also this little gnome (maybe Swiss?) in my head saying ‘caution, keep your powder dry, wait’ Regards, ITDYA
Uncle_Doug
26 Jul 2019
Trading update RB good value currently at £65 - easy 20% upside. ULVR overpriced at £49. I’d wait for £45 for a BUY but keep holding if currently invested. Both are keepers.
Gamesinvestor1
26 Jul 2019
Trading update ITDYA - Thanks for the update. Wouldn’t it worry you, the fact that 2/3rds of the growth in profits that ULVR just announced was due to price increases and only 1/3rd was due to sales volume increases? This has been a very consistent trend in Unilever’s reporting over the last couple of years. Surely it’s not sustainable. When I go into a supermarket or similar shop, there are so many personal care products and the price ranges are all over the place. Invariably now I’ll bypass the Dove and similar products that seem to be as much as 50% more expensive than own brand stuff. Maybe I’m getting more sceptical but Procter and Gamble suffered a similar problem some years back when they kind of priced themselves off the shelves in some stores. I’m afraid I don’t share Neil Wilson’s view that price growth is entirely a good thing. If price growth is taking more of the growth here, they are losing market share in volume as surely the products are selling more as populations continue to rise inexorably. Games
In_the_dark_yet_again
26 Jul 2019
Trading update If the link doesn’t work… Citywire: from Markets.com. Pricing positive at Unilever Half-year results from Unilever (ULVR) were clouded by slightly weaker-than-expected second quarter sales growth, but Markets.com believes the consumer goods giant can still make wins on pricing as inflation kicks in. Unilever, maker of Dove soap and Ben & Jerry’s ice cream, said underlying sales growth rose 3.5% in the second quarter, shy of a 3.7% consensus analysts forecast, according to figures from the company. This was caused by wet weather in Europe and slower growth in India though Unilever stuck to a forecast that full-year sales would rise at the lower half of its long-standing 3-5% target range. Unilever shares closed 2% or 102p down at £48.96, having risen 18% this year before today. Analyst Neil Wilson said ‘growth is being driven more by price than volume, which is positive’. ‘We’ve seen how volume has been the chief driver of growth but noted in October that there were more encouraging signs about inflation,’ he said. Regards, ITDYA
In_the_dark_yet_again
26 Jul 2019
Trading update LSE:ULVR @Gamesinvestor1 This is what Citywire had to say on ULVR - not huge insight but more food for thought. [link] Regards, ITDYA
Gamesinvestor1
25 Jul 2019
Trading update Sadly there are no free trade agreements, they are all tariff related and quota related. We pay £16Bn a year in tariffs for non EU imports alone each year - that is on top of the membership fees of £10Bn+ or whatever the fudged figure really is. The way I look at it, 85% of the world is not in the EU and it manges to sell into European countries and buy from them - The EU is a political organisation, not an economic one, and that is kind of obvious given the destruction of the Southern European countries economies and employment levels. The EU is a barrier to free trade. Games
In_the_dark_yet_again
25 Jul 2019
Trading update I’m no huge fan of the EU either, I hate the centralized bureaucrat ‘elite’ and there drive for ever more control just I couldn’t see a practical way to achieving a ‘sensible’ Brexit, certainly not one that satisfied the leavers while maintaining free trade; it could never happen. For me the only practical option was to stay in and actively organise all those who like the free trade ideas but want to avoid the slow creep towards federalisation - they are everywhere. The EU High Command seem to think it is leadership by steamrollering their agenda, ignoring the wishes of the people - the people ‘don’t understand’ so they’ll do what’s ‘best’ for them regardless. But free trade was always going to mean free movement of people, well pretty free at least. Only fantasists or liars would suggest otherwise. I just thought we’d do better organising the dissenting voices from inside. Regards, ITDYA
Gamesinvestor1
25 Jul 2019
Trading update ITDYA - I agree with your assessment of Unilever, although I view it as well to overpriced. RB is my chosen option and it has underperformed for me since transitioning out of Unilever, and RB’s challenges are not insignificant by any means. I’ll stick with it as a few % of my wad. I’m not a fan of the EU at all but respect your view, and I think once a clear decision is in place, one way or the other, we will get some direction. I think either way and even if there is a short term shock from leaving, the impact will be greater utimately (in my own view of course) for the EU than the UK. However, no one knows that for certain, I just feel that the UK is stifled inside the EU, who’s economic model I consider to be outdated and broken from a real economic perspective and the world is moving on without them. Games
In_the_dark_yet_again
25 Jul 2019
Trading update LSE:ULVR @Gamesinvestor1 I agree. A pretty dull, average to poor, set of results which, if it were any other company, would probably have caused a spanking… but it is a pretty blue, blue chip and, in these troubled times, that ‘quality’ will command a decent premium. I see it as a very defensive stock given we now have the buffoon in #10 and the cabinet stacked with no better, committed to push through a no deal hard Brexit (lets hope the more sensible element of the Tory Party will vote no confidence if they really try because there’s no way the EU will move much more than a token ‘face saving’ gesture). Plus the Dutch will always love it pretty much no matter what. Me, I still prefer Reckitt at current prices but, given the recent out-performance of ULVR vs RB, I seem to be in the minority. Regards, ITDYA
Gamesinvestor1
25 Jul 2019
Trading update [link] 3% growth and P/E of 22 – There’s a lorra lorra faith in this one it seems. Games
In_the_dark_yet_again
18 Jun 2019
Trading Statement LSE:ULVR £50 a share… I wonder what LKH would have said! Always one of his favourites but I didn’t see £50 coming any time soon. Looks like my swap to RB was way too early. What am I missing because I cannot reconcile £50 ULVR with RB at only(?) £66? Not saying RB is cheap nor ULVR expensive, just I cannot reconcile that % spread. Regards, ITDYA thinking some of my ‘swap’ models maybe should be made out of something more substantial than balsa wood!
